Naveen Fintax

Chapter 8: Deductions to be made in Computing Total Income

noreply@blogger.com (Naveen Fintax) — Sat, 18 Apr 2026 14:07:42 +0000

🚀 The Ultimate Deep Dive into Chapter 8 Deductions: New Income Tax Act 2025 💰

The dawn of the Income Tax Act, 2025 (effective April 1, 2026) has modernized India's tax landscape! The massive, complicated 1961 Act has been completely restructured. If you are looking for your beloved tax-saving deductions (previously famous as Chapter VI-A), they have now been given a new home and new section numbers under Chapter 8.

Let's map out exactly what changed, compare the old section numbers with the new ones, and deep dive into how you can save tax under the new laws! 👇

⚠️ Crucial Note: Just like before, these Chapter 8 deductions are primarily available only if you opt for the Old Tax Regime. Under the New Tax Regime, most of these major deductions are restricted. Always run the numbers before choosing your regime!

📑 Quick Navigation Index

Click on any topic to jump straight to it:

👉 1. Section 123 (Old 80C): The Super Saver (Up to ₹1.5L) 📈
👉 2. Section 126 (Old 80D): Health Insurance Premiums 🏥
👉 3. Section 124(3) (Old 80CCD-1B): NPS Additional Benefit 🏖️
👉 4. Section 129 (Old 80E): Education Loan Interest 🎓
👉 5. Section 133 (Old 80G): Donations & Charity 🤝
👉 📊 Summary: Old vs. New Section Mapping

1. Section 123 (Formerly Section 80C): The Super Saver 📈

The most famous tax-saving section has been reborn! Section 123 of the ITA 2025 combines the old 80C, 80CCC, and parts of 80CCD into one streamlined section. The maximum combined deduction limit remains a solid ₹1.5 Lakhs per tax year.

Eligible Investments under Sec 123:

🏢 EPF & PPF: Employees' Provident Fund and Public Provident Fund.
📊 ELSS: Equity Linked Savings Scheme (Tax-saving mutual funds).
🛡️ Life Insurance: Premiums paid for yourself, your spouse, or your children.
🏠 Home Loan: The principal repayment portion of your EMI.
👧 Sukanya Samriddhi Yojana (SSY): For the bright future of your girl child.
🏫 Tuition Fees: Paid for up to two children.

2. Section 126 (Formerly Section 80D): Health is Wealth 🏥

Protecting your family from medical emergencies still gets you excellent tax benefits. The old Section 80D rules have been restructured into Section 126 with a much clearer, easy-to-read sub-section layout.

👨‍👩‍👧 Self, Spouse & Kids: Claim up to ₹25,000.
👵👴 Parents (below 60 years): Claim an additional ₹25,000.
🌟 Senior Citizen Parents (above 60 years): The limit increases to ₹50,000!

Bonus: Within these overall limits, you can still claim up to ₹5,000 for preventive health check-ups! 🩺

3. Section 124(3) (Formerly Section 80CCD(1B)): Securing Your Retirement 🏖️

The government still heavily incentivizes the National Pension System (NPS). The extra ₹50,000 benefit you used to know as 80CCD(1B) is now housed under Section 124(3).

You get an additional deduction of ₹50,000 for voluntary contributions to your NPS Tier 1 account. This is over and above the ₹1.5 Lakh limit of Section 123! Total potential savings combined = ₹2 Lakhs.

4. Section 129 (Formerly Section 80E): Powering Higher Education 🎓

If you take an education loan for higher studies for yourself, your spouse, or your children, Section 129 is your new best friend.

The rules remain beautifully generous: There is NO upper limit on the amount of interest you can claim as a deduction! 🤯 You can claim this for a maximum of 8 years, starting from the year you begin repaying the interest.

5. Section 133 (Formerly Section 80G): The Joy of Giving 🤝

Donations to recognized charities, political parties, and relief funds are now governed by Section 133. Depending on the organization you donate to, you can claim either a 50% or 100% deduction on the donated amount.

Pro Tip: Cash donations above ₹2,000 do not qualify! Always use a digital payment method, cheque, or demand draft and make sure you get a valid donation receipt. 🧾

📊 Cheat Sheet: Old 1961 Act vs. New 2025 Act Mapping

Deduction Category	Old Act (1961) Section	New Act (2025) Section
Max ₹1.5L Limit (PPF, ELSS, Insurance)	80C, 80CCC, 80CCE	Section 123
Health Insurance Premium	80D	Section 126
Additional ₹50K NPS Contribution	80CCD(1B)	Section 124(3)
Education Loan Interest	80E	Section 129
Donations to Charity	80G	Section 133

Final Thoughts 💡

The Income Tax Act of 2025 brings a much-needed structural cleanup to our tax laws. While the section numbers have jumped from the 80s into the 120s and 130s, the core benefits that help you save money are still intact. Just remember to consult your CA before filing to ensure you are picking the most beneficial regime for your tax year! 🧑‍💼

Disclaimer: This blog post is for informational purposes only and does not constitute professional financial advice. Tax rules are subject to change based on government regulations.

Chapter 7: Set-off, or Carry Forward and Set-off of Losses

noreply@blogger.com (Naveen Fintax) — Sat, 18 Apr 2026 10:18:40 +0000

Simplified Guide to Chapter 7: Set-Off & Carry Forward of Losses (Income Tax Act 2025)

🌟 Decoding Chapter 7: Set-Off & Carry Forward of Losses under Income Tax Act 2025 🌟

The new Income Tax Act 2025 is here (effective April 1, 2026), replacing the old 1961 Act. While the laws are reorganized for better clarity, nobody likes facing a financial loss! But hey, the Income Tax Department gives you a silver lining: Set-Off and Carry Forward of Losses. Let's break down Chapter 7 of the new act into a super simple, easy-to-understand flow! 💸📉

📌 Index (Click to Jump)

📖 1. What does "Set-Off" mean?
🔄 2. Step 1: Intra-Head Set-Off (Section 108)
🔀 3. Step 2: Inter-Head Set-Off (Section 109)
⏩ 4. Step 3: Carry Forward of Losses (Sections 110 to 115)
⏰ 5. The Golden Rule: Filing a Loss Return (Section 121)

📖 1. What does "Set-Off" mean?

Imagine you have two businesses. One makes a profit of ₹5 Lakhs, and the other makes a loss of ₹2 Lakhs. Instead of paying tax on the full ₹5 Lakhs, the taxman allows you to "Set-Off" (adjust) your loss against your profit. So, you only pay tax on the net ₹3 Lakhs! 🥳

If your losses are too big to adjust this year, you can "Carry Forward" them to future years to reduce your future taxes. Chapter 7 of the new Act covers all the rules regarding this.

🔄 2. Step 1: Intra-Head Set-Off (Section 108)

Under the new Section 108 (formerly Section 70), the first step is to adjust your losses within the same category (head) of income. If you have two houses, and one gives rental income while the other is empty and has a home loan loss, you can adjust them together.

⚠️ The Exceptions! (You can't do this with everything)

📉 Capital Gains: A Long-Term Capital Loss (LTCL) can only be adjusted against a Long-Term Capital Gain (LTCG). However, a Short-Term Capital Loss can be adjusted against both short and long-term gains.
🎲 Speculative Business: Losses from day-trading or speculation can only be adjusted against speculative profits.
🐎 Owning & Maintaining Racehorses: These losses can only be offset against income from the exact same activity.

🔀 3. Step 2: Inter-Head Set-Off (Section 109)

If you still have losses left after Step 1, you move to Step 2. Section 109 (formerly Section 71) allows you to adjust a loss from one head of income against a profit from a different head (e.g., adjusting a Business Loss against Income from House Property).

🛑 But wait, strict boundaries apply!

💼 Business Loss: Cannot be adjusted against your Salary income. (Nice try! 😉)
🏠 House Property Loss: Can be adjusted against other heads, but only up to ₹2 Lakhs in a single year.
📉 Capital Losses: Can never be adjusted against any other head of income. They must stay within the Capital Gains family.

⏩ 4. Step 3: Carry Forward of Losses (Sections 110 to 115)

If you suffered a massive loss this year and your profits aren't enough to absorb it, don't panic! You can carry it forward to future years. The ITA 2025 maps these out clearly:

🏠 House Property (Sec 110): Carry forward up to 8 Assessment Years. (Can only be adjusted against House Property income in future years).
📉 Capital Gains (Sec 111): Carry forward up to 8 Assessment Years.
💼 Normal Business Loss (Sec 112): Carry forward up to 8 Assessment Years.
🎲 Speculation Business Loss (Sec 113): Carry forward up to 4 Assessment Years.
🏭 Specified Business Loss (Sec 114): Carry forward Indefinitely (No time limit!).
🐎 Racehorse Maintenance (Sec 115): Carry forward up to 4 Assessment Years.

⏰ 5. The Golden Rule: Filing a Loss Return (Section 121)

Here is the most critical part where many people fail. According to Section 121 of the Income Tax Act 2025 (formerly Section 80):

🚨 If you do not file your Income Tax Return (ITR) before the due date, you CANNOT carry forward your losses! 🚨

The only exception to this rule is the loss from House Property and unabsorbed depreciation. They can be carried forward even if you file a belated return. But for Business losses or Capital Gains losses, filing on time is mandatory! 📅

💡 Final Thoughts

The new Income Tax Act 2025 has made reading the law simpler by reorganizing the scattered sections into clean, sequential chapters. By smartly using Chapter 7 provisions, you can legally ensure that a bad financial year eventually pays off by lowering your future tax burdens! 📉➡️📈

Disclaimer: Tax laws are subject to interpretations. Always consult with a registered tax professional or Chartered Accountant before filing your returns! 🧑‍💼💼

Chapter 6: Aggregation of Income

noreply@blogger.com (Naveen Fintax) — Sat, 18 Apr 2026 07:32:00 +0000

Decoding Chapter 6 of the Income Tax Act (2025) 🇮🇳

Aggregation of Income & Unexplained Wealth Explained Simply! 💸

Hello, taxpayers and finance enthusiasts! 👋 Have you ever wondered what happens if the Income Tax Department finds out about a lavish wedding you threw, but your tax return says you earn minimum wage? Or what if sudden, unexplained money appears in your bank account? Enter Chapter VI of the Income Tax Act.

Often confused with Chapter VI-A (which gives you awesome deductions like 80C), Chapter 6 is actually the taxman’s strict watchdog. It primarily deals with the Aggregation of Income. Let’s break it down so it's super easy to understand!

📑 Table of Contents (Click to jump!)

👉 1. What is "Aggregation of Income"?
👉 2. The "Unexplained" Sections (Sec 68 to 69D)
👉 3. The Heavy Penalty: Tax Rate on Unexplained Income
👉 4. Final Takeaway

1. What is "Aggregation of Income"? 🧩

In simple terms, "Aggregation" means adding things together. The Income Tax Act says that to calculate your total tax liability, we must pool together all your income from different sources (Salary, Business, Capital Gains, House Property, and Other Sources).

But Chapter VI focuses heavily on bringing hidden or unexplained incomes out of the shadows and forcibly aggregating (adding) them to your total income.

💡 Pro Tip: Don't confuse this with "Clubbing of Income" (where your spouse's or minor child's income is added to yours). Clubbing falls under Chapter V, not Chapter VI!

2. The "Unexplained" Sections (Sec 68 to 69D) 🕵️‍♂️

This is the juicy part of Chapter 6. If the Assessing Officer (AO) finds discrepancies between your lifestyle, bank accounts, and your declared income, these specific sections get triggered:

Section 68 - Cash Credits 🏦: If you have a mystery deposit in your bank account or books of accounts and you can't explain the source (or the AO isn't satisfied with your explanation), that money is treated as your income.
Section 69 - Unexplained Investments 🏡: Bought a luxury villa or a lot of gold, but it's not recorded in your books? If you can't prove where the money came from, the value of that investment gets aggregated into your income.
Section 69A - Unexplained Money & Jewellery 💍: If the taxman searches your premises and finds cash, bullion, or jewelry that doesn't match your income profile, it becomes taxable under this section.
Section 69B - Partially Disclosed Investments 📉: Let's say you bought a property worth ₹1 Crore but only recorded ₹40 Lakhs in your books to save tax. The "missing" ₹60 Lakhs will be caught and taxed here!
Section 69C - Unexplained Expenditure 🥂: Remember that lavish destination wedding? If you incur massive expenses but have no logical source of income to fund them, the IT department will tax the expenditure amount as if it were your income.
Section 69D - Hundi Borrowings 📜: Borrowing or repaying money on a "Hundi" (an informal, ancient financial instrument) in hard cash instead of account payee cheques? That amount will be added straight to your income!

3. The Heavy Penalty: Tax Rate on Unexplained Income 🚨

You might think, "Okay, if they find unexplained money, I'll just pay my normal 30% tax on it."

WRONG! ❌

Under Section 115BBE of the Income Tax Act, any income caught under Sections 68 to 69D is taxed at a massive, punitive rate:

🔥 The 78% Tax Hammer 🔥

Base Tax: 60%
+ Surcharge: 25% (of the base tax)
+ Health & Education Cess: 4%
Effective Tax Rate = 78%

Plus, NO basic exemption limits and NO Chapter VI-A (80C, 80D, etc.) deductions are allowed against this income!

4. Final Takeaway 🎯

Chapter 6 of the Income Tax Act is designed to crack down mercilessly on black money, hidden investments, and unexplained wealth. By aggregating these undisclosed amounts directly into your total income and slapping them with a crippling 78% tax rate, the tax department ensures that tax evasion is highly unrewarding.

The Golden Rule: Always keep your books clean, declare your income accurately, and ensure your lifestyle matches your tax returns! 📑✅

Disclaimer: Tax laws are complex and subject to change. This post is for educational purposes. Always consult a certified Chartered Accountant (CA) for personalized tax advice.

Chapter 6A brief summary

noreply@blogger.com (Naveen Fintax) — Sat, 18 Apr 2026 07:21:00 +0000

💸 Demystifying Chapter VI-A of the Income Tax Act 💸

Welcome, tax savers! 🎉 If you are looking to keep more of your hard-earned money this year, you've landed in the right place. While Chapter VI of the Income Tax Act deals with setting off losses, the real star of the show is Chapter VI-A. This is the section that houses all the famous deductions (like 80C and 80D) that legally lower your Gross Total Income (GTI), meaning you pay less tax!

Let's break down these tax-saving superpowers in a way that actually makes sense! 🚀

📑 Quick Navigation Index

👉 1. Section 80C & Friends: The Tax-Saving Superstars 🌟
👉 2. Section 80D: Your Health & Wealth Shield 🛡️
👉 3. Section 80E: Powering Higher Education 🎓
👉 4. Section 80G: The Joy of Giving 🤝
👉 5. Section 80TTA & 80TTB: Savings Account Perks 🏦
👉 6. ⚠️ Crucial Note: Old vs. New Tax Regime ⚖️

1. Section 80C, 80CCC & 80CCD: The Superstars 🌟

When someone mentions "tax saving," they are usually talking about Section 80C. It is the most popular deduction basket available to individuals and HUFs!

The Limit: A combined maximum deduction of ₹1.5 Lakhs per financial year.
Where to Invest (80C):
- Public Provident Fund (PPF) 📈
- Employees' Provident Fund (EPF) 💼
- Equity Linked Savings Scheme (ELSS) Mutual Funds 📊
- Life Insurance Premiums ☂️
- Home Loan Principal Repayment 🏠
- Children's Tuition Fees (Up to 2 children) 🎒
The Secret Bonus (80CCD(1B)): If you invest in the National Pension System (NPS), you get an extra ₹50,000 deduction over and above the ₹1.5 Lakh limit! 🎯

2. Section 80D: Your Health & Wealth Shield 🛡️

Medical emergencies can drain your savings, but having health insurance protects your wallet and your tax bill.

For You & Family (Under 60): Deduct up to ₹25,000 on premiums paid.
For Parents (Under 60): An additional ₹25,000 deduction.
For Senior Citizen Parents (60+): The limit jumps to ₹50,000! 👵👴

💡 Pro Tip: This limit includes a ₹5,000 sub-limit for preventive health check-ups. Don't forget to claim those annual blood test bills! 🩸

3. Section 80E: Powering Higher Education 🎓

Investing in education pays the best interest, but did you know the interest paid on an education loan actively saves you taxes?

The Benefit: You can deduct the entire interest amount paid on an education loan taken for yourself, your spouse, or your children.
The Limit: There is NO UPPER LIMIT! 🤯
Duration: Available for up to 8 years starting from the year you begin repaying the loan.

4. Section 80G: The Joy of Giving 🤝

Philanthropy is rewarding for the soul, and the government rewards it via your taxes. Donations made to approved charitable institutions and relief funds qualify here.

How it works: Depending on the specific fund or institution, you can claim a deduction of either 50% or 100% of the donated amount.
Important Rule: Cash donations exceeding ₹2,000 are not eligible for deductions. Always use UPI, net banking, or cheques! 💳

5. Section 80TTA & 80TTB: Savings Account Perks 🏦

Did you know the interest your money earns just by sitting in a savings account is added to your taxable income? Luckily, there's a buffer!

Section 80TTA (Under 60 years): Interest income from savings accounts up to ₹10,000 is entirely tax-free.
Section 80TTB (Senior Citizens 60+): A much wider net! Covers interest from savings accounts, fixed deposits (FDs), and post office deposits up to ₹50,000. 💰

6. ⚠️ Crucial Note: Old vs. New Tax Regime ⚖️

Before you rush to invest in all these fantastic tax-saving instruments, you must understand the two tax regimes operating in 2025:

The Old Tax Regime: This is where ALL the Chapter VI-A deductions (80C, 80D, etc.) live. You must actively opt into this regime to claim these benefits!
The New Tax Regime (Default): Offers lower baseline tax slab rates but strips away almost all of these Chapter VI-A deductions (with a few rare exceptions like Section 80CCD(2) for employer NPS contributions).

Conclusion: Always calculate your taxes under BOTH regimes to see which one leaves you with more money in your pocket! 🧮

Disclaimer: This blog post is for educational and informational purposes only. Income Tax laws are dynamic and subject to government amendments. It's always highly recommended to consult with a certified Chartered Accountant (CA) for personalized financial and tax planning advice. 📝

Chapter 5 of income tax act 2025 clubbing of income

noreply@blogger.com (Naveen Fintax) — Mon, 13 Apr 2026 18:12:00 +0000

📚 Decoding Chapter 5 of the Income Tax Act (2025 Edition) 🇮🇳

The Ultimate Guide to "Clubbing of Income" made easy!

📌 Table of Contents (Click to Jump!)

👉 1. Introduction: What is Chapter 5? 👉 2. Why was this Rule Created? 🕵️‍♂️ 👉 3. Section 60: Giving Away Income but Keeping the Asset 🏠 👉 4. Section 61: The "Take it Back" (Revocable) Transfer 🔄 👉 5. Section 64: Income of your Spouse 💑 👉 6. Section 64(1A): Income of a Minor Child 👶 👉 7. Conclusion & Pro Tip 💡

1. Introduction: What is Chapter 5? 📖

Have you ever thought: "What if I transfer my FD interest to my wife's bank account so I don't have to pay tax on it?" 🤔

Well, the Income Tax Department is already one step ahead! Chapter V (Chapter 5) of the Income Tax Act, 1961 (applicable for FY 2025-26) deals with a concept called "Clubbing of Income" (Sections 60 to 65). Simply put, in certain situations, the income earned by someone else (like your spouse or minor child) gets added (clubbed) to your total income, and YOU have to pay the tax on it! 😲

2. Why was this Rule Created? 🕵️‍♂️

In the past, high-income earners used a clever loophole. They would divert their income to family members in lower tax brackets to save money. 💸

To stop this tax evasion, the government introduced Chapter 5. The rule is simple: If you are the real source of the money, you must pay the tax, no matter whose bank account it sits in!

3. Section 60: Giving Away Income but Keeping the Asset 🏠

Let’s say you own an apartment that gives a rent of ₹50,000/month. You tell your tenant to pay the rent directly to your friend to avoid taxes.

The Rule: Under Section 60, if you transfer the income to someone else without transferring the ownership of the asset (the apartment), that income will still be clubbed into your hands. Nice try, though! 😉

4. Section 61: The "Take it Back" (Revocable) Transfer 🔄

What if you officially gift the apartment to your friend, but add a secret condition: "I can take this apartment back whenever I want"?

The Rule: This is called a Revocable Transfer. Because you still hold the ultimate power over the asset, the income from that asset will be taxed in your hands, not your friend's! 🛑

5. Section 64: Income of your Spouse 💑

This is the most common scenario! When does your spouse's income get clubbed with yours?

Salary from a business you control: If your spouse gets a salary from a company where you have a "substantial interest" (and they don't have professional qualifications for the job), that salary is taxed in your hands. 🏢
Gifting Assets: If you gift ₹10 Lakhs to your husband/wife, and they invest it in an FD, the interest earned on that FD will be clubbed to your income. 🏦

6. Section 64(1A): Income of a Minor Child 👶

If your child is under 18 years old and earns money, that income doesn't just disappear from the tax radar!

The Rule: A minor child's income is clubbed with the income of the parent who earns more. 📈

Exception: The clubbing rule does not apply if the child earns money through their own manual work, special talent, or knowledge (like a child actor or a spelling bee champion). Also, you get a tiny exemption of ₹1,500 per child under Section 10(32). 🏆

7. Conclusion & Pro Tip 💡

Chapter 5 is the Income Tax Department's way of ensuring fairness. Before you try to lower your tax bill by shifting funds to your family members, always check the Clubbing Rules!

🔥 Pro Tip for 2025: Remember, if the income gets clubbed, the re-invested income usually doesn't! (e.g., If you gift your wife ₹10L, the FD interest of ₹70k is clubbed to you. But if she invests that ₹70k into a mutual fund, the profit from the mutual fund is hers, not yours!) 📊

Enjoyed this tax breakdown? Share this post with your friends and family so they don't get a surprise notice from the taxman! 📬🚀

Chapter 4 of income tax act 2025

noreply@blogger.com (Naveen Fintax) — Wed, 08 Apr 2026 19:06:00 +0000

🚀 Unpacking Chapter 4 of the New Income Tax Act 2025: What You Need to Know! 💸

Hello, tax-savvy friends! 👋 The financial world in India is undergoing a massive transformation with the introduction of the Income Tax Act, 2025 (replacing our 64-year-old friend, the ITA 1961). It shrinks down 819 complex sections into a sleek 536 and reorganizes 47 chapters into just 23! But today, we're diving deep into the heart of what matters most to the salaried individual and homeowner: Chapter 4 – Salary and House Property. 🏢💼

Let's break down the tax jargon into simple, bite-sized pieces!

📌 Table of Contents

Bye-Bye AY, Hello "Tax Year" 🗓️
The Big Shift in Salaries: Exemptions to Deductions 💰
Decoding "Profits in Lieu of Salary" 📊
House Property Tweaks: The "Any Property" Rule 🏡
The Bottom Line For You 🎯

1. Bye-Bye AY, Hello "Tax Year" 🗓️

Before jumping into the core of Chapter 4, you need to know about a fundamental shift in the 2025 Act. The confusing terms Financial Year (FY) and Assessment Year (AY) are being merged into a single, straightforward concept called the "Tax Year". No more trying to remember if your income from 2025 is filed in AY 2026—it's all just one continuous, easy-to-understand 12-month cycle! ✨

2. The Big Shift in Salaries: Exemptions to Deductions 💰

In the old regime, Chapter IV broadly covered the computation of all income heads. Now, under the new structure, Chapter 4 is specifically laser-focused on Salary and House Property.

One of the biggest structural changes here is the realignment of salary exemptions into deductions. What does this mean for you? 🤔

The Old Way: Certain allowances were "exempt" from being added to your gross total income in the first place.
The New Way (ITA 2025): Your entire earnings are considered part of your gross salary, and then specific allowances are treated as deductions from that total. It makes the math much cleaner and automated compliance far easier! 🧮

3. Decoding "Profits in Lieu of Salary" 📊

If you've ever received compensation for a modified employment contract or a severance package, you've dealt with "profits in lieu of salary." Chapter 4 brings revised exclusions to this section. The new act removes redundant clauses and intricate language so HR departments can structure your CTC (Cost to Company) with complete clarity, minimizing friction between employers and tax authorities. 🤝

4. House Property Tweaks: The "Any Property" Rule 🏡

This is a subtle but massive change! Under the old ITA 1961, there were specific tax implications when "any house property" was transferred for inadequate consideration (e.g., selling a home to a relative for way less than its market value to avoid tax).

Under ITA 2025's Chapter 4, there is a definitional shift from "any house property" to "any property". This means the government is broadening the scope to close tax loopholes! Whether it's a residential home, a commercial shop, or a vacant piece of land, transferring it for lower than its value will be strictly scrutinized under the new rules. 🕵️‍♂️🏘️

5. The Bottom Line For You 🎯

Chapter 4 of the Income Tax Act 2025 is fundamentally designed to achieve three things:

Enhance Readability: Dropping the 100-year-old complicated colonial English.
Close Loopholes: Broadening definitions like "house property" to "any property".
Streamline Math: Reorganizing exemptions to function as deductions for smoother, faster tax processing.

Get ready for a much simpler tax filing experience when these rules come into full effect for the upcoming fiscal years! 🎉

Chapter 3 of income tax act 2025

noreply@blogger.com (Naveen Fintax) — Sun, 05 Apr 2026 12:08:00 +0000

🌟 Unlocking Chapter 3 of the Income Tax Act 2025: Your Ultimate Guide to Tax-Free Incomes! 🌟

Tired of paying taxes on every penny you earn? Welcome to the most exciting part of the Income Tax Act! Let's dive into the legal ways to keep your hard-earned money safe.

📑 Index: Jump to Your Favorite Topic!

👉 1. Introduction: The Magic of Chapter 3 🤔
👉 2. Agricultural Income: The Ultimate Tax Shield 🌾
👉 3. Salaried Employee Perks: Leave, Gratuity & PF 💼
👉 4. Life Insurance Proceeds: Shielding Your Family 🛡️
👉 5. Business & SEZ Units: Exporting for Profit 🏭
👉 6. Charities & NGOs: Doing Good, Tax-Free 🏛️
👉 7. Conclusion & Pro Tax Tips 💡

1. Introduction: The Magic of Chapter 3 🤔

If the Income Tax Act were a movie, Chapter III would be the superhero! 🦸‍♂️ Titled "Incomes Which Do Not Form Part of Total Income," this chapter is essentially a massive list of exemptions.

Unlike deductions (which you subtract from your total income), the incomes listed in Chapter 3 never enter your tax calculation in the first place! Under the updated provisions for 2025, knowing these can legally reduce your tax burden to zero on specific earnings. Let's break down the best ones!

2. Agricultural Income: The Ultimate Tax Shield 🌾

India thrives on agriculture, and the government rewards this by making Agricultural Income 100% Tax-Free under Section 10(1).

🚜 What qualifies? Rent or revenue from agricultural land situated in India, income from farming, and income from farmhouses.
🪴 Nursery Income: Income derived from saplings or seedlings grown in a nursery is also considered agricultural income!

⚠️ Catch for 2025: If you have non-agricultural income exceeding the basic exemption limit along with agricultural income over ₹5,000, you must apply the "Partial Integration" method. It pushes your non-farming income into a higher tax slab!

3. Salaried Employee Perks: Leave, Gratuity & PF 💼

If you are a salaried professional, this section is your best friend. Under Section 10, several payouts from your employer are fully or partially exempt:

💰 Gratuity: Tax-free up to ₹20 Lakhs for non-government employees (and fully exempt for government employees) after 5 years of continuous service!
🏖️ Leave Encashment: Cash received against unused leaves is exempt up to a maximum limit set by the government (recently updated to ₹25 Lakhs for non-government employees).
✈️ Leave Travel Concession (LTC): Travel costs for you and your family on a domestic vacation are exempt twice in a block of 4 years.
📈 Provident Fund (EPF/PPF): The maturity amount and interest earned from your PPF and EPF remain beautifully tax-free!

4. Life Insurance Proceeds: Shielding Your Family 🛡️

Getting a life insurance payout or a maturity benefit? Section 10(10D) covers this.

Historically, all life insurance maturity proceeds were tax-free. However, the 2025 tax rules maintain a very important boundary line:

📉 The ₹5 Lakh Rule: For policies issued recently, if your annual premium exceeds ₹5 Lakhs, the maturity proceeds will be taxable. However, payouts received due to the unfortunate death of the insured remain 100% tax-free, regardless of the premium amount!

5. Business & SEZ Units: Exporting for Profit 🏭

Section 10AA provides a massive boost to businesses operating out of Special Economic Zones (SEZs).

If an enterprise manufactures goods or provides services from an SEZ, they enjoy a phased tax holiday on their export profits. Though the government has been phasing out some corporate exemptions to promote lower flat-tax rates, SEZ businesses still need to carefully analyze Chapter 3 to claim their grandfathered benefits!

6. Charities & NGOs: Doing Good, Tax-Free 🏛️

Sections 11 to 13A of Chapter 3 focus on Trusts, NGOs, and Political Parties.

🤝 Trusts & NGOs: Income derived from property held under trust for charitable or religious purposes is exempt, provided they apply at least 85% of their income to those purposes. New 2025 rule check: Commercial receipts of an NGO must not exceed 20% of its total receipts!
🗳️ Political Parties: Income from voluntary contributions, house property, and capital gains is exempt for registered political parties, provided they maintain proper books and get them audited.

7. Conclusion & Pro Tax Tips 💡

Chapter 3 of the Income Tax Act 2025 is a goldmine. Whether you are a farmer, a corporate employee, an investor, or running a charity, understanding these exemptions is the key to legitimate tax planning.

🔥 Pro Tip: The government has been heavily pushing the New Tax Regime in 2025, which gives a lower tax rate but forces you to give up many of these Chapter 3 exemptions (like LTC and House Rent Allowance). Always calculate your taxes under BOTH regimes before filing!

Did you find this guide helpful? Drop a comment below and share it with your friends to help them save some tax! 👇💬

Chapter 2 Basis of Charge

noreply@blogger.com (Naveen Fintax) — Sun, 05 Apr 2026 10:26:00 +0000

📚 Decoding Chapter 2 of the Income Tax Act: The 'Basis of Charge' Explained! 🇮🇳💰

Welcome back, tax-savvy readers! 👋 Have you ever wondered what actually gives the government the power to tax your hard-earned money? Or why NRIs pay tax differently than resident Indians? The answer lies in the bedrock of Indian taxation: Chapter II of the Income Tax Act.

Today, we are going to break down this vital chapter for the 2025 tax season so you can finally understand the "Who, What, and Where" of income tax, without the confusing legal jargon! Let's dive in! 🚀

📑 Table of Contents (Click to Jump)

1. Introduction: What is Chapter 2? 🤔
2. Section 4: The 'Charging' Section ⚡
3. Section 5: Scope of Total Income (What gets taxed?) 🌍
4. Section 6: Residential Status (Who are you to the taxman?) 🏠
5. Sections 7 to 9: Deemed Incomes (The Hidden Traps!) 🪤
6. Conclusion & Takeaways 🎯

1. Introduction: What is Chapter 2? 🤔

In simple terms, Chapter 2 is titled "Basis of Charge". It contains Sections 4 to 9A of the Income Tax Act. Think of it as the gateway to the entire tax system. Before the government can calculate deductions, exemptions, or tax rates, they must first use this chapter to figure out if they even have the right to tax you in the first place.

2. Section 4: The 'Charging' Section ⚡

Section 4 is the absolute boss of the Income Tax Act. It is the core charging section.

📝 What it says: Income tax shall be charged for any assessment year at the rate(s) enacted by the Finance Act (like Budget 2025) on the total income of the previous year of every person.
💡 What it means for you: You pay tax this year (Assessment Year) on the income you earned last year (Previous Year/Financial Year). This section gives the legal authority to deduct tax at source (TDS) or ask for advance tax. No Section 4 = No Income Tax!

3. Section 5: Scope of Total Income (What gets taxed?) 🌍

So, you know you have to pay tax. But on what income? That depends entirely on your Residential Status. Section 5 lays out the rules:

🧍‍♂️ If you are a Resident: Global Income is taxable! Whether you earn a salary in Bangalore, rent from a property in Dubai, or dividends from US stocks—the Indian taxman wants a piece of it.
✈️ If you are a Non-Resident (NRI): Only Indian Income is taxable. You only pay tax on money that is received in India, accrues in India, or arises in India. Your foreign income is safe from the Indian tax net!
🤷‍♂️ If you are a Resident but Not Ordinarily Resident (RNOR): You pay tax on Indian income + foreign income only if that foreign income comes from a business controlled from India.

4. Section 6: Residential Status (Who are you to the taxman?) 🏠

Since Section 5 depends on whether you are a Resident or an NRI, Section 6 tells you how to calculate your status. It’s all about the days you spend on Indian soil!

You are a Resident of India if you satisfy any one of these basic conditions:

🗓️ You are in India for 182 days or more during the financial year. OR
🗓️ You are in India for 60 days or more in the current year ➕ 365 days or more in the preceding 4 years.

⚠️ Pro Tip for 2025: The rules get a bit tweaked for Indian citizens leaving for employment abroad or crew members of Indian ships (the 60 days gets replaced with 182 days). Also, beware of the "Deemed Resident" rule—if you are an Indian citizen not paying tax in any other country, India might deem you a resident!

5. Sections 7 to 9: Deemed Incomes (The Hidden Traps!) 🪤

Sometimes, people try to be smart by diverting income so it doesn't "look" like they received it in India. The taxman is smarter. Sections 7, 8, and 9 deal with Deemed Income.

💸 Section 7 (Income deemed to be received): Even if you haven't physically received the cash, it's yours. Example: The annual interest credited to your recognized Provident Fund (PF).
📈 Section 9 (Income deemed to accrue or arise in India): This is a massive net. Even if a transaction happens outside India, if it has a "Business Connection" in India, or it’s a salary paid by the Indian Govt to a citizen abroad, or royalty paid by an Indian resident—it is taxable in India!

6. Conclusion & Takeaways 🎯

Understanding Chapter 2 of the Income Tax Act is like understanding the rules of the game before you play. Here is your quick recap:

✅ Section 4 gives the power to tax.
✅ Section 6 defines your residential status based on your stay.
✅ Section 5 tells you whether your global or just Indian income is taxed based on that status.
✅ Sections 7-9 ensure no one escapes through loopholes by "deeming" certain incomes as Indian.

Disclaimer: Tax laws are subject to updates via the annual Finance Act (Budget 2025). Always consult a certified Chartered Accountant (CA) for personalized tax advice! 💼📊

Did you find this breakdown helpful? Let me know in the comments below, and don't forget to share this with your friends who get confused by tax jargon! 👇👇

Chapter 1 of income tax act 2025

noreply@blogger.com (Naveen Fintax) — Sun, 05 Apr 2026 08:01:00 +0000

Unlocking Chapter 1 of the Income Tax Act 2025: The Complete Glossary

Decoding Chapter 1 of the Income Tax Act 2025: The Complete Master Guide

📑 Quick Index (Click to Jump)

1. Introduction: The Dawn of a New Tax Era 2. Section 1: Title, Extent & Commencement 3. Section 2: The Mega Glossary – All Key Definitions Explained

• Group A: The Taxpayer & The Process (Person, Assessee, Assessment) • Group B: Types of Incomes (Agricultural Income, Advance Tax, Dividend) • Group C: Assets & Business (Capital Asset, Amalgamation)

4. The Game-Changer: Hello "Tax Year" 5. Conclusion: Your Foundation is Set

1. Introduction: The Dawn of a New Tax Era

After more than six decades of navigating the complex maze of the Income Tax Act of 1961, India has officially ushered in the Income Tax Act, 2025. Designed to be simpler, leaner, and more taxpayer-friendly, this modern law strips away the archaic "provisos" and "explanations" that caused endless litigation.

Before jumping into deductions and tax brackets, every taxpayer must understand where it all begins: Chapter I - Preliminary. This foundational chapter contains the dictionary for the entire Act.

2. Section 1: Title, Extent & Commencement

Section 1 acts as the birth certificate of the new tax law. It establishes three ground rules:

Short Title: The Act is officially named the Income-tax Act, 2025.
Extent: It applies universally to the whole of India.
Commencement: It officially comes into force on April 1, 2026.

💡 Key Takeaway: If you are filing returns for income earned up to March 31, 2026, you will still follow the old 1961 Act. Any income earned from April 1, 2026 onwards falls under this sparkling new 2025 Act!

3. Section 2: The Mega Glossary – All Key Definitions Explained

If you don't understand the vocabulary, you can't read the book! Section 2 is the heart of Chapter 1. Because the new law aims for clarity, we have broken down all the critical definitions into logical groups so you can easily digest them.

🧑‍🤝‍🧑 Group A: The Taxpayer & The Process

1. Person

Under the Act, a "Person" isn't just a human being. The law classifies a Person into 7 categories to ensure no entity escapes tax. It includes: (i) Individuals, (ii) Hindu Undivided Families (HUF), (iii) Companies, (iv) Firms (including LLPs), (v) Association of Persons (AOP) or Body of Individuals (BOI), (vi) Local Authorities, and (vii) Artificial Juridical Persons.

2. Assessee

An Assessee is any Person who is liable to pay tax, interest, or penalty under this Act. You are an assessee if proceedings are going on against you. It also includes:

Deemed Assessee: Someone liable for another's tax (e.g., a legal heir of a deceased taxpayer).
Assessee in Default: Someone who failed a legal duty (e.g., an employer who failed to deduct TDS).

3. Assessment

Assessment is simply the formal procedure of determining a person's correct total income and calculating the tax payable. The new Act clearly states that Assessment also includes Reassessment (when the taxman opens an old file to check for escaped income).

🌾 Group B: Types of Incomes

4. Agricultural Income

Since agricultural income is generally exempt from tax, defining it accurately is crucial. It includes:

Rent or revenue derived from land situated in India used for agricultural purposes.
Income from the physical act of agriculture or making the produce fit for market.
Income from a farmhouse (dwelling or storehouse) located on or in the immediate vicinity of the land.
Note: Income from nursery saplings/seedlings is also considered agricultural, provided the land isn't used for non-agri commercial purposes.

5. Advance Tax

Also known as "pay-as-you-earn" tax. It is the income tax payable in advance during the year in which the income is earned, rather than paying a lump sum at the end of the year.

6. Dividend

A dividend is basically a distribution of profits by a company to its shareholders. The legal definition ensures that even if a company tries to disguise a profit distribution (like giving loans to major shareholders to avoid tax), it is deemed as a Dividend and taxed accordingly.

🏢 Group C: Assets & Business Structuring

7. Capital Asset

A Capital Asset is property of any kind held by an assessee (like real estate, stocks, mutual funds, or patents).
Exceptions: It strictly does not include:

Stock-in-trade (goods you sell daily in business).
Personal effects (clothes, furniture) — However, jewelry, archaeological collections, and art are specifically EXCLUDED from personal effects and are taxable!
Agricultural land in rural areas.

8. Amalgamation

In the corporate world, Amalgamation means the merger of one or more companies with another, forming a single entity. The new Act ensures that when companies merge, all properties and liabilities transfer seamlessly to the new unified company for tax continuity.

4. The Game-Changer: Hello "Tax Year"

Historically, the biggest headache for a layman was understanding the difference between the Previous Year (PY) and the Assessment Year (AY).
"Wait, so the income I earned in 2024 is assessed in 2025?" — We've all been there!

The unified 'Tax Year'

Section 2 of the new Act introduces a revolutionary simplification: The Tax Year.

From April 1, 2026, the concept of Assessment Year and Previous Year is discontinued. The period in which you earn the income is simply called the Tax Year. For example, the period from April 1, 2026, to March 31, 2027, is simply Tax Year 2026-27. Your earnings, deductions, and tax filings will all reference this single term. Pure simplicity!

5. Conclusion: Your Foundation is Set

While Chapter 1 doesn't tell you how much tax you need to pay, it tells you how to read the law. By laying down crystal-clear definitions for terms like Person, Assessee, Capital Assets, and introducing the unified Tax Year, the Income Tax Act 2025 sets the tone for an era of transparency and taxpayer ease.

Stay Tuned for Chapter 2!

Now that you know the vocabulary, are you ready to calculate your taxes? In our next post, we will break down the New Tax Slab Changes & Rates. Don't forget to bookmark this page and leave a comment below if the new 'Tax Year' concept makes your life easier!

INCOME TAX HIGHLIGHTS OF UNION BUDGET 2025-26

noreply@blogger.com (Naveen Fintax) — Sat, 01 Feb 2025 08:00:00 +0000

👉No personal income tax payable upto income of Rs 12 lakh (i.e. average income of Rs 1 lakh per month other than special rate income such as capital gains) under the new regime.

👉This limit will be Rs 12.75 lakh for salaried tax payers, due to standard deduction of Rs 75,000.
The new structure will substantially reduce the taxes of the middle class and leave more money in their hands, boosting household consumption, savings and investment.
The new Income-Tax Bill to be clear and direct in text so as to make it simple to understand for taxpayers and tax administration, leading to tax certainty and reduced litigation.
Revenue of about ₹ 1 lakh crore in direct taxes will be forgone.

Revised tax rate structure

In the new tax regime, the revised tax rate structure will stand as follows
0-4 lakh rupees
Nil
4-8 lakh rupees
5 percent
8-12 lakh rupees
10 percent
12-16 lakh rupees
15 percent
16-20 lakh rupees
20 percent
20- 24 lakh rupees
25 percent
Above 24 lakh rupees
30 percent

TDS/TCS rationalization for easing difficulties

👉Rationalization of Tax Deduction at Source (TDS) by reducing number of rates and thresholds above which TDS is deducted.
👉The limit for tax deduction on interest for senior citizens doubled from the present Rs 50,000 to Rs 1 lakh.
👉The annual limit of Rs 2.40 lakh for TDS on rent increased to Rs 6 lakh.
👉The threshold to collect tax at source (TCS) on remittances under RBI’s Liberalized Remittance Scheme (LRS) increased from Rs 7 lakh to Rs 10 lakh.
👉The provisions of the higher TDS deduction will apply only in non-PAN cases.
👉Decriminalization for the cases of delay of payment of TCS up to the due date of filing statement.

Reducing Compliance Burden

Reduction of compliance burden for small charitable trusts/institutions by increasing their period of registration from 5 years to 10 years.

The benefit of claiming the annual value of self-occupied properties as nil will be extended for two such self-occupied properties without any condition.

Ease of Doing Business

Introduction of a scheme for determining arm's length price of international transaction for a block period of three years.
Expansion of the scope of safe harbour rules to reduce litigation and provide certainty in international taxation.
Exemption of withdrawals made from National Savings Scheme (NSS) by individuals on or after the 29th of August, 2024.
Similar treatment to NPS Vatsalya accounts as is available to normal NPS accounts, subject to overall limits.

Employment and Investment

Tax certainty for electronics manufacturing Schemes

Presumptive taxation regime for non-residents who provide services to a resident company that is establishing or operating an electronics manufacturing facility.
Introduction of a safe harbour for tax certainty for non-residents who store components for supply to specified electronics manufacturing units.

Tonnage Tax Scheme for Inland Vessels

The benefits of existing tonnage tax scheme to be extended to inland vessels registered under the Indian Vessels Act, 2021 to promote inland water transport in the country.

Extension for incorporation of Start-Ups

Extension of the period of incorporation by 5 years to allow the benefit available to start-ups incorporated before 1.4.2030.

Alternate Investment Funds (AIFs)

Certainty of taxation on the gains from securities to Category I and Category II AIFs which are undertaking investments in infrastructure and other such sectors.

Extension of investment date for Sovereign and Pension Funds

Extension of the date of making investments in Sovereign Wealth Funds and Pension Funds by five more years, to 31st March, 2030, to promote funding from them to the infrastructure sector.

SOURCE PIB:https://pib.gov.in/PressReleasePage.aspx?PRID=2098353

Tax benefit from House Rent Allowance ( HRA )

noreply@blogger.com (Naveen Fintax) — Sat, 29 Oct 2022 14:36:00 +0000

What is HRA?

HRA or House Rent Allowance is an allowance which salaried individuals receive from their employer for meeting the rental expenses of their house. The amount received is partly exempted from tax, for the employee who are residing in a rented house. In case the employee lives in his/her own house and does not pay any rent, the entire amount would be taxable

Who can avail tax exemption on HRA?

This tax benefit is available only to the salaried individuals (opting for old tax regime) who have the HRA component as part of their salary structure and is staying in rented accommodation. Self-employed professionals cannot avail this deduction.

What is the tax benefit of House Rent allowance (HRA)?

Least/minimum of the following is exempt (Not taxable/deducted from total HRA received)

(a) Actual amount of HRA received

(b) Rent paid Less 10% of salary

(c) 50% of salary if house taken on rent is situated in Kolkata, Chennai, Mumbai and Delhi (or) 40 % of salary if the house is taken on rent is NOT situated in Kolkata, Chennai, Mumbai and Delhi.

For calculation purposes, the salary considered is 'basic salary'. In case 'Dearness Allowance (DA)' (if it forms a part of retirement benefits) and 'commission received on the basis of sales turnover' is applicable, they too are added to compute the minimum HRA exemption available

Documents required to be maintained to claim HRA tax exemption?

HRA exemptions can be availed only on submission of rent receipts or the rent agreement with the house owner. It is mandatory for an employee to report the PAN of the 'landlord' to the employer( or mention it in IT return) if the rent paid is more than Rs 1,00,000 annually to avail the tax benefit.

Note:

Some special scenarios in claiming HRA tax benefit, such as:

📌 Paying rent to family members: The rented premises must not be owned by the person claiming the tax exemption. So if you stay with your parents and pay rent to them then you can claim that for tax exemption

📌Own a house, but staying in a different city: One can avail simultaneous benefit of deduction available for the home loan against 'interest paid' and 'principal repayment' and HRA in case your own home is rented out or you work in another city.

💡Individuals who don't get HRA but pay rent: There may be some employees who might not have an HRA component in their salary structure. Also, a non-salaried individual might be paying rent. For them, Section 80 (GG) of the Income-tax Act offers help.

The least of the following is available for exemption from tax under Section 80GG:

(i) Rent paid in excess of 10% of total income

(ii) 25% of the total income*

(iii) Rs.5,000 per month

*Under this section, the total income is calculated as gross total income minus long-term capital gains, the short-term capital where Securities Transaction Tax (STT) has been paid and deductions available under Sections 80C to 80U, except Section 80GG.

📌Where is House Rent allowance (HRA) to be reflected while filing income-tax return (ITR)?

The amount of HRA is required to be disclosed in the ITR under the column allowances to the extent exempt under section 10. section 10(3A) is the relevant section under which the amount of exempt HRA to be shown.

Source : Income tax india, Economic times.

Who should file income tax return mandatorily ?

noreply@blogger.com (Naveen Fintax) — Wed, 27 Jul 2022 15:21:00 +0000

Who should file return of income(ROI)?

Every individual has to file the ROI if his total income (including income of any other person in respect of which he is assessable) without giving effect to the provisions of section 10(38), 10A, 10B or 10BA or 54 or 54B or 54D or 54EC or 54F or 54G or 54GA or 54GB Chapter VIA (i.e., deduction under section 80C to section 80U), exceeds the basic exemption limit.

Filing of return is mandatory in the following cases:

1) If an individual has assets outside India:
An Individual, being a resident and ordinary resident in India, shall file his return of Income, even if his income does not exceed the maximum exemption limit, if he:
a) Holds, as a beneficial owner or otherwise, any asset (including any financial interest in any entity) located outside India
b) Has signing authority in any account located outside India
c) Is a beneficiary of any asset (including any financial interest in any entity) located outside India.
2) If he deposits more than Rs. 1 crore in bank account
An Individual or HUF shall file his return of Income, even if income does not exceed the maximum exemption limit, if he has deposited an amount (or aggregate of amount) exceeding Rs. 1 crore in one or more current accounts maintained with a banking company or a co-operative bank. .
3) If foreign travel expense is more than Rs. 2 lakh .
An Individual or HUF shall file his return of Income, even if income does not exceed the maximum exemption limit, if he has incurred more than Rs. 2 lakh on travel to a foreign country, either for himself or for any other person. .
4) If electricity consumption is more than Rs. 1 lakh
An Individual or HUF shall file his return of Income, even if income does not exceed the maximum exemption limit, if he has incurred an expenditure exceeding Rs. 1 lakh on electricity consumption..
5) If total sales, turnover or gross receipt of the business exceeds Rs. 60 lakh during the previous year.
6) If total gross receipt of profession exceeds Rs. 10 lakh during the previous year.
7) If the total of tax deducted and collected in case of a person during the previous year is Rs. 25,000 or more (Rs. 50,000 in case of resident senior citizen).
8) If the aggregate deposit in one or more savings bank accounts of the person is Rs. 50 lakhs or more during the previous year.

Due dates for filing returns of income/loss

The due dates for filing return of income are as follows:

1) Individual/HUF whose accounts are to be audited or partner of a firm whose accounts are to be audited or the spouse of such partner if the provisions of section 5A apply31st October of the assessment year
2) Filing of return where a taxpayer (corporate/non-corporate including partners of the Firm) is required to furnish a report in Form No. 3CEB under section 92E30th November of the assessment year
3) In all other cases31st July of the assessment year

source : https://incometaxindia.gov.in/

Section - 194R of Income-tax Act, 1961-2022 TDS on benefit or perquisite in respect of business or profession

noreply@blogger.com (Naveen Fintax) — Sat, 18 Jun 2022 17:28:00 +0000

Section - 194R, Income-tax Act, 1961-2022

Deduction of tax on benefit or perquisite in respect of business or profession.

Payer : Any Person

Payee: Resident

Nature of Transaction :

Any person responsible for providing to a resident, any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession, by such resident,

Timing of Deduction of Tax : Before providing such benefit or perquisite, as the case may be, to such resident,

Rate of Tax : 10% of the value or aggregate of value of such benefit or perquisite

Notes :

(1) In a case where the benefit or perquisite, as the case may be, is wholly in kind or partly in cash and partly in kind but such part in cash is not sufficient to meet the liability of deduction of tax in respect of whole of such benefit or perquisite, the person responsible for providing such benefit or perquisite shall, before releasing the benefit or perquisite, ensure that tax required to be deducted has been paid in respect of the benefit or perquisite

(2) This Section does not apply if Value or aggregate of value of the benefit or perquisite does not exceed Rs 20,000.

(3) This section shall not apply to a person being an individual or a Hindu undivided family, whose total sales, gross receipts or turnover does not exceed one crore rupees in case of business or fifty lakh rupees in case of profession, during the financial year immediately preceding the financial year in which such benefit or perquisite, as the case may be, is provided by such person.

(4) If any difficulty arises in giving effect to the provisions of this section, the Board may, with the previous approval of the Central Government, issue guidelines for the purpose of removing the difficulty.

(5) Every guideline issued by the Board under sub-section (2) shall, as soon as may be after it is issued, be laid before each House of Parliament, and shall be binding on the income-tax authorities and on the person providing any such benefit or perquisite.

(6) Explanation.—For the purposes of this section, the expression "person responsible for providing" means the person providing such benefit or perquisite, or in case of a company, the company itself including the principal officer thereof.

Guidelines

Question 1. Is it necessary that the person providing benefit or perquisite needs to check if the amount is taxable under clause (iv) of section 28 of the Act, before deducting tax under section 194R of the Act?

Answer: No. The deductor is not required to check whether the amount of benefit or perquisite that he is providing would be taxable in the hands of the recipient under clause (iv) of section 28 of the Act. The amount could be taxable under any other section like section 41(1) etc. Section 194R of the Act casts an obligation on the person responsible for providing any benefit or perquisite to a resident, to deduct tax at

source @ 10%. There is no further requirement to check whether the amount is taxable in the hands of the recipient or under which section it is taxable.

In this regard, it may be highlighted that in the context of section 195 of the Act it is a requirement to know whether the payment made by the deductor is income in the hands of the non-resident recipient as section 195 of the Act requires deduction on any other sum chargeable under the provisions of this Act at the rates in force. Th us there is requirement that deductor needs to verify if the "sum is chargeable under the Income-tax Act". The term " rate in force" is defined in clause (37A) of section 2 of the Act and it allows benefit of agreement under section 90 or section 90A of the Act, if eligible, in determining the rate of tax at which the tax is to be deducted at source. Hence, there is further requirement of checking if the amount is taxable under tax treaty and if yes, at what rate. Such a requirement is not there in section

194R of the Act, in the absence of these two terms in this section. Hence, there is no requirement for deductor to verify whether the amount is taxable in the hands of the recipient or section under which it is taxable.

It may also be highlighted that these two terms are also not there in section 194E of the Act and Hon ' bleSupreme Court in the case of PILCOM vs. CIT West Bengal (Civil Appeal No. 5749 of 20 12), held that tax is to be deducted under section 194E of the Act at a spec ific rate indicated there in and there is no need to see the taxabi lity or the rate of taxability in the hands of the non-resident.

Question 2. Is it necessary that the benefit or perquisite must be in kind for section 194R of the Act to operate?

Answer: Tax under section 194R of the Act is required to be deducted whether the benefit or perquisite is in cash or in kind. In this regard it is important to draw attention to the first proviso to sub-section (I) of section 194R of the Act, which reads as under: "Provided that in a case where the benefit or perquisite, as the case may be, is wholly in kind or partly in cash and partly in kind but such part in cash is not sufficient to meet the liability of deduction of tax in respect of whole of such benefit or perquisite, the person responsible for providing such benefit or perquisite shall, before releasing the benefit or perquisite, ensure that tax required to be deducted has been paid in respect of the benefit or perquisite: n

This proviso clearly indicates the intent of legislature that there could also be situations where benefit or perquisite is in cash or the benefit or perquisite is in kind or partly in cash and partly in kind. Thus, section 194R of the Act clearly brings in its scope the situation where the benefit or perquisite is in cash or in kind or partly in cash or partly in kind.

Question 3. Is there any requirement to deduct tax under section 194R of the Act, when the benefit or perquisite is in the form of capital asset?

Answer: As has been stated in response to question no I, there is n0 requirement to check whether the perquisite or benefit is taxable in the hands of the recipient and the section under which it is taxable.

Further, courts have held many benefits or perquisites to be taxable even though one can argue that they are in the nature of capital asset. The following judgments illustrate this point:

• Assessee entered into an agreement with' l' for purchase of a plot of land and certain amount was paid as earnest money. However, possession of land was not given to assessee and seller entered into another agreement with a third party to develop the said plot. Assessee tiled suit in which a consent decree was passed and in pursuance of same certain amount as paid to assessee. On appeal it was held that such sum received in pursuance of consent decree was liable to tax as business income under section 28(iv). Ramesh Babulal Shah v CIT (20 15) 53 taxmann.com 277(Bom)

• The amount representing principal loan waived by bank under one time settlement scheme would constitute income falling under section 28(iv) relating to value of any benefit or perquisite, arising from business or exercise of profession. CIT v Raman iyam Homes (P) Ltd (2016) 68 taxmann.com 289 (Mad)

• Value of rent free accommodation, furniture and fixtures given to director was held as taxable under section 28(iv). CIT v Subrata Roy (2016) 3851TR 547 (All)

• Where a car was given to an assessee by his disciple, who had been benefited from his preaching, the value of car was held to be taxable in the hands of the assessee being a receipt from the exercise of the vocation carried on by him. CIT (Addl) v Ram Kripal Tripathi (1980) 125 ITR 408 (All)

• The assessee was a director of a company. In terms of an agreement with the promoters, shares were allotted to the director. On these facts, it was held that the shares received by the director were benefit or perquisite received from a company by the director and it was a benefit assessable to tax. D. M. Neterwala v CIT (1986) 122 ITR 880 (Born)

• Value of gift of land was held as a receipt by the assessee in carrying on of his vocation and was held as taxable. Amarendra Nath Chakraborty v CIT (1971) 79 ITR 342 (Cal) Thus, it can be seen that the asset given as benefit or perquisite may be capital asset in general sense of the term like car, land etc but in the hands of the recipient it is benefit or perquisite and has accordingly

been held to be taxable. In any case, as stated earlier, the deductor is not required to check if the benefit or perquisite is taxable in the hands of recipient. Thus, the deductor is required to deduct tax under section 194R of the Act in all cases where benefit or perquisite (of whatever nature) is provided.

Question 4: Whether sales discount, cash discount and rebates are benefit or perquisite?

Answer: Sales discounts, cash discount or rebates allowed to customers from the listed retail price represent lesser realization of the sale price itself.

Logically these are also benefits though related to sales/purchase. Since TDS under section 194R of the Act is applicable on all forms of benefit/perquisite, tax is required to be deducted. However, it is seen that subjecting these to tax deduction would put seller to difficulty. To remove such difficulty it is clarified that no tax is required to be deducted under section 194R of the Act on sales discount, cash discount and rebates allowed to customers.

There could be another situation, where a seller is selling its items from its stock in trade to a buyer. The seller offers two items free with purchase of 10 items. In substance, the seller is actually selling 12 items

at a price of 10 items. Let us assume that the price of each item is Rs 12. In this case, the selling price for the seller would be Rs 120 for 12 items. For buyer, he has purchased 12 items at a price of 10. Just like seller, the purchase price for the buyer is Rs 120 for 12 items and he is expected to record so in his books.

In such a situation, again there could be difficulty in applying section 194R provision. Hence, to remove difficulty it is clarified that on the above facts no tax is required to be deducted under section 194R of the Act. It is clarified that situation is different when free samples are given and the above relaxation would

not apply to a situation of free samples.

Similarly, this relaxation should not be extended to other benefits provided by the seller in connection with its sale. To illustrate, the following are some of the examples of benefits/perquisites on which tax is required to be deducted under section 194R of the Act (the list is not exhaustive):

• When a person gives incentives (other than discount, rebate) in the form of cash or kind such as car, TV, computers, gold coin, mobile phone etc.

• When a person sponsors a trip for the recipient and his/her relatives upon achieving certain targets

• When a person provides free ticket for an event

• When a person gives medicine samples free to medical practitioners.

The above examples are only illustrative. The relaxation provided from non-deduction of tax for sales discount and rebate is only on those items and should not be extended to others.

It is further clarified that these benefits/perquisites may be used by owner/director/employee of the recipient entity or their relatives who in their individual capacity may not be carrying on business or

exercising a profession. However, the tax is required to be deducted by the person in the name of recipient entity since the usage by owner/directorlemployee/relative is by virtue of their relation with the recipient entity and in substance the benefit/perquisite has been provided by the person to the recipicnt entity.

To illustrate, the free medicine sample may be provided by a company to a doctor who is an employee of a hospital. The TDS under section 194R of the Act is required to be deducted by the company in the hands of hospital as the benefit/perquisite is provided to the doctor on account of him being the employee of the hospital. Thus, in substance, the benefit/perquisite is provitletl to the hospital. The hospitnl mny

subsequently treat this benefit/perquisite as the perquisite given to its employees (if the person who used it is his employee) under section 17 of the Act and deduct tax under section 192 of the Act. In such a case it would be first taxable in the hands of the hospital and then allowed as deduction as salary expenditure.

Thus, ultimately the amount would get taxed in the hands of the employee and not in the hands of the hospital. Hospital can get credit of tax deducted under section 194R of the Act by furn ishing its tax return.

It is further clarified that the threshold of twenty thousand rupees in the second proviso to sub-section (I)

of section 194R of the Act is also required to be seen with respect to the recipient entity.

Similarly, the tax is required to be deducted under section 194R of the Act if the benefit or perquisite is

provided to a doctor who is working as a consultant in the hospital. In this case the benefit or perquisite

provider may deduct tax under section : 94R of the Act with hospital as recipient and then hospital may

again deduct tax under section 194R of the Act for providing the same benefit or perquisite to the

consultant. To remove difficulty, as an alternative, the original benefit or perquisite provider may directly

deduct tax under section 194R of the Act in the case of the consultant as a recipient.

The provision of section 194R of the Act shall not apply if the benefit or perquisite is being provided to a

Government entity, like Government hospital, not carrying on business or profession.

Question 5. How is the valuation of benefit/perquisite required to be carried out?

Answer: The valuation would be based on fair market value of the benefit or perquisite except in

following cases:-

(i) The benefit/perquisite provider has purchased the benefit/perquisite before providing it to the recipient. [n that case the purchase price shall be the value for such benefit/perquisite.

(ii) The benefit/perquisite provider manufactures such items given as benefit/perquisite, then the price that it charges to its customers for such items shall be the value for such benefit/perquisite. It is further clarified that GST will not be included for the purposes of valuation of benefit/perquisite for TDS under section 194R of the Act.

Question 6: Many a times, a social media influencer is given a product of a manufacturing company

so that he can use that product and make audio/video to speak about that product in social media.

Is this product given to such influencer a benefit or perquisite?

Answer: Whether this is benefit or perquisite will depend upon the facts of the case. [n case of benefit or perquisite being a product like car, mobile, outfit, cosmetics etc and if the product is returned to the

manufacturing company after using for the purpose of rendering service, then it will not be treated as a benefit/perquisite for the purposes of section 194R of the Act. However, if the product is retained then it will be in the nature of benefit/perquisite and tax is required to be deducted accordingly under section 194R of the Act.

Question 7: Whether reimbursement of out of pocket expense incurred by service provider in the

course of rendering service is benefit/perquisite?

Answer: Any expenditure which is the liability of a person carrying out business or profession, if met by the other person is in effect benefit/perquisite provided by the second person to the first person in the course of business/profession.

Let us assume that a consultant is rendering service to a person "X" for which he is receiving consultancy fee. [n the course of rendering that service, he has to travel to different city from the place where is regularly carrying on business or profession. For this purpose, he pays for boarding and lodging expense incurred exclusively for the purposes of rendering the service to "X". Ordinarily, the expenditure incurred

by the consultant is part of his business expenditure which is deductible from the fee that he receives from

company "X". In such a case, the fee received by the consultant is his income and the expenditure incurred on travel is his expenditure deductible from such income in computing his total income. Now if this travel expenditure is met by the company "X", it is benefit or perquisite provided by "X" to the consultant.

However, sometimes the invoice is obtained in the name of "X" and accordingly, if paid by the consultant, is reimbursed by "X". In this case, since the expense paid by the consultant (for which reimbursement is made) is incurred wholly and exclusively for the purposes of rendering services to "X" and the invoice is in the name of "X", then the reimbursement made by "X" being the service recipient will not be considered as benefit/perquisite for the purposes of section 194R of the Act.

If the invoice is not in the name of "X" and the payment is made by "X" directly or reimbursed, it is the benefit/perquisite provided by "X" to the consultant for which deduction is required to be made under section 194R of the Act.

Question 8: If there is a dealer conference to educate the dealers about the products of the

company - Is it benefit/perquisite?

Answer: The expenditure pertaining to dealer/business conference would not be considered as benefit/perquisite for the purposes of section 194R of the Act in a case where dealer/business conference

is held with the prime object to educate dealers/customers about any of the following or similar aspects:

(i) new product being launched

(ii) discussion as to how the product is better than others

(iii) obtaining orders from dealers/customers

(iv) teaching sales techniques to dealers/customers

(v) addressing queries of the dealers/customers

(vi) reconciliation of accounts with dealers/customers

However, such conference must not be in the nature of incentives/benefits to select dealers/customers who have achieved particular targets.

Further, in the following cases the expenditure would be considered as benefit or perquisite for the purposes of section I 94R of the Act:-

(i) Expense attributable to leisure trip or leisure component, even if it is incidental to the dealer business conference.

(ii) Expenditure incurred for family members accompanying the person attending dealerlbusiness conference

(iii) Expenditure on participants of dealer/business conference for days which are on account of prior

stay or overstay beyond the dates of such conference.

Question 9: Section 194R provides that if the benefit/perquisite is in kind or partly in kind (and cash is not sufficient to meet TDS) then the person responsible for providing such benefit or perquisite is required to ensure that tax required to be deducted has been paid in respect of the benefit or perquisite, before releasing the benefit or perquisite. How can such person be satisfied that tax has been deposited?

Answer: The requirement of law is that if a person is providing benefit in kind to a recipient and tax is required to be deducted under section 194R of the Act, the person is required to ensure that tax required to

be deducted has been paid by the recipient. Such recipient would pay tax in the form of advance tax. The tax deductor may rely on a declaration along with a copy of the advance tax payment challan provided by the recipient confirming that the tax required to be deducted on the benefit/perquisite has been deposited.

This would be then required to be reported in TDS return along with challan number. This year Form 26Q has included provisions for reporting such transactions.

In the alternative, as an option to remove difficulty if any, the benefit provider may deduct the tax under section 194R of the Act and pay to the Government. The tax should be deducted after taking into account the fact the tax paid by him as TDS is also a benefit under section 194R of the Act. In the Form 26Q he will need to show it as tax deducted on benefit provided.

Question 10. Section 194R would come into effect from the I" July 2022. Second proviso to subsection (I) of section 194R of the Act provides that the provision of this section does not apply

where the value or aggregate of value of the benefit or perquisite provided or likely to be provided

to a resident during the financial year does not exceed twenty thousand rupees. It is not clear how

this limit of twenty thousand is to be computed for the Financial Year 2022-23?

Answer: It is hereby clarified that,-

(i) Since the threshold of twenty thousand rupees is with respect to the financial year, calculation of value or aggregate of value of the benefit or perquisite triggering deduction under section 194R of the Act shall

be counted from I" April, 2022. Hence, if the value or aggregate value of the benefit or perquisite provided or likely to be provided to a resident exceeds twenty thousand rupees during the financial year

2022-23 (including the period up to 30th June 2022), the provision of section 194R shall apply on any benefit or perquisite provided on or after I" July 2022.

(ii) The benefit or perquisite which has been provided on or before 30" June 2022, would not be subjected to tax deduction under section 194R of the Act.

Investments / Payments / Incomes on which I can get tax benefit ? / Tax deductions specified under Chapter VIA of the Income Tax Act

noreply@blogger.com (Naveen Fintax) — Thu, 16 Jun 2022 17:16:00 +0000

Tax deductions specified under Chapter VIA of the Income Tax Act

These Deductions will not be available to a taxpayer opting for the New Tax Regime u/s 115 BAC, except for deduction u/s 80CCD (2) which will be applicable for New Tax Regime as well

# 👇👊Click section number for Detailed section

Section	Description	Deduction Limit
80C	Deduction towards payments made to Life Insurance Premium Provident Fund Subscription to certain equity shares Tuition Fees National Savings Certificate, Housing Loan Principal Other various items
80CCC	Annuity plan of LIC or other insurer towards Pension Scheme	Combined deduction limit of ₹ 1,50,000 for ( 80C, 80CCC, 80CCD(1))
80CCD(1)	Pension Scheme of Central Government
80CCD(1B)	Deduction towards payments made to Pension Scheme of Central Government, excluding deduction claimed under 80CCD (1)	₹ 50,000
80CCD(2)	Deduction towards contribution made by an employer to the Pension Scheme of Central Government
	If Employer is a PSU, State Government or Others	10% of salary
	If Employer is Central Government	14% of salary
80D	Deduction towards payments made to Health Insurance Premium & Preventive Health check up
	For Self / Spouse or Dependent Children	₹ 25,000 (₹ 50,000 if any person is a Senior Citizen) ₹ 5,000 for preventive health check up, included in above limit
	For Parents	₹ 25,000 (₹50,000 if any person is a Senior Citizen) ₹ 5,000 for preventive health check up, included in above limit
	Deduction towards Medical Expenditure incurred on a Senior Citizen, if no premium is paid on health insurance coverage
	For Self/ Spouse or Dependent Children	₹ 50,000
	For Parents	₹ 50,000
8DD	Deduction towards payments made towards Maintenance or Medical treatment of a Disabled Dependent or Paid / Deposited any amount under relevant approved scheme	Flat deduction of ₹ 75,000 available for a person with Disability, irrespective of expense incurred The deduction is ₹ 1,25,000 if the person has Severe Disability (80% or more)
80DDB	Deduction towards payments made towards Medical treatment of Self or Dependant for specified diseases	₹ 40,000 (₹ 1,00,000 if Senior Citizen)
80E	Deduction towards interest payments made on loan for higher education of Self or relative	Total amount paid towards interest on loan taken
80EE	Deduction towards interest payments made on loan taken for acquisition of residential house property where the loan is sanctioned between 1st April 2016 to 31st March 2017	₹ 50,000 on the interest paid on loan taken
80EEA	Deduction available only to individuals towards interest payments made on loan taken for acquisition of residential house property for the first time where the loan is sanctioned between 1st April 2019 to 31st March 2022 & deduction should not have been claimed u/s 80EE	₹ 1,50,000 on the interest paid on loan taken
80EEB	Deduction towards interest payments made on loan for purchase of Electric Vehicle where the loan is sanctioned between 1st April 2019 to 31st March 2023	₹ 1,50,000 on the interest paid on loan taken
80G	Deduction towards Donations made to prescribed Funds, Charitable Institutions, etc.(Note: No deduction shall be allowed under this section in respect of donation made in cash exceeding ₹ 2000/-) Donation are eligible for deduction under the below categories
	Without any limit	100% deduction 50% deduction
	Subject to qualifying limit	100% deduction 50% deduction
80GG	Deduction towards rent paid for house & applicable to only those who are self-employed or for whom HRA is not part of Salary Note: Form 10BA to be filled for claiming this deduction	Least of the following shall be allowed as deduction Rent paid reduced by 10% of Total Income before this deduction ₹ 5,000 per month 25% of Total Income (excluding long term capital gains, short term capital gains under section 111A or income under section 115A or 115D)
80GGA	Deduction towards Donations made for Scientific Research or Rural Development (Note: No deduction shall be allowed under this Section in respect of donation made in cash exceeding ₹ 2000/- or if Gross Total Income includes income from Profit / Gains of Business / Profession) Donation are eligible for deduction under the below categories
	Research Association or University, College or other Institution for	Scientific Research Social Science or Statistical Research
	Association or Institution for	Rural Development Conservation of Natural Resources or for Afforestation
	PSU or Local Authority or an association or institution approved by the National Committee for carrying out any eligible project
	Funds notified by Central Government for	· Afforestation, Rural Development
	National Urban Poverty Eradication Fund as setup and notified by Central Government
80GGC	Deduction towards Donations made to Political Party or Electoral Trust	Deduction towards Donations made to Political Party or Electoral Trust
80TTA	Deduction on interest received on saving bank accounts by Non-Senior Citizens	₹ 10,000/-
80TTB	Deduction on interest received on deposits by Resident Senior Citizens	₹ 50,000/-
80U	Deductions for a resident individual taxpayer with Disability	Flat ₹ 75,000 deduction for a person with Disability, irrespective of expense incurred Flat ₹ 1,25,000 deduction for a person with Severe Disability (80% or more), irrespective of expense incurred

source : https://www.incometax.gov.in/

Disclaimer: The content on this page is only to give an overview and general guidance and is not exhaustive. For complete details and guidelines please refer Income Tax Act, Rules and Notifications.

RBI Monetary Policy 2022 Highlights

noreply@blogger.com (Naveen Fintax) — Wed, 08 Jun 2022 10:51:00 +0000

In Short

⚡ RBI hikes Repo Rate by 50 basis points
⚡ Retains GDP growth forecast at 7.2%, Inflation projected at 6.7% during FY 2022-23
⚡ Credit Cards, beginning with RuPay card can be linked with UPI
⚡ e-Mandate transaction limit increased to Rs 15,000
⚡ Upper limit on housing loans by Cooperative banks hiked by more than 100%

Key Policy Rates

The Monetary Policy Committee of Reserve Bank of India, which met from 6-8 June 2022, has unanimously decided to hike the Repo Rate by 50 basis points to 4.90 %
Consequently, Standing Deposit Facility Rate stands adjusted to 4.65% and Marginal Standing Facility rate and Bank Rate to 5.15%
The MPC also decided to remain focused on withdrawal of accommodation to ensure that inflation remains within the target going forward, while supporting growth.
Inflation
Assuming normal monsoon in 2022 and average crude oil price of $105 per barrel in Indian basket, inflation is projected at 6.7% in 2022-23

Q1 - 7.5%

Q2 - 7.4%

Q3 - 6.2%

Q4 - 5.8%

Growth forecast
The MPC has observed that the global economy continues to grapple with multi-decadal high inflation and slowing growth, persisting geopolitical tensions and sanctions, elevated prices of crude oil and other commodities and lingering COVID-19 related supply chain bottlenecks.

Economic indicators for April –May indicate a broadening of the recovery in economic activity in India. Urban demand is recovering and rural demand is gradually improving. Merchandise exports posted robust double-digit growth for the fifteenth month in a row during May while non-oil non-gold imports continued to expand at a healthy pace, pointing to recovery of domestic demand.
Real GDP growth for 2022-23 is estimated at 7.2%

Q1 - 16.2%

Q2 - 6.2%

Q3 - 4.1%

Q4 - 4.0%

According to NSO provisional estimates released on May 31, India's GDP growth in 2021-22 is estimated at 8.7%, higher than pre-pandemic level.

Measures to benefit Cooperative Banks

Taking into account the increase in housing prices since the limits were last revised and considering the customer needs, it has been decided to increase the existing limits on individual housing loans by cooperative banks. Accordingly, the limits for Tier I /Tier II UCBs shall stand revised from ₹30 lakh/ ₹70 lakh to ₹60 lakh/ ₹140 lakh, respectively. As regards RCBs, the limits shall increase from ₹20 lakh to ₹50 lakh for RCBs with assessed
net worth less than ₹100 crore; and from ₹30 lakh to ₹75 lakh for other RCBs.
Urban cooperative banks can now extend doorstep banking services to customers Will enable these banks to better meet the needs of their customers, especially senior citizens and differently abled persons-

Rural cooperative banks can now extend finance to commercial real estate (loans to residential housing projects) within existing aggregate housing finance limit of 5% of total assets

Enhancement of limit on e-mandate transactions
To further augment customer convenience and facilitate recurring payments like subscriptions, insurance premia and education fees of larger value, limit per transcation for e-mandate based recurring payments increased from ₹5,000 to ₹ 15,000

Enhancing scope of UPI payment system.

Now, credit cards too can be linked with UPI platform, beginning with RuPay cards. This will provide additional convenience to users and enhance scope of digital payments. UPI has become the most inclusive mode of payment in India. Currently, over 26 crore unique users and 5 crore merchants are onboarded on the UPI platform.

The Monetary Policy Committee, besides the Governor Shri Shaktikanta Das, comprised Dr. Shashanka Bhide, Dr. Ashima Goyal, Prof. Jayanth R. Varma, Dr. Rajiv Ranjan and Dr. Michael Debabrata Patra

The next meeting of the MPC is scheduled during August 2-4, 2022

RBI Governor’s Detailed statement can be seen here

***

Source : https://pib.gov.in/PressReleasePage.aspx?PRID=1832000

HIGHLIGHTS OF THE UNION BUDGET 2022-23

noreply@blogger.com (Naveen Fintax) — Tue, 01 Feb 2022 10:20:00 +0000

The Union Budget seeks to complement macro-economic level growth with a focus on micro-economic level all inclusive welfare. The Union Minister for Finance & Corporate Affairs, Smt Nirmala Sitharaman tabled the Union Budget 2022-23 in Parliament today.

The key highlights of the budget are as follows:

PART A

India’s economic growth estimated at 9.2% to be the highest among all large economies.
60 lakh new jobs to be created under the productivity linked incentive scheme in 14 sectors.
PLI Schemes have the potential to create an additional production of Rs 30 lakh crore.
Entering Amrit Kaal, the 25 year long lead up to India @100, the budget provides impetus for growth along four priorities:

👉PM GatiShakti
👉Inclusive Development
👉Productivity Enhancement & Investment, Sunrise opportunities, Energy Transition, and Climate Action.
👉Financing of investments

PM GatiShakti

The seven engines that drive PM GatiShakti are Roads, Railways, Airports, Ports, Mass Transport, Waterways and Logistics Infrastructure.

PM GatiShkati National Master Plan

The scope of PM GatiShakti National Master Plan will encompass the seven engines for economic transformation, seamless multimodal connectivity and logistics efficiency.
The projects pertaining to these 7 engines in the National Infrastructure Pipeline will be aligned with PM GatiShakti framework.

Road Transport

National Highways Network to be expanded by 25000 Km in 2022-23.
Rs 20000 Crore to be mobilized for National Highways Network expansion.

Multimodal Logistics Parks

Contracts to be awarded through PPP mode in 2022-23 for implementation of Multimodal Logistics Parks at four locations.

Railways

One Station One Product concept to help local businesses & supply chains.
2000 Km of railway network to be brought under Kavach, the indigenous world class technology and capacity augmentation in 2022-23.
400 new generation Vande Bharat Trains to be manufactured during the next three years.
100 PM GatiShakti Cargo terminals for multimodal logistics to be developed during the next three years.

Parvatmala

National Ropeways Development Program, Parvatmala to be taken up on PPP mode.
Contracts to be awarded in 2022-23 for 8 ropeway projects of 60 Km length.

Inclusive Development

Agriculture

Rs. 2.37 lakh crore direct payment to 1.63 crore farmers for procurement of wheat and paddy.
Chemical free Natural farming to be promoted throughout the county. Initial focus is on farmer’s lands in 5 Km wide corridors along river Ganga.
NABARD to facilitate fund with blended capital to finance startups for agriculture & rural enterprise.
‘Kisan Drones’ for crop assessment, digitization of land records, spraying of insecticides and nutrients.

Ken Betwa project

1400 crore outlay for implementation of the Ken – Betwa link project.
9.08 lakh hectares of farmers’ lands to receive irrigation benefits by Ken-Betwa link project.

MSME

Udyam, e-shram, NCS and ASEEM portals to be interlinked.
130 lakh MSMEs provided additional credit under Emergency Credit Linked Guarantee Scheme (ECLGS)
ECLGS to be extended up to March 2023.
Guarantee cover under ECLGS to be expanded by Rs 50000 Crore to total cover of Rs 5 Lakh Crore.
Rs 2 lakh Crore additional credit for Micro and Small Enterprises to be facilitated under the Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE).
Raising and Accelerating MSME performance (RAMP) programme with outlay of Rs 6000 Crore to be rolled out.

Skill Development

Digital Ecosystem for Skilling and Livelihood (DESH-Stack e-portal) will be launched to empower citizens to skill, reskill or upskill through on-line training.

· Startups will be promoted to facilitate ‘Drone Shakti’ and for Drone-As-A-Service (DrAAS).

Education

‘One class-One TV channel’ programme of PM eVIDYA to be expanded to 200 TV channels.

· Virtual labs and skilling e-labs to be set up to promote critical thinking skills and simulated learning environment.

· High-quality e-content will be developed for delivery through Digital Teachers.

· Digital University for world-class quality universal education with personalised learning experience to be established.

Health

An open platform for National Digital Health Ecosystem to be rolled out.

· ‘National Tele Mental Health Programme’ for quality mental health counselling and care services to be launched.

A network of 23 tele-mental health centres of excellence will be set up, with NIMHANS being the nodal centre and International Institute of Information Technology-Bangalore (IIITB) providing technology support.

Saksham Anganwadi

Integrated benefits to women and children through Mission Shakti, Mission Vatsalya, Saksham Anganwadi and Poshan 2.0.
Two lakh anganwadis to be upgraded to Saksham Anganwadis.

Har Ghar, Nal Se Jal

Rs. 60,000 crore allocated to cover 3.8 crore households in 2022-23 under Har Ghar, Nal se Jal.

Housing for All

Rs. 48,000 crore allocated for completion of 80 lakh houses in 2022-23 under PM Awas Yojana.

Prime Minister’s Development Initiative for North-East Region (PM-DevINE)

New scheme PM-DevINE launched to fund infrastructure and social development projects in the North-East.
An initial allocation of Rs. 1,500 crore made to enable livelihood activities for youth and women under the scheme.

Vibrant Villages Programme

Vibrant Villages Programme for development of Border villages with sparse population, limited connectivity and infrastructure on the northern border.

Banking

100 per cent of 1.5 lakh post offices to come on the core banking system.
Scheduled Commercial Banks to set up 75 Digital Banking Units (DBUs) in 75 districts.

e-Passport

e-Passports with embedded chip and futuristic technology to be rolled out.

Urban Planning

Modernization of building byelaws, Town Planning Schemes (TPS), and Transit Oriented Development (TOD) will be implemented.
Battery swapping policy to be brought out for setting up charging stations at scale in urban areas.

Land Records Management

Unique Land Parcel Identification Number for IT-based management of land records.

Accelerated Corporate Exit

Centre for Processing Accelerated Corporate Exit (C-PACE) to be established for speedy winding-up of companies.

AVGC Promotion Task Force

An animation, visual effects, gaming, and comic (AVGC) promotion task force to be set-up to realize the potential of this sector.

Telecom Sector

Scheme for design-led manufacturing to be launched to build a strong ecosystem for 5G as part of the Production Linked Incentive Scheme.

Export Promotion

Special Economic Zones Act to be replaced with a new legislation to enable States to become partners in ‘Development of Enterprise and Service Hubs’.

AtmaNirbharta in Defence:

68% of capital procurement budget earmarked for domestic industry in 2022-23, up from 58% in 2021-22.

· Defence R&D to be opened up for industry, startups and academia with 25% of defence R&D budget earmarked.

· Independent nodal umbrella body to be set up for meeting testing and certification requirements.

Sunrise Opportunities

Government contribution to be provided for R&D in Sunrise Opportunities like Artificial Intelligence, Geospatial Systems and Drones, Semiconductor and its eco-system, Space Economy, Genomics and Pharmaceuticals, Green Energy, and Clean Mobility Systems.

Energy Transition and Climate Action:

Additional allocation of Rs. 19,500 crore for Production Linked Incentive for manufacture of high efficiency solar modules to meet the goal of 280 GW of installed solar power by 2030.

· Five to seven per cent biomass pellets to be co-fired in thermal power plants:

- CO2 savings of 38 MMT annually,
- Extra income to farmers and job opportunities to locals,
- Help avoid stubble burning in agriculture fields.

· Four pilot projects to be set up for coal gasification and conversion of coal into chemicals for the industry

· Financial support to farmers belonging to Scheduled Castes and Scheduled Tribes, who want to take up agro-forestry.

Public Capital Investment:

Public investment to continue to pump-prime private investment and demand in 2022-23.

· Outlay for capital expenditure stepped up sharply by 35.4% to Rs. 7.50 lakh crore in 2022-23 from Rs. 5.54 lakh crore in the current year.

· Outlay in 2022-23 to be 2.9% of GDP.

‘Effective Capital Expenditure’ of Central Government estimated at Rs. 10.68 lakh crore in 2022-23, which is about 4.1% of GDP.

GIFT-IFSC

World-class foreign universities and institutions to be allowed in the GIFT City.
An International Arbitration Centre to be set up for timely settlement of disputes under international jurisprudence.

Mobilising Resources

Data Centres and Energy Storage Systems to be given infrastructure status.

· Venture Capital and Private Equity invested more than Rs. 5.5 lakh crore last year facilitating one of the largest start-up and growth ecosystem. Measures to be taken to help scale up this investment.

· Blended funds to be promoted for sunrise sectors.

· Sovereign Green Bonds to be issued for mobilizing resources for green infrastructure.

👉Digital Rupee

Introduction of Digital Rupee by the Reserve Bank of India starting 2022-23.

Providing Greater Fiscal Space to States

Enhanced outlay for ‘Scheme for Financial Assistance to States for Capital Investment’:
- From Rs. 10,000 crore in Budget Estimates to Rs. 15,000 crore in Revised Estimates for current year

· Allocation of Rs. 1 lakh crore in 2022-23 to assist the states in catalysing overall investments in the economy: fifty-year interest free loans, over and above normal borrowings

In 2022-23, States will be allowed a fiscal deficit of 4% of GSDP, of which 0.5% will be tied to power sector reforms

Fiscal Management

Budget Estimates 2021-22: Rs. 34.83 lakh crore

· Revised Estimates 2021-22: Rs. 37.70 lakh crore

· Total expenditure in 2022-23 estimated at Rs. 39.45 lakh crore

· Total receipts other than borrowings in 2022-23 estimated at Rs. 22.84 lakh crore

· Fiscal deficit in current year: 6.9% of GDP (against 6.8% in Budget Estimates)

Fiscal deficit in 2022-23 estimated at 6.4% of GDP

PART B

DIRECT TAXES

To take forward the policy of stable and predictable tax regime:

Vision to establish a trustworthy tax regime.
To further simplify tax system and reduce litigation.

Introducing new ‘Updated return’

Provision to file an Updated Return on payment of additional tax.
Will enable the assessee to declare income missed out earlier.
Can be filed within two years from the end of the relevant assessment year.

Cooperative societies

Alternate Minimum Tax paid by cooperatives brought down from 18.5 per cent to 15 per cent.

To provide a level playing field between cooperative societies and companies.
Surcharge on cooperative societies reduced from 12 per cent to 7 per cent for those having total income of more than Rs 1 crore and up to Rs 10 crores.

Tax relief to persons with disability

Payment of annuity and lump sum amount from insurance scheme to be allowed to differently abled dependent during the lifetime of parents/guardians, i.e., on parents/ guardian attaining the age of 60 years.

Parity in National Pension Scheme Contribution

Tax deduction limit increased from 10 per cent to 14 per cent on employer’s contribution to the NPS account of State Government employees.
Brings them at par with central government employees.
Would help in enhancing social security benefits.

Incentives for Start-ups

Period of incorporation extended by one year, up to 31.03.2023 for eligible start-ups to avail tax benefit.
Previously the period of incorporation valid up to 31.03.2022.

Incentives under concessional tax regime

Last date for commencement of manufacturing or production under section 115BAB extended by one year i.e. from 31st March, 2023 to 31st March, 2024.

Scheme for taxation of virtual digital assets

Specific tax regime for virtual digital assets introduced.
Any income from transfer of any virtual digital asset to be taxed at the rate of 30 per cent.
No deduction in respect of any expenditure or allowance to be allowed while computing such income except cost of acquisition.
Loss from transfer of virtual digital asset cannot be set off against any other income.
To capture the transaction details, TDS to be provided on payment made in relation to transfer of virtual digital asset at the rate of 1 per cent of such consideration above a monetary threshold.
Gift of virtual digital asset also to be taxed in the hands of the recipient.

Litigation Management

In cases where question of law is identical to the one pending in High Court or Supreme Court, the filing of appeal by the department shall be deferred till such question of law is decided by the court.
To greatly help in reducing repeated litigation between taxpayers and the department.

Tax incentives to IFSC

Subject to specified conditions, the following to be exempt from tax
- Income of a non-resident from offshore derivative instruments.
- Income from over the counter derivatives issued by an offshore banking unit.
- Income from royalty and interest on account of lease of ship.
- Income received from portfolio management services in IFSC.

Rationalization of Surcharge

Surcharge on AOPs (consortium formed to execute a contract) capped at 15 per cent.
Done to reduce the disparity in surcharge between individual companies and AOPs.
Surcharge on long term capital gains arising on transfer of any type of assets capped at 15 per cent.
To give a boost to the start up community.

Health and Education Cess

Any surcharge or cess on income and profits not allowable as business expenditure.

Deterrence against tax-evasion

No set off, of any loss to be allowed against undisclosed income detected during search and survey operations.

Rationalizing TDS Provisions

Benefits passed on to agents as business promotion strategy taxable in hands of agents.
Tax deduction provided to person giving benefits, if the aggregate value of such benefits exceeds Rs 20,000 during the financial year.

INDIRECT TAXES

Remarkable progress in GST

GST revenues are buoyant despite the pandemic – Taxpayers deserve applause for this growth.

Special Economic Zones

Customs Administration of SEZs to be fully IT driven and function on the Customs National Portal – shall be implemented by 30th September 2022.

Customs Reforms and duty rate changes

Faceless Customs has been fully established. During Covid-19 pandemic, Customs formations have done exceptional frontline work against all odds displaying agility and purpose.

Project imports and capital goods

Gradually phasing out of the concessional rates in capital goods and project imports; and applying a moderate tariff of 7.5 percent – conducive to the growth of domestic sector and ‘Make in India’.
Certain exemptions for advanced machineries that are not manufactured within the country shall continue.
A few exemptions introduced on inputs, like specialised castings, ball screw and linear motion guide - to encourage domestic manufacturing of capital goods.

Review of customs exemptions and tariff simplification

More than 350 exemption entries proposed to be gradually phased out, like exemption on certain agricultural produce, chemicals, fabrics, medical devices, & drugs and medicines for which sufficient domestic capacity exists.

Simplifying the Customs rate and tariff structure particularly for sectors like chemicals, textiles and metals and minimise disputes; Removal of exemption on items which are or can be manufactured in India and providing concessional duties on raw material that go into manufacturing of intermediate products – in line with the objective of ‘Make in India’ and ‘Atmanirbhar Bharat’.

Sector specific proposals

Electronics

Customs duty rates to be calibrated to provide a graded rate structure - to facilitate domestic manufacturing of wearable devices, hearable devices and electronic smart meters.
Duty concessions to parts of transformer of mobile phone chargers and camera lens of mobile camera module and certain other items – To enable domestic manufacturing of high growth electronic items.

Gems and Jewellery

Customs duty on cut and polished diamonds and gemstones being reduced to 5 per cent; Nil customs duty to simply sawn diamond - To give a boost to the Gems and Jewellery sector

A simplified regulatory framework to be implemented by June this year - To facilitate export of jewellery through e-commerce.

Customs duty of at least Rs 400 per Kg to be paid on imitation jewellery import - To disincentivise import of undervalued imitation jewellery.

Chemicals

Customs duty on certain critical chemicals namely methanol, acetic acid and heavy feed stocks for petroleum refining being reduced; Duty is being raised on sodium cyanide for which adequate domestic capacity exists – This will help in enhancing domestic value addition.

MSME

Customs duty on umbrellas being raised to 20 per cent. Exemption to parts of umbrellas being withdrawn.
Exemption being rationalised on implements and tools for agri-sector which are manufactured in India
Customs duty exemption given to steel scrap last year extended for another year to provide relief to MSME secondary steel producers
Certain Anti- dumping and CVD on stainless steel and coated steel flat products, bars of alloy steel and high-speed steel are being revoked – to tackle prevailing high prices of metal in larger public interest.

Exports

To incentivise exports, exemptions being provided on items such as embellishment, trimming, fasteners, buttons, zipper, lining material, specified leather, furniture fittings and packaging boxes.

Duty being reduced on certain inputs required for shrimp aquaculture - to promote its exports.

Tariff measure to encourage blending of fuel

Unblended fuel to attract an additional differential excise duty of Rs 2/ litre from the 1st of October 2022 - to encourage blending of fuel.

Content Source: https://pib.gov.in/PressReleasePage.aspx?PRID=1794165

Section - 194K, Income-tax Act, 1961 : TDS incase of payment of Income in respect of units.

noreply@blogger.com (Naveen Fintax) — Sat, 28 Aug 2021 15:19:00 +0000

Section - 194K, Income-tax Act, 1961-2021
TDS incase of payment of Income in respect of units.

Who is liable to deduct Tds u/s 194K?
Any person responsible for paying to a resident any income in respect of—
(a) units of a Mutual Fund specified under clause (23D) of section 10; or
(b) units from the Administrator of the specified undertaking; or
(c) units from the specified company,

Timing of Deduction:

At the time of credit of such income to the account of the payee or,

at the time of payment thereof by any mode, whichever is earlier.

Rate of TDS: 10%

No need to deduct TDS u/s 194K:

(i) where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited or paid during the financial year by the person responsible for making the payment to the account of, or to, the payee does not exceed Rs 5000; or
(ii) if the income is of the nature of capital gains.

Explanation 1.—For the purposes of this section,—
(a) "Administrator" means the Administrator as referred to in clause (a) of section 2 of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 (58 of 2002);
(b) "specified company" means a company as referred to in clause (h) of section 2 of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 (58 of 2002);
(c) "specified undertaking" shall have the meaning assigned to it in clause (i) of section 2 of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 (58 of 2002).
Explanation 2.—For the removal of doubts, it is hereby clarified that where any income referred to in this section is credited to any account, whether called "suspense account" or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be the credit of such income to the account of the payee and the provisions of this section shall apply accordingly.

Section – 194 of Income-tax Act, 1961: TDS on Dividends.

noreply@blogger.com (Naveen Fintax) — Thu, 19 Aug 2021 15:39:00 +0000

Section – 194 of Income-tax Act, 1961-2021

TDS on Dividends.

Who is liable to deduct tax?

The principal officer of an Indian company or
a company which has made the prescribed arrangements for the declaration and payment of dividends (including dividends on preference shares) within India

Timing of deduction?

Before making any payment [by any mode] in respect of any dividend or

before making any distribution or payment to a shareholder, who is resident in India, of any dividend within the meaning of sub-clause (a),(b),(c),(d),(e) of section 2(22), deduct from the amount of such dividend, income-tax at the rate of 10%

Rate of TDS: 10%

Exceptions to section 194: provisions of this section shall not apply to such income credited or paid to:

👉An individual, if—

(a) the dividend is paid by the company by any mode other than cash; and

(b) the amount of such dividend or, as the case may be, the aggregate of the amounts of such dividend distributed or paid or likely to be distributed or paid during the financial year by the company to the shareholder, does not exceed Rs 5000

👉The Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956 (31 of 1956), in respect of any shares owned by it or in which it has full beneficial interest;

👉The General Insurance Corporation of India (hereafter in this proviso referred to as the Corporation) or to any of the four companies (hereafter in this proviso referred to as such company), formed by virtue of the schemes framed under sub-section (1) of section 16 of the General Insurance Business (Nationalisation) Act, 1972 (57 of 1972), in respect of any shares owned by the Corporation or such company or in which the Corporation or such company has full beneficial interest;

👉Any other insurer in respect of any shares owned by it or in which it has full beneficial interest;

👉A "business trust", as defined in clause (13A) of section 2, by a special purpose vehicle referred to in the Explanation to clause (23FC) of section 10;

👉Any other person as may be notified by the Central Government in the Official Gazette in this behalf.

The Taxation Laws (Amendment) Bill, 2021

noreply@blogger.com (Naveen Fintax) — Tue, 10 Aug 2021 04:45:00 +0000

The Taxation Laws (Amendment) Bill, 2021

Key Benefits:

Will instill foreign as well as domestic investors' with confidence in the Indian Economy.
Will spur companies which are at the cusp of deciding their investments into investing in India.
Will avoid unnecessary litigations and saves time and costs of the government.
Will boost the policy of the government to have a predictable tax regime.
Will provide impetus to country's goal of becoming a $5 trillion economy.

Key Features:

Provides that no tax demand shall be raised in the future based on the retrospective amendment made through Finance Act, 2012, for any indirect transfer of Indian assets if the transaction was Undertaken before 28th May 2012
Provides that the demand raised for indirect transfer of Indian assets made before 28th May 2012, shall be nullified on fulfillment of specified conditions and on furnishing of an undertaking.
Proposes to refund the amount paid in these cases without any interest theron.
Proposes to amend the Finance Act, 2012 so as to provide that the validation of demand, etc, under Section 119 of the Finance Act, 2012 shall cease to apply on fulfillment of specified conditions and on furnishing of an undertaking.
Empowers CBDT to make rules to provide the form and manner in which an undertaking shall be submitted.

CBDT further extends due dates for electronic filing of various Forms under the Income-tax Act, 1961

noreply@blogger.com (Naveen Fintax) — Tue, 03 Aug 2021 17:48:00 +0000

Ministry of finance

CBDT extends due dates for electronic filing of various Forms under the Income-tax Act, 1961

On consideration of difficulties reported by the taxpayers and other stakeholders in electronic filing of certain Forms under the provisions of the Income-tax Act,1961 read with Income-tax Rules,1962 (Rules), Central Board of Direct Taxes (CBDT) has decided to further extend the due dates for electronic filing of such Forms vide Circular No.15/2021 dated 03.08.2021. The details are as under:

Form	Extended Due date
The Quarterly statement in Form No. 15CC to be furnished by authorized dealer in respect of remittances made for the quarter ending on 30th June, 2021,	31st August, 2021
The Equalization Levy Statement in Form No.1 for the Financial Year 2020- 21	31st August, 2021
The Statement of Income paid or credited by an investment fund to its unit holder in Form No. 64D for the Previous Year 2020-21	15th September, 2021
The Statement of Income paid or credited by an investment fund to its unit holder in Form No. 64C for the Previous Year 2020-21	30th September, 2021

Further, considering the non-availability of the utility for e-filing of certain Forms, the CBDT has decided to extend the due dates for electronic filing of such Forms as under:

Intimation to be made by a Pension Fund in respect of each investment made by it in India in Form No. 10BBB for the quarter ending on 30th June,2021	30th September, 2021
Intimation to be made by Sovereign Wealth Fund in respect of investments made by it in India in Form II SWF for the quarter ending on 30th June, 2021	30th September, 2021

CBDT Circular No. 15/2021 in F.No.225/49/2021/ITA-II dated 03.08.2021issued today, is available on www.incometaxindia.gov.in. It is also clarified vide the said Circular that the above forms, e-filed, after the expiry of time limits provided as per Circular No.12 of 2021 dated 25.06.2021 or as per the relevant provisions, till date of issuance of said Circular, will stand regularised accordingly.

Section 194Q of Income tax act :TDS on purchase of goods by specified buyer from 1st July 2021

noreply@blogger.com (Naveen Fintax) — Tue, 29 Jun 2021 06:58:00 +0000

This article briefly covers about Section 194Q of Income Tax Act 1961.

Deduction of tax at source on payment of certain sum for purchase of goods.

Section 194Q

Person liable to deduct TDS (Buyer):

A person whose total sales, gross receipts or turnover from the business carried on by him exceed RS 10 crore rupees during the financial year immediately preceding the financial year in which the purchase of goods is carried out, not being a person, as the Central Government may, by notification in the Official Gazette, specify for this purpose, subject to such conditions as may be specified therein.

When to Deduct TDS u/s 194Q:

Any person, being a buyer who is responsible for paying any sum to any resident seller for purchase of any goods of the value or aggregate of such value exceeding RS 50 lakh rupees in any previous year.

Timing of Deduction:

At the time of credit of such sum to the account of the seller or at the time of payment thereof by any mode, whichever is earlier.

Rate of TDS:

0.1 per cent of such sum exceeding fifty lakh rupees.

The provisions of this section shall not apply to a transaction on which:

(a) tax is deductible under any of the provisions of this Act; and
(b) tax is collectible under the provisions of section 206C other than a transaction to which sub-section (1H) of section 206C applies.]

Note:

👉 Where any sum referred to in sub-section (1) is credited to any account, whether called "suspense account" or by any other name, in the books of account of the person liable to pay such income, such credit of income shall be deemed to be the credit of such income to the account of the payee and the provisions of this section shall apply accordingly.
👉If any difficulty arises in giving effect to the provisions of this section, the Board may, with the previous approval of the Central Government, issue guidelines for the purpose of removing the difficulty.
👉Every guideline issued by the Board under sub-section (3) shall, as soon as may be after it is issued, be laid before each House of Parliament, and shall be binding on the income-tax authorities and the person liable to deduct tax.

Government announces tax exemption for expenditure on Covid treatment and ex-gratia received on death due to Covid

noreply@blogger.com (Naveen Fintax) — Fri, 25 Jun 2021 18:11:00 +0000

Following Income-tax exemptions are provided by Central Board of Direct Taxes through press release dated 25th july 2021:

1) Any amount received by a taxpayer for medical treatment from employer or from any person for treatment of Covid-19 during FY 2019-20 and subsequent years.

2) Ex-gratia payment received by family members of a person from the employer of such person or from other person on the death of the person on account of Covid-19 during FY 2019-20 and subsequent years.

The exemption shall be allowed

without any limit for the amount received from the employer and
limited to Rs. 10 lakh in aggregate for the amount received from any other persons.

Necessary legislative amendments for the above decisions shall be proposed in

due course of time.

source "Income tax India"

post updated on 25/06/2021.

CBDT Extends Due dates of variour income tax compliances

noreply@blogger.com (Naveen Fintax) — Fri, 25 Jun 2021 17:40:00 +0000

In view of the impact of the Covid-19 pandemic, taxpayers are facing
inconvenience in meeting certain tax compliances and also in filing response to various notices. In order to ease compliances to be made by taxpayers during this difficult time, CBDT Extends Due dates of following income tax compliances:

📌Last date of linkage of Aadhaar with PAN under section 139AA of the Act,

which was earlier extended to 30th June, 2021 is further extended to 30th
September, 2021.

👉 The Statement of Deduction of Tax for the last quarter of the Financial Year
2020-21 by 15th July, 2021.

👉 The Certificate of Tax Deducted at Source in Form No.16, be furnished on or
before 31st July, 2021.

👉 The application  for registration/ provisional registration/
intimation/ approval/ provisional approval of Trusts/ Institutions/ Research
Associations etc., required to be made on or before 30th June, 2021, may be
made on or before 31st August, 2021.

👉The Equalization Levy Statement in Form No. 1 for the Financial Year 2020-
21, which is required to be filed on or before 30th June, 2021, may be furnished
on or before 31st July, 2021.

👉The Annual Statement required to be furnished under sub-section (5) of
section 9A of the Act by the eligible investment fund in Form No. 3CEK for
the Financial Year 2020-21, which is required to be filed on or before 29th June,
2021, may be furnished on or before 31st July, 2021.

👉Uploading of the declarations received from recipients in Form No. 15G/15H
during the quarter ending 30th June, 2021, w   hich is required to be uploaded on
or before 15th July, 2021, may be uploaded by 31st August,2021.

👉Exercising of option to withdraw pending application (filed before the erstwhile
Income Tax Settlement Commission) under sub-section (1) ofSection 245M of
the Act in Form No. 34BB, which is required to be exercised on or before 27th
June, 2021, may be exercised on or before 31st July, 2021.

👉 Objections to Dispute Resolution Panel (DRP) and Assessing Officer under
section 144C of the Income-tax Act, 1961  by 31st August, 2021,

👉 The compliances to be made by the taxpayers such as investment, deposit,
payment, acquisition, purchase, construction or such other action, by whatever
name called, for the purpose of claiming any exemption under the provisions
contained in Section 54 to 54GB of the Act, for which the last date of such
compliance falls between 1st April,2021 to 29th September, 2021 (both days
inclusive), may be completed on or before 30th September, 2021.

👉The Statement of Income paid or credited by an investment fund to its unit
holder in Form No. 64D for the Previous Year 2020-21, required to be furnished
on or before 15th June, 2021 under Rule 12CB of the Rules, as extended to 30th
June, 2021 vide Circular No.9 of 2021, may be furnished on or before 15th July,
2021.

👉The Statement of Income paid or credited by an investment fund to its unit
holder in Form No. 64C for the Previous Year 2020-21, required to be furnished
on or before 30th June, 2021 under Rule 12CB of the Rules, as extended to 15th
July, 2021 vide Circular No.9 of 2021, may be furnished on or before 31st July,
2021.

👉The Quarterly Statement in Form No. 15CC to be furnished by authorized
dealer in respect of remittances made for the quarter ending on 30th June, 2021,
required to be furnished on or before 15th July, 2021 under Rule 37 BB of the
Rules, may be furnished on or before 31st July, 2021.

👉 Last date of payment of amount under Vivad se Vishwas(without additional
amount) which was earlier extended to 30th June, 2021 is further extended to 31st
August, 2021.

👉Last date of payment of amount under Vivad se Vishwas (with additional
amount) has been notified as 31st October, 2021.

👉 Time Limit for passing assessment order which was earlier extended to 30th
June, 2021 is further extended to 30th September 2021.

👉Time Limit for passing penalty order which was earlier extended to 30th June,
2021 is further extended to 30th September 2021.

👉 Time Limit for processing Equalisation Levy returns which was earlier
extended to 30th June, 2021 is further extended to 30th September 2021.

Source "income tax india"

Posted on 25/06/2021.

Section 206AB and 206CCA of Income tax Act : Higher TDS & TCS for non-filers of income-tax return.

noreply@blogger.com (Naveen Fintax) — Thu, 24 Jun 2021 11:14:00 +0000

Section 206AB and 206CCA of Income tax Act : TDS & TCS for non-filers of income-tax return.

👉As per section 206AB any person (liable to deduct TDS under Chapter XVIIB, other than section 192, 192A, 194B, 194BB, 194LBC, or 194N) making payment to "specified person" shall be liable to deduct TDS at the higher of the following rates

(i) Twice the rate specified in the relevant provision of the Act; or
(ii) Twice the rate or rates in force; or
(iii) 5%

Provided If the provisions of section 206AA is applicable then higher of section 206AB & 206AA to be considered.

👉As per section 206CCA any person liable to Collect TCS under Chapter XVII-BB on any sum or amount received from "specified person" shall be liable to Collect TCS at the higher of the following rates:

(i) Twice the rate specified in the relevant provision of the Act; or
(ii) 5%

Provided If the provisions of section 206CC is applicable then higher of section 206CCA & 206CC to be considered.

Note:

✓ Specified person :

A person who has not filed the ROI for both of the 2 AY relevant to the 2 PY immediately prior to the PY in which tax is required to be deducted or collected, for which the time limit of filing ROI under section 139(1) has expired; and the aggregate of TDS and TCS in his case is RS 50,000 or more in each of these 2 previous years

provided that the specified person shall not include a non-resident who does not have a permanent establishment in India

✓ These sections are applicable from 1st July 2021
✓ [ROI - return of income, AY - assessment year, PY - previous year]

last updated on 24/06/2021.

80TTA & 80TTB Deductions under Income tax - interest on deposits

noreply@blogger.com (Naveen Fintax) — Fri, 08 Jan 2021 18:02:00 +0000

In computing the total income of an assessee the following deductions are allowed for interest on deposits.

Section - 80TTA of Income-tax Act, 1961-2020

Deduction in respect of interest on deposits in savings account.

Eligible Assessee: Individual or a Hindu undivided family (other than the assessee referred to in section 80TTB)

👉Deduction allowed against any income by way of interest on deposits (not being time deposits) in a savings account with—
a banking company (or)
a co-operative society engaged in banking (or)
a Post Office

Maximum Amount of Deduction: Rs 10,000

NOTE:

☑ Where the interest income is derived from any deposit in a savings account held by, or on behalf of, a firm, an association of persons or a body of individuals, no deduction shall be allowed under this section in respect of such income in computing the total income of any partner of the firm or any member of the association or any individual of the body.
☑ "time deposits" means the deposits repayable on expiry of fixed periods.

Section - 80TTB of Income-tax Act, 1961-2020

Deduction in respect of interest on deposits in case of senior citizens.

Eligible Assessee: Resident Individual being senior citizen (age of 60 or more)

👉Deduction allowed against any income by way of interest on deposits with—
a banking company
a co-operative society engaged in banking
a Post Office

Maximum Amount of Deduction: Rs 50,000

NOTE: Where the interest income is derived from any deposit held by, or on behalf of, a firm, an association of persons or a body of individuals, no deduction shall be allowed under this section in respect of such income in computing the total income of any partner of the firm or any member of the association or any individual of the body.

0-4 lakh rupees	Nil
4-8 lakh rupees	5 percent
8-12 lakh rupees	10 percent
12-16 lakh rupees	15 percent
16-20 lakh rupees	20 percent
20- 24 lakh rupees	25 percent
Above 24 lakh rupees	30 percent