Income tax slabs for individuals, HUFs, AOPs, BOIs for FY - 2025-26 (i.e. AY 2026-27)

As per the budget 2025, the income up to Rs.12,00,000 will have zero tax liability for the FY 2025-26 (AY 2026-27) under the new tax regime. Here's how:

The revised tax slabs are as follows:

With the revised tax structure, individuals earning up to Rs.12,00,000 will have no tax liability due to the increased rebate of Rs.60,000. For salaried individuals, the tax liability will be zero for incomes up to Rs.12,75,000, due to the Rs.75,000 standard deduction.

1. Income tax Slabs for Individuals, HUFs, AOPs, BOIs (New Regime)

· No tax on income up to ₹4,00,000.

· 5% tax on income between ₹4,00,001 and ₹8,00,000.

· 10% tax on income between ₹8,00,001 and ₹12,00,000.

· 15% tax on income between ₹12,00,001 and ₹16,00,000.

· 20% tax on income between ₹16,00,001 and ₹20,00,000.

· 25% tax on income between ₹20,00,001 and ₹24,00,000.

· 30% tax on income above ₹24,00,000.

2. Income tax Slabs for Domestic Companies

· Turnover ≤ ₹400Cr: 25%

· Turnover > ₹400Cr: 30%

· Optional Rates:

· 22% (115BAA) – For companies giving up exemptions

· 15% (115BAB) – For new manufacturing firms

Note:

· The marginal relief on rebate is still applicable.

· The rebate is not available for income that is taxed at special rates (e.g., capital gains under section 112A).

Income tax slabs for for Individuals, HUFs, AOPs, BOIs FY 2024-25 (i.e.AY 2025-26)

The tax slabs for for Individuals, HUFs, AOPs, BOIs FY 2024-25 (AY 2025-26) are as follows:

· No tax on income up to ₹3,00,000.

· 5% tax on income between ₹3,00,001 and ₹7,00,000.

· 10% tax on income between ₹7,00,001 and ₹10,00,000.

· 15% tax on income between ₹10,00,001 and ₹12,00,000.

· 20% tax on income between ₹12,00,001 and ₹15,00,000.

· 30% tax on income above ₹15,00,000.

· Rebate: Tax rebate up to Rs.25,000 is applicable if the total income does not exceed Rs.7,00,000 (not applicable for NRIs). Therefore, no tax for an income up-to Rs.7,00,000.

· Standard Deduction: The standard deduction for salaried employees is Rs.75,000 under the new regime.

· Deduction under Family Pension: The deduction on family pension received has been increased from Rs.15,000 to Rs.25,000.

· NPS Contribution: The deduction limit on employer's contribution to NPS is 14% for FY 2024-25.

As a result of the above changes, a salaried employee in the new tax regime can save up to Rs.17,500 in taxes.

The new regime is the default tax regime. If individuals want to choose the old regime then they have to file Form 10-IEA. The highest surcharge rate is 25% under the new regime as opposed to 37% in the old regime.

Important Points to note if you select the new tax regime:

· Please note that the tax rates in the New tax regime are the same for all categories of Individuals, i.e. Individuals, Senior citizens, and Super senior citizens.

· Individuals with net taxable income less than or equal to Rs.7 lakh will be eligible for tax rebate u/s 87A, i.e. tax liability will be NIL under the new regime.

Surcharge

· 10% surcharge on income between ₹50 lakh and ₹1 crore.

· 15% surcharge on income between ₹1 crore and ₹2 crore.

· 25% surcharge on income between ₹2 crore and ₹5 crore.

· 37% surcharge on income above ₹5 crore (reduced to 25% under the new tax regime from April 1, 2023).

· Exceptions:

· Surcharge on dividends and capital gains under Sections 111A, 112A, and 115AD is capped at 15%.

· AOPs consisting entirely of companies also have a 15% surcharge limit.

· An additional 4% Health & Education Cess applies to total tax liability.

SECTION 43B(H) OF INCOME TAX ACT: MSME APPLICABILITY, MSME CLASSIFICATION ON THE BASIS OF TURNOVER LIMIT, MSME PAYMENT RULE, SECTION 43B(H) EFFECTIVE DATE

The Finance Act 2023 inserted Section 43B(h), which stipulates that any sum owed to Micro and Small enterprises for goods supplied or services given may be deducted in the same year if it is paid within the deadline stipulated by the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006.

This amendment aims to address the issue of working capital scarcity in the MSME industry and promote prompt payments to micro and small businesses. The assessment year 2024–2025 and any following years will be covered by this change, which will come into effect on April 1, 2024.

MSME Section 43B(h): New MSME 45 Days Payment Rule

The newly added clause (h) states that any sum payable by the assessee to a Micro & Small Enterprise beyond the time limit specified in Section 15 of the MSMED Act shall be allowed as a deduction only in the previous year in which the sum has been actually paid (irrespective of the accounting method employed).

MSME Classification on the basis of Turnover Limit

Section 43B(h) Applicability

This clause is applicable when an enterprise is buying goods or taking services from Micro and Small enterprise registered under the MSMED Act, 2006. Notably, the registration of the buyer under the MSMED Act, 2006 is not mandatory. Clause (h) of Section 43B comes into effect from April 1, 2024.

Example: Mr A (Unregistered under the MSMED Act) purchased Goods from Mr B (Registered under the MSMED Act). Whether section 43B(h) applicable.?

Yes, section 43B(h) applicable as a supplier is registered under MSMED Act.

Section 43B(h) Applicability On Traders

As per Office Memorandum No. 5/2(2)/2021-E/P and G/Policy dated July 2, 2021, wholesale and retail traders are entitled to Udyam registration only for the benefit of Priority Sector Lending. So, Section 43B(h) is not applicable for dues outstanding to traders as per the MSMED Act’s definition of enterprise.

Example: Mr. A purchased Goods from Mr. B. Mr.B is a trader. Is section 43B(h) applicable?

No, section 43B(h) is not applicable as the supplier is a trader. It is applicable to Manufacturing and services Providers Only.

Section 43B(h) Effective Date

Section 43B Clause (h) is applied from April 1, 2024. This amendment applies from assessment year (AY) 2024-25.

Section 43B(h) Time Limit

Business enterprises are required to pay MSMEs within 45 days, as per section 15 of the MSMED Act, 2006, depending on the presence of a written agreement. In case there is no written agreement, payment should be made within 15 days. In case there is a written agreement, payment shall be made as per the agreed-upon timeline, not exceeding 45 days.

Penalties For Failure To Pay MSMEs

In the case of late payment to an MSME, interest is applicable.

Rate of interest: Compound interest at the 3 times the bank rate notified by the Reserve Bank of India (RBI).

Date from which interest is payable: The date as per the agreement or the day following immediately after the expiry of the period of fifteen days from the day of acceptance or the day of deemed acceptance of any goods or any services by a buyer from a supplier (appointed day), as the case may be.

The deduction of this interest is not allowed as an expense, as per the Income-tax Act (ITA), 1961.

ITR FILING DUE DATES for FY 2024-25

When is the Last Date to File ITR?

The last date to file ITR is 31st July of the following financial year for non-audit taxpayers.

So, for the Financial Year 2024-25 (Assessment Year 2025-26) the last date to file ITR would be 31st July 2025.

However, if you miss filing on this deadline you can file a belated return by 31st December 2025 with penalties and interest.

Income Tax Filing Due Dates for FY 2024-25 (AY 2025-26)

· Individuals/HUFs/AOPs/BOIs (No Audit Required): 31st July 2025

· Businesses Requiring Audit: 31st October 2025

· Businesses with Transfer Pricing Reports: 30th November 2025

· Revised Return: 31st December 2025

· Belated/Late Return: 31st December 2025

• Updated Return: 31st March 2030 (4 years from the end of the relevant AY)

Consequences of Missing the ITR Filing Deadline interest, late fee and loss adjustment

Interest

If you submit your return after the deadline, you will be liable to pay interest at a rate of 1% per month or part month on the unpaid tax amount as per Section 234A.

Late fee

In case of late filing, Section 234F imposes a late fee of

· Rs.5,000, if your total income exceeds Rs. 5 Lakh.

· Rs.1,000, if your total income is within Rs.5 lakh

Loss Adjustment

In case you have incurred losses from sources like the stock market, mutual funds, properties, or any of your businesses, you have the option to carry them forward and offset them against your income in the subsequent year. This provision substantially reduces your tax liability in future years. However, you will not be allowed to carry forward these losses if you miss filing your ITR before the deadline.

LONG-TERM CAPITAL GAIN TAX RATE ON LISTED EQUITY SHARES AND EQUITY-ORIENTED MUTUAL FUNDS AND OTHER ASSETS (SUCH AS REAL ESTATE, LAND, UNLISTED SHARES, ETC.):

• The long-term capital gain tax rate varies depending on the type of asset being sold. The tax rates applicable for different types of assets are as follows:

i) Listed equity shares and equity-oriented mutual funds:

Long-Term Capital Gains (LTCG) that exceed Rs. 1.25 lakh in a financial year are subject to a 12.5% tax rate from 23rd July, 2024. For transfers made up to 22nd July, 2024, the tax rate of 10% will be applicable.

ii) Other assets (such as real estate, land, unlisted shares, etc.):

For Transfers made on or after 23rd July, 2024 (except for land and building) - LTCG is taxed at 12.5% without taking the indexation benefit.

For Transfers made on or before 22nd July, 2024 - LTCG is taxed at 20%

after taking the indexation benefit.

iii) In case of transfer of land or buildings acquired before July 23, 2024, taxpayers have the option to pay tax at either a rate of 12.5% without indexation benefits or 20% with indexation benefits.

Income from house property: Classification into - self occupied and let out property, tax benefit for joint owners, properties excluded from house property, budget 2025 update on income from house property & Tax implication on HRA (House Rent Allowance)

Classification of House Property -

a. Self-Occupied House Property

A self-occupied house property is used for one’s own residential purposes. This may be occupied by the taxpayer’s family – parents and/or spouse and children. A vacant house property can also be considered self-occupied for the purpose of Income Tax.

Prior to FY 2019-20, if more than one self-occupied house property is owned by the taxpayer, only one is considered and treated as a self-occupied property and the remaining are assumed to be let out. The choice of which property to choose as self-occupied is up to the taxpayer.

From the FY 2019-20 and onwards, the benefit of considering the houses as self-occupied has been extended to 2 houses. Now, a homeowner can claim his 2 properties as self-occupied and the remaining house as let out for Income tax purposes.

b. Let Out House Property

A house property that is rented for the whole or part of the year is considered a let-out house property for income tax purposes. A house property in excess of 2 self-occupied properties, as mentioned above, is also deemed a let-out property(treated as a let-out even if vacant).

There is one more term used in practical life - Inherited Property

An inherited property is one which is one bequeathed from parents, grandparents, etc. and again, can either be a self-occupied one or a let-out one based on its usage as discussed above.

Taxability of Land Appurtenant to Property

· Land which is an inseparable part of building, which is enjoyed by people who use the building is called as Land Appurtenant to Building. Eg. garden, driveway, parking etc.,

· Income from such land is always taxed under the head ‘Income from House Property’.

· Income from letting out of vacant land is taxable under the head “Income from Other Sources” or “Profits or gains from business or profession” as the case may be.

Tax Benefits on Home Loans for Joint Owners

The joint owners, who are also co-borrowers of a self-occupied house property, can claim a deduction on interest on the home loan up to Rs 2 lakh each. And deduction on principal repayments, including a deduction for stamp duty and registration charges under Section 80C within the overall limit of Rs.1.5 lakh for each of the joint owners. These deductions are allowed to be claimed in the same ratio as that of the ownership share in the property.

You may have taken the loan jointly, but unless you are an owner in the property – you are not entitled to the tax benefits. There have been situations where the property is owned by a parent and the parent and child together take up a loan which is paid off only by the child. In such a case the child, who is not a co-owner is devoid of the tax benefits on the home loan.

Therefore, to claim the tax benefits on the property:

1. You must be a co-owner in the property

2. You must be a co-borrower for the loan

Each co-owner can claim a deduction of maximum Rs 1.5 lakh towards repayment of principal under section 80C. This is within the overall limit of Rs 1.5 lakh of Section 80C. Therefore, you can avail a larger tax benefit against the interest paid on home loan when the property is jointly owned and your interest outgo exceeds Rs 2 lakh per year.

It’s important to note that the tax benefit of both the deduction on home loan interest and principal repayment under section 80C can only be claimed once the construction of the property is complete.

HRA and Deduction on Home Loan

Scenario 1: You live in a rented accommodation since your house is too small for your needs Raghav lives in a rented house in Noida since his own office, son’s school and his wife’s office are in Noida, He has his own house in the outskirts of Delhi which is quite small and also lying vacant. He is paying interest on the loan on his own house. Raghav can claim:

· HRA for rent he pays for the house in Noida, and

· Deduction on interest up to Rs 2,00,000 on the home loan

Scenario 2: You live in a rented house; your own house is also let out Neha recently bought a flat in Indore, though she lives and works in Bangalore. She has no plans of returning to Indore in the next five years so she gives that flat on rent. She lives on rent in Bangalore. Neha can claim:

· HRA for the rent she pays for the house in Bangalore and

· Claim the entire interest she pays during the year on the home loan

Exclusions to Income From House Property

Income from the following properties are excluded from the income from house property:

• · Farmhouses contributing to agricultural income

• · Any palace in the occupation of an ex-ruler

• · Property of a local authority

• · Property of any registered trade union

• · Property of a member of a Scheduled tribe;

• · Statutory corporation or an institution or association financed by the Government for promoting the interests of the members either of the Scheduled Castes or Scheduled tribes or both

• · Any corporation established by the government to promote the interests of members of a minority group

• · Any cooperative society formed for promoting the interests of the members either of the Scheduled Castes or Scheduled tribes or both

• · Property Income from the letting of warehouses for storage, processing or facilitating the marketing of commodities by an authority constituted under any law for the marketing of commodities

• · Any institution for the development of ‘Khadi and Village Industries’

• · Self-occupied house property of an individual which has not been rented throughout the previous year

• · House property held for any charitable purposes

• · Property of any political party

Budget 2025 Update for income from House Property

Previously, the annual value of up to two self-occupied properties was deemed to be nil if the owner is unable to occupy the property due to employment, business, or professional commitments at a different location. It is now proposed that the annual value of up to two house properties shall be nil if the owner occupies the house for his own residence or cannot occupy it for any reason.

ADVANCE TAX FOR FY 2024-25 AND FY 2025-26 ALONGWITH INTEREST DETAILS AND DUE DATES

Who Should Pay Advance Tax?

Salaried individuals, freelancers and businesses– If your total tax liability is Rs 10,000 or more in a financial year, you have to pay advance tax. The advance tax applies to all taxpayers, salaried individuals, freelancers, and businesses.

Senior citizens– People aged 60 years or more who do not run a business are exempt from paying advance tax. So, only senior citizens (60 years or more) having business income must pay advance tax.

Presumptive income for businesses–The taxpayers who have opted for the presumptive taxation scheme under section 44AD have to pay the whole amount of their advance tax in one instalment on or before 15th March. They also have the option to pay all of their tax dues by 31st March.

Presumptive income for professionals– Independent professionals such as doctors, lawyers, architects, etc. come under the presumptive scheme under section 44ADA. They have to pay the whole of their advance tax liability in one instalment on or before 15th March. They can also pay the entire amount by 31st March.

Note: No interest u/s 234C shall be levied if you have paid advance tax upto 12% in first instalment and upto 36% in second instalment.

Important Due Dates for Paying Advance Tax Instalments for FY 2025-26

Advance Tax Due Dates & Payment Schedule:

• 15th June 2024 – 1st Installment (15% of tax liability)

• 15th September 2024 – 2nd Installment (45% of tax liability)

• 15th December 2024 – 3rd Installment (75% of tax liability)

• 15th March 2025 – 4th Installment (100% of tax liability)

• 15th March 2025 – Presumptive Tax Scheme (100% of tax liability in a single payment)

Updated Return (ITR-U) AND CHANGES IN BUDGET 2025, DUE DATE FOR FILLING CONDITIONS AND RELEVANT TAX RATES

Who is Eligible to File ITR-U? To be eligible for filing ITR-U, the taxpayer must meet the following criteria:

Failure to file a return within the original or belated deadline.

Mistakes or omissions in a previously filed return (whether it was original, belated, or revised).

You may need to file an ITR-U if you missed reporting income or made incorrect claims in your initial filing.

ITR-U Filing Deadline One of the major changes in the 2025 Union Budget is the extension of the deadline for filing an updated return. Previously, taxpayers had a 2-year window to file ITR-U. However, with the new update, the deadline has been extended to four years from the end of the relevant assessment year, giving taxpayers more time to rectify any errors.

The revised filing deadlines are:

For AY 2022-23 (FY 2021-22), the last date to file ITR-U is 31st March 2027.

For AY 2023-24 (FY 2022-23), the last date to file ITR-U is 31st March 2028.

For AY 2024-25 (FY 2023-24), the last date to file ITR-U is 31st March 2029.

Penalties and Additional Tax for ITR-U When filing ITR-U, the taxpayer is required to pay additional taxes, which are subject to specific penalties based on when the return is filed. The penalties for late filing are as follows:

Within 12 months from the end of the relevant assessment year: 25% of the average tax and interest due.

Within 24 months from the end of the relevant assessment year: 50% of the average tax and interest due.

Within 36 months from the end of the relevant assessment year: 60% of the average tax and interest due.

Within 48 months from the end of the relevant assessment year: 70% of the average tax and interest due.

INCOME FROM OTHER SOURCES AND TAX TREATMENTS AND CHANGES

Budget 2025 update for income from other sources

It has been proposed to increase the limit for TDS deduction u/s 194A on the Interest Income of the taxpayer as follows:

· TDS will be deducted on interest income from bank to a senior citizen only if such income is more that Rs. 1,00,000.

· TDS will be deducted on interest income from bank in case of other assessee if such income is more that Rs. 50,000.

· TDS will be deducted on interest income from other than bank if such income is more than Rs. 10,000.

INCOME FROM PGBP AND TAX TREATMENTS AND CHANGES AS PER BUDGET 2025

Types of incomes covered under section 28

Section 28 of the IT Act 1961 covers the following types of income.

1. Profits from Business or Profession: Any income generated during the previous year through the conduct of a business or profession is taxable under Section 28. This includes profits from sales of goods or services, fees earned by professionals, and income from freelance work.

2. Salary, Commission, Bonus etc.: The income mentioned in section 28 encompasses salaries, commissions, bonuses and other incomes that come as reward for effort exerted in connection with trade/profession employed by individuals as well as partners in a firm.

3. Compensation Payments: Certain compensation payments received under specific circumstances are also taxable under Section 28. These include payments made upon termination of employment, modification of contracts, or termination/modification of agency agreements related to managing an Indian company.

4. Income from Specific Activities: Section 28 extends to income generated from specific business or professional-like activities. This can include income earned through import/export businesses or income received by a partner from a firm (including salary, interest, bonus, etc.).

5. Receipts under Agreements: It also covers the amounts received in terms of any agreement where the person carrying out the activity is paid off for refraining from performing any action concerning their trade or profession or nor sharing their know-how, patent right, copyright, trade mark, license, franchise or other commercial rights like those capable of being used by it in manufacturing processing goods for sale or providing services.

6. Any sum received under the Keyman Insurance policy: Any sum received by an assessee as an employer under a Keyman Insurance policy will be taxable as income from the business.

7. Fair market value of inventory on its conversion/treatment as a capital asset: Fair market value of inventory on the date of its conversion or treatment as a capital asset would be chargeable to tax as business income.

Expenses disallowed under PGBP

There are two primary reasons for disallowance of any expenditure:

· The tax amount required to be deducted on certain expenditures are not deducted while making the payment.

· The expenditure does not implicitly relate to the conduct of such business or profession;

TDS Default on Payments Outside India or to Non-Residents

· TDS deductible but not deducted → 100% expenditure disallowed. If deducted later, allowed in the year of deposit.

· TDS deducted but not deposited before due date → 100% expenditure disallowed. Allowed in the year of deposit.

· Salaries paid outside India without TDS deduction → Disallowed.

TDS Default on Payments to Residents (Including Salaries)

· TDS deductible but not deducted → 30% expenditure disallowed. If deducted later, allowed in the year of deposit.

· TDS deducted but not deposited before due date → 30% expenditure disallowed. Allowed in the year of deposit.

Relief in Case of TDS Non-Deduction

Expenditure is allowed if:

• Recipient files a timely return.

• Payment is included in the recipient’s return.

• Taxes are paid on such income.

• CA certificate is obtained and uploaded.

Disallowance Due to Equalization Levy Default

• Non-deduction or non-deposit of levy → Expenditure disallowed.

• Allowed in the year when the levy is deducted or deposited.

Disallowance of Expenditure Paid in Cash

• Payments exceeding ₹10,000 in cash are disallowed.

• Allowed only if made via cheque, draft, or bank transfer.

· Exceptions (Rule 6DD) include payments to banks, government, for agricultural products, cottage industries, salary (post-TDS), and in remote areas.

Accepted Digital Payment Modes (Rule 6ABBA, effective 1st Sept 2019)

· Credit/Debit Card, Net Banking, UPI, IMPS, RTGS, NEFT, BHIM, Aadhaar Pay

Budget 2025 Update

It has been proposed to insert a new section 44BBD to cater non-residents providing services or technology to a resident, operating business related to electronics manufacturing. Such non-residents will be able to calculate profits at 25% of the amount received for such services.

APPEALS AND ASSESSMENTS IN INCOME TAX. FILING OF FORM 35 ONLINE, HEARINGS AND ORDERS. METHOD AND OTHER POINTS OF IMPORTANCE REGARDING CIT (APPEALS)

What is Form 35 of the Income Tax Act?

Form 35 is available for assessees or deductors aggrieved by any order of an Assessing Officer (AO). They can file an appeal to the Commissioner of Income Tax (Appeals) against any order of the Assessing Officer by submitting a duly filled Form 35. People who need to mandatorily e-file income tax returns can also e-file Form 35. If you do not file your income tax returns online, you can also file Form 35 offline.

When you are filing Form 35, you need to file your appeal along with a Memorandum of Appeal, provide a statement of facts and explain the ground behind your appeal. Apart from that, your Form 35 should also be accompanied by a copy of the order appealed against the notice of demand.

How to Download Form 35 of Income Tax Act?

You can file Form 35 on the official e-filing website of the Income Tax Department. You can also download the offline version of Form 35 from the Income Tax website.

How to File Form 35 of Income Tax?

Step 1: Visit the official Income Tax e-filing portal and log in using your user ID and password.

Step 2: A new page will open. Click on the e-file option from the taskbar. A drop-down menu will open. Click ‘Income Tax Form’ and select the ‘File Income Tax Forms’ option.

Step 3: On the ‘File Income Tax Forms’ page, enter Form 35 in the search bar and click on it once the option comes up.

Step 4: Select the Assessment Year and click on ‘Continue’.

Step 5: Once a new page opens, click ‘Let’s Get Started’.

Step 6: Now the Form 35 page will open. On this page, fill in all the necessary details and click the ‘Preview’ button.

Step 7: Check all the details on the ‘Preview’ page and click ‘Proceed to E-Verify’.

Step 8: A dialogue box for a confirmation to proceed with e-verification will appear on the screen. Click ‘Yes’ here.

Step 9: An e-verification page will open where you need to verify the form. After successful verification, a success message will be displayed on the screen along with the Transaction ID and Acknowledgement Number. You need to note these numbers for future reference.

You will also receive an email confirmation and SMS confirmation on your mobile number registered with the e-filing portal upon successful submission.

Before filing Form 35, you must pay an appeal fee based on the assessed total income determined by the Assessing Officer (AO):

• Up to ₹1 lakh → ₹250

• ₹1 lakh – ₹2 lakh → ₹500

• Above ₹2 lakh → ₹1,000

• Other cases → ₹250

INCOME TAX AUDIT CONDITIONS BASED FOR BUSINESS, PROFESSION FOR BUSINESS LOSS AND CASES UNDER OTHER LAW AND DUE DATES

For Business:

• Normal Business (Not under presumptive taxation):

  • If sales/turnover/gross receipts exceed Rs. 1 crore, or

  • If cash transactions are up to 5% of total transactions, turnover threshold is Rs. 10 crores.

• Presumptive Taxation (Section 44AE, 44BB, 44BBB):

  • If opting for the scheme and claiming profits lower than the prescribed limit.

• Presumptive Taxation (Section 44AD):

  • If declaring taxable income below the prescribed limit and income exceeds Rs. 2.5 lakh (basic exemption limit).

• Opting Out of Presumptive Taxation:

  • If a taxpayer opts out of presumptive taxation in any one year of the 5-year lock-in period and income exceeds the basic exemption limit in subsequent 5 years.

For Profession:

• Profession (Not under presumptive taxation):

  • If gross receipts exceed Rs. 50 lakh in a year.

• Presumptive Taxation (Section 44ADA):

  • If claiming profits below 50% of total receipts and income exceeds the basic exemption limit.

For Business Loss:

• If a business incurs a loss and turnover exceeds Rs. 1 crore, the taxpayer is subject to tax audit.

Cases Under Other Laws:

• If the taxpayer is required to audit accounts under another law, they are not required to do a separate income tax audit, provided the audit report is furnished before the due date.

Tax Audit Report Forms:

• Form 3CA: If the business/profession is already audited under another law.

• Form 3CB: If the business/profession is not required to be audited under any other law.

• Form 3CE: For non-residents and foreign companies receiving royalties or fees for technical services.

Income Tax Audit Deadline:

• The last date for completing the income tax audit for FY 2023-24 is 7th October 2024 (extended from 30th September 2024).

• For Transfer Pricing Audit, the deadline is 31st October 2024.

How and When Tax Audit Reports Shall be Furnished and penalty for non-filling or delay in non-filling

Filing the Report:

• The tax auditor submits the audit report online using their Chartered Accountant (CA) login details.

• Taxpayers must add CA details in their login portal.

• Once the report is uploaded, the taxpayer must accept or reject it. If rejected, the process must be repeated until the report is accepted.

Filing Deadlines:

• 31st October of the subsequent year for taxpayers with international transactions.

• 30th September of the subsequent year for all other taxpayers.

• The subsequent year refers to the assessment year.

Penalty for Non-filing or Delay in Filing Tax Audit Report:

Penalty for Non-filing:

• The lesser of:

  • 0.5% of total sales/turnover/gross receipts

  • Rs. 1,50,000

· Exceptions: If there is a reasonable cause for the delay, no penalty will be levied under Section 271B.

PRESUMPTIVE TAXATION LIMITS, RESTRICTION, CONDITIONS, MAINTENANCE OF BOOKS AND ADVANCE TAX PAYMENT (FY 2024-25 / AY 2025-26) FOR BUSINESS AND PROFESSION:

· For Small Businesses under Section 44AD:
Businesses with a turnover up to Rs. 3 crore can opt for presumptive taxation, provided 95% of receipts are through online modes.

· For Professionals under Section 44ADA:
Professionals like doctors, lawyers, engineers, etc., with gross receipts up to Rs. 75 lakh are eligible for the presumptive taxation scheme, subject to the condition of 95% receipts being online.

Key Features of the Presumptive Scheme (Section 44AD):

1. Turnover Limit:

1. Rs. 3 crore if 95% of receipts are online.

2. Rs. 2 crore if not all receipts are through online modes.

2. Minimum Income Declaration: Minimum 8% of turnover (or 6% if receipts are digital).

3. No Need for Accounting Records: Businesses under this scheme are not required to maintain detailed accounts.

4. No Audit Requirement: Tax audit is not necessary unless the turnover exceeds the limits or the taxpayer opts out.

5. Advance Tax Payment: Full 100% advance tax must be paid by 15th March of the financial year.

6. Tax Filing: Tax return is filed using ITR-4, a simpler form than ITR-3.

New Condition (Section 44AD(4)):

• If a taxpayer opts for presumptive taxation, they must continue the scheme for 5 consecutive years.

• Opting Out Early:

  • If a taxpayer opts out before the 5 years are complete, they cannot re-enter the scheme for the next 5 years.

Example:
If a taxpayer opts for the scheme in AY 2024-25, they must continue it until AY 2028-29. If they opt out in AY 2025-26, they cannot rejoin the scheme until AY 2030-31.

Restrictions for Opting Presumptive Scheme:

• The restriction applies if profits are declared less than 8% or 6%. If this happens, the taxpayer cannot opt for the scheme for the next 5 years.

• Exceptions:

  • If the taxpayer’s turnover exceeds the limit (e.g., Rs 2 crore), they are ineligible for the scheme regardless of profit declarations.

Maintenance of Books of Accounts and Tax Audit:

1. If a taxpayer declares less than 8%/6% of profits or fails to comply with Section 44AD(4), and their income exceeds the basic exemption limit, they must:

1. Maintain books of accounts.

2. Undergo a tax audit if turnover exceeds Rs 1 crore.

2. Example:

2. If Mr. P opts for the presumptive scheme but declares profits below the required percentage, and his income exceeds the basic exemption limit (Rs 2.5 lakh), he must maintain accounts and undergo a tax audit.

Advance Tax Payment under Section 44AD:

• Due Date:
  Taxpayers opting for presumptive taxation must pay 100% advance tax by 15th March of each financial year.

• Penalty:
  Failure to pay advance tax attracts interest under Section 234C.

Summary of Conditions:

• Turnover Limit for Section 44AD:
  Rs. 3 crore (if 95% of receipts are digital) or Rs. 2 crore (if not all receipts are digital).

• Profit Percentage:
  Minimum 8% of turnover (6% for digital receipts).

• Tax Audit:
  Not required unless turnover exceeds limits or the taxpayer opts out of the scheme.

• Advance Tax:
  Must pay full advance tax by 15th March of the financial year.

TDS/TCS RATE FOR FY 2025-26 (AY 2026-2027) (EFFECTIVE FROM APRIL 1, 2025) FOR RESIDENTS INDIVIDUALS AND OTHER ENTITIES:

1. TDS/TCS Rates for Resident Individuals and Entities:

• · Section 192: TDS on salary is deducted at the normal slab rate after the basic exemption limit.

• · Section 192A: Premature EPF withdrawal attracts TDS at 10% if it exceeds ₹50,000.

• · Section 193: Interest on securities has a ₹10,000 threshold and a 10% TDS rate.

• · Section 194: Dividend income with a ₹10,000 threshold is subject to 10% TDS.

• · Section 194A: Interest other than securities has different thresholds: ₹1,00,000 for senior citizens, ₹50,000 for bank/PO/co-op society, and ₹10,000 for other cases, with a 10% TDS rate.

• · Section 194B: Lottery winnings, crossword puzzles, etc., with a ₹10,000 per transaction threshold, have a 30% TDS rate.

• · Section 194BA: Winnings from online games have no threshold and a 30% TDS rate.

• · Section 194BB: Horse race winnings with a ₹10,000 per transaction threshold are taxed at 30% TDS.

• · Section 194C: Payments to contractors have a ₹30,000 single transaction and ₹1,00,000 aggregate threshold, with a 1% TDS rate for HUF/individuals and 2% for others.

• · Section 194D: Insurance commission with a ₹20,000 threshold has a 5% TDS rate till 30-09-2024 and 2% from 01-10-2024.

• · Section 194DA: Life insurance pay-out with a ₹1,00,000 threshold has a 5% TDS rate till 30-09-2024 and 2% from 01-10-2024.

• · Section 194G: Lottery ticket commission with a ₹20,000 threshold has a 5% TDS rate till 30-09-2024 and 2% from 01-10-2024.

• · Section 194H: Commission or brokerage with a ₹20,000 threshold has a 5% TDS rate till 30-09-2024 and 2% from 01-10-2024.

• · Section 194-I: Rent with a ₹50,000 per month threshold has a 2% TDS rate for plant and machinery and 10% for land/building.

• · Section 194J: Professional/technical fees with a ₹50,000 threshold have a 10% TDS rate.

• · Section 194LA: Compensation on immovable property acquisition with a ₹5,00,000 threshold has a 10% TDS rate.

• · Section 194N: Cash withdrawal with a ₹1 crore threshold (₹3 crore for co-op societies) has a 2% TDS rate for amounts between ₹20 lakhs and ₹1 crore, and 5% for amounts above ₹1 crore (above ₹3 crore for co-op societies).

• · Section 194-O: E-commerce transactions with a ₹5,00,000 threshold have a 1% TDS rate till 30-09-2024 and 0.1% from 01-10-2024.

• · Section 194Q: Purchase of goods with a ₹50,00,000 threshold has a 0.1% TDS rate.

• · Section 194S: Transfer of virtual digital assets with a ₹10,000 threshold for non-specified persons and ₹50,000 for specified persons has a 1% TDS rate.

• · Section 206C(1): TCS on scrap sale has no threshold and a 1% rate.

• · Section 206C(1G): TCS on remittance out of India under LRS for educational and medical purposes with a ₹10,00,000 threshold has a 5% rate.

• · Section 206C(1G): TCS on remittance for purchase of overseas tour program package has no threshold, with a 5% rate up to ₹10,00,000 and 20% above ₹10,00,000.

• · Section 206C(1G): TCS on remittance out of India under LRS for any other purpose with a ₹10,00,000 threshold has a 20% rate.

• · Section 206C(1G): Remittance for education purpose, where the source of fund is an educational loan from financial institutions u/s 80E, has no limit and a 0% TCS rate.

  TDS/TCS RATE FOR FY 2025-26 (AY 2026-2027) (EFFECTIVE FROM APRIL 1, 2025) For non-residents:

• · Section 194E: Payment to non-resident sportsmen/sports associations has no threshold and a 20% TDS rate.

• · Section 194LB: Interest on infrastructure debt fund has no threshold and a 5% TDS rate.

• · Section 194LC: Interest on foreign currency loans has no threshold and a 5% TDS rate (4% for IFSC-listed bonds).

• · Section 195: Other payments to non-residents have no threshold, with a 20% TDS rate for royalty and technical fees, and 10% for long-term capital gains (LTCG).

• · TCS on sale of goods under Section 206C(1H) has been completely removed from April 1, 2025.

• · Higher TDS rates applicable under Section 206AB/206CCA for non-filers of income tax returns have been removed from April 1, 2025.

Futures and options (F&O) Taxation in India: Tax audit applicability, reporting gains and losses, which ITR applicability, MAINTENANCE OF ACCOUNTING RECORD

F&O traders must understand the tax implications on their trades to avoid penalties and maximize tax benefits. Here's a simplified guide to F&O taxation:

1. Tax Audit Changes:

1. Previously, F&O traders with turnover above Rs 10 crore were subject to tax audits. However, the calculation of trading turnover has changed, and only positive and negative differences will be considered, lowering the turnover and potentially reducing the need for a tax audit.

2. Report F&O Gains/Losses:

2. All gains and losses from F&O trading must be declared in your tax returns (ITR). Failure to report these transactions can lead to notices from the tax department.

3. Income Classification:

3. F&O trading is classified as non-speculative business income under Section 43(5). Hence, profits or losses from F&O should be reported as Business Income under the PGBP (Profits and Gains from Business and Profession) head.

4. Which ITR to File:

4. Traders must file their income under ITR-3, which is designed for business income.

5. Taxability of Other Investments:

5. Intra-day trading is treated as speculative business income, while long-term or short-term equity investments may fall under capital gains depending on the holding period and frequency of trading.

6. Maintenance of Accounting Records:

6. Traders are required to maintain accounts if:

   • Income exceeds Rs 2.5 lakh.

   • Turnover exceeds Rs 25 lakh in any of the preceding three years.

   • For new businesses, the limit applies in the first year.

7. Tax Audit Applicability:

7. A tax audit is required if:

   • Turnover exceeds Rs 1 crore or Rs 10 crore (if cash receipts are less than 5%).

   • Losses from F&O trading require filing an audit if income exceeds basic exemption and you opt out of the presumptive taxation scheme.

8. Aditya's F&O Trade example:

• Futures trade profit: 100 units x (210-200) = Rs 1,000

• Options trade loss: 200 units x (290-300) = Rs 2,000 (negative ignored)

• Total Turnover (Absolute Profit): Rs 3,000

9. Tax Audit Applicability Based on Turnover:

1. Turnover up to Rs 2 Cr:

o No audit if profit is >=6% of turnover.

o Audit required if profit is <6% and income exceed the basic exemption limit.

2. Turnover between Rs 2 Cr and Rs 10 Cr:

o Tax audit not required if 95% of transactions are digital.

3. Turnover above Rs 10 Cr:

o Tax audit mandatory regardless of profit or loss.

10. Set-Off and Carry Forward of F&O Losses:

• F&O losses (non-speculative) can be carried forward and offset against future non-speculative income for up to 8 years.

• Speculative losses (e.g., intra-day trading) can only be carried forward for 4 years.

11. Expenses Deductible by F&O Traders:

• F&O traders can claim business-related expenses like:

  • Brokerage fees, commission, telephone bills, internet costs, etc.

  • Ensure to maintain proper records, and digital payments are recommended to claim deductions.

12. Example of Expense Deduction:

13. Aditya’s F&O expenses for the year:

• Brokerage enrollment charges: Rs 5,000

• Brokerage charges: Rs 98,000

• Telephone expenses: Rs 18,000

• Internet charges: Rs 14,400

• Total F&O expenses: Rs 1,35,400

• Net F&O loss after expenses: Rs 4,35,400

  • Adjusted taxable income: Rs 15,00,000 (Salary) + Rs 3,50,000 (Rental) + Rs 80,000 (Interest)

  • Total taxable income: Rs 15,00,000 - Rs 4,35,400 = Rs 10,64,600 (after adjusting loss).

14. Should F&O Traders Opt for the New Tax Regime (Section 115BAC)?

• Under the new regime:

  • Tax calculations are based on new slab rates.

  • No deductions under Chapter VI-A (e.g., 80C, 80D).

  • Traders can switch back to the new regime only once in their lifetime, by filing Form 10-IEA.

INTRADAY TRADING -Meaning and HOW PROFITS ARE TAXED

If you earn income from shares, it's crucial to identify whether you're a trader or investor, as it influences your tax treatment. Investors benefit from lower tax rates on capital gains, while traders can deduct business expenses from their income.

Capital Assets vs. Trading Assets

• Investors: Invest for long-term capital appreciation and dividends. Income from the sale of shares is taxed as capital gains (LTCG or STCG).

• Traders: Buy and sell shares frequently to profit from short-term price movements. Their income is classified as business income and taxed at applicable slab rates (up to 30%).

Intraday Trading: Speculative Business Income

Intraday trading is when shares are bought and sold within the same trading day. The profits from such trades are treated as speculative business income and taxed according to income tax slabs.

Income Tax Rules for Intraday Trading

• Income Head: Speculative business income (treated as business income).

• ITR Form: Traders must file ITR-3, reporting speculative business income.

• Due Date:

  • 31st July if no tax audit is required.

  • 31st October if tax audit is applicable.

Tax Audit Applicability for Intraday Trading, Turnover calculation for intraday trading, advance tax for intraday traders, carry forward of losses

• Turnover ≤ ₹2 Crore: Tax audit is not required if profits are at least 6% of turnover. If profit is less than 6% or there's a loss, tax audit applies if income exceeds ₹2.5 lakh.

• Turnover between ₹2 Crore and ₹10 Crore: No tax audit if profits are ≥ 6% of turnover. If opting out of presumptive taxation, a tax audit is required.

• Turnover > ₹10 Crore: Tax audit is mandatory irrespective of profit or loss, provided over 95% of transactions are digital.

Turnover Calculation for Intraday Trading

Turnover is the sum of absolute profits and losses (positive and negative differences). For example:

• Buy 100 shares at ₹75, sell at ₹80: Profit = ₹500

• Buy 200 shares at ₹500, sell at ₹460: Loss = ₹8,000

• Absolute turnover = ₹500 + ₹8,000 = ₹8,500

Tax Calculation for Intraday Trading

Tax on intraday trading income is calculated based on income tax slabs just like any other person

Carry Forward Losses for Intraday Traders

Speculative business losses (from intraday trading) can be carried forward for 4 years if returns are filed on time. These losses can only be offset against speculative business income. However, under the new tax regime, losses cannot be carried forward or adjusted.

STARTUP INDIA: ELIGIBILITY, TAX EXEMPTIONS, AND INCENTIVES

Launched in 2016 by Prime Minister Narendra Modi, the Startup India campaign aimed to promote entrepreneurship by offering various tax exemptions and incentives. However, these benefits are available only to "Eligible Startups" that meet specific criteria.

Eligibility for Startup India

To qualify as an eligible startup under the Startup India Action Plan, the following conditions must be met:

1. Age: The startup must be less than 10 years old from the date of incorporation/registration.

2. Entity Type: It must be a private limited company, partnership firm, or limited liability partnership (LLP).

3. Annual Turnover: The startup's turnover should not exceed ₹100 crore in any of its financial years.

4. Innovation and Growth: It should focus on innovation, development, improvement of products or services, or have a scalable business model with potential for high employment generation or wealth creation.

5. Business Formation: It should not be formed by splitting or reconstructing an existing business.

Tax Exemptions for Eligible Startups

Eligible startups under the Startup India program can avail the following tax exemptions:

1. 3-Year Tax Holiday:

1. Startups incorporated between April 1, 2016, and March 31, 2022, can avail a 100% tax rebate on profits for three years within a block of seven years, provided annual turnover doesn't exceed ₹25 crore. This helps startups manage working capital in their early years.

2. Exemption from Tax on Long-Term Capital Gains:

2. A new section (54 EE) allows startups to exempt tax on long-term capital gains if the amount is reinvested into a specified fund within 6 months. The maximum investable amount is ₹50 lakh, which must remain invested for 3 years; withdrawal before 3 years will revoke the exemption.

3. Tax Exemption on Investments Above Fair Market Value:

3. Investments made by angel investors, family, funds (not registered as venture capital), or incubators above fair market value in eligible startups are exempt from tax.

4. Tax Exemption on Capital Gains from Residential Property Sale (Section 54GB):

4. Under Section 54GB, long-term capital gains from the sale of a residential property can be exempt if reinvested in equity shares of eligible startups. The shares must be held for 5 years, and the startup must use the investment to purchase assets that are not transferred within 5 years.

5. Carry Forward Losses and Capital Gains in Case of Change in Shareholding:

5. Eligible startups can carry forward losses if the shareholders holding voting rights on the last day of the year, when the loss occurred, remain the same on the last day of the subsequent year. The 51% voting rights restriction has been relaxed for eligible startups.

MSME RELATED TAXATION AND OTHER NORMS BEFORE BUDGET AND AFTER BUDGET, UDYAM REGISTERATION, ELIGIBIITY FOR MSME REGISTERATION, DOCUMENTS REQURIED, STEPS FOR REGISTERATION, FEES, CERTIFICATE,

The Micro, Small, and Medium Enterprises Development Act (MSMED), 2006 aims to support MSMEs and help them compete with larger businesses. The new GST return filing system introduced changes to simplify the process, impacting MSMEs' payment cycles. Here’s how these changes interplay:

Background of the New GST Return Filing System

• Small Taxpayers: Businesses with turnover up to ₹5 crores in the preceding year.

• Large Taxpayers: Businesses with turnover above ₹5 crores.

• Small taxpayers, including most MSMEs, can opt for quarterly GST filing, while large taxpayers must file monthly. Input tax credit (ITC) for buyers can only be claimed if the supplier uploads invoices on the GST portal.

Background of the MSMED Act, 2006

• The MSMED Act mandates that payments to MSMEs must be made within 45 days of supply to protect their interests.

• The MSME Samadhaan portal was launched to resolve delayed payments to MSMEs by central and state government departments.

Payment Cycle Issue

• MSMEs opting for quarterly filing may face delayed payments from large taxpayers who need their invoices uploaded monthly for ITC claims.

• As a result, large taxpayers might delay payments until the MSME uploads the invoices, potentially violating the 45-day payment limit set by the MSMED Act.

This situation discourages large taxpayers from engaging with MSMEs unless they adopt a monthly return filing system, which can be burdensome for the MSME and increase compliance costs.

Solution and Conclusion

The government has proposed a partnership between GSTN and the Trade Receivables Discounting System (TReDS) to ease the working capital pressure on MSMEs. TReDS allows MSMEs to sell/discount trade receivables, improving cash flow and reducing payment delays. GSTN’s involvement would authenticate invoices, encouraging MSMEs to file returns promptly.

While the solution does not completely resolve the payment cycle issue, it aims to support MSMEs by facilitating faster working capital access and easing the compliance burden of filing returns.

MSME Registration in India: Procedure and Documents Required

Budget 2025 Updates:

• Revised MSME Classification: More businesses now qualify.

• Credit Cards: ₹5 lakh limit for micro-enterprises, 10 lakh cards in FY 2025-26.

• Fund of Funds: ₹10,000 crore fund with an expanded scope.

• Term Loans: Up to ₹2 crore for 5 lakh women and SC/ST entrepreneurs.

What is MSME? MSMEs, or Micro, Small, and Medium Enterprises, are crucial for India’s economy, contributing significantly to manufacturing (36%) and exports (45%). The government offers MSME registration (Udyam Registration) to help businesses access benefits like loans, tax relief, and more.

Revised MSME Classification (2025)

The government has revised the classification of MSMEs, with criteria based on both investment and annual turnover. The new classification is as follows:

1. Micro Enterprises: These enterprises have an investment in plant and machinery of up to ₹2.5 crore and an annual turnover of less than ₹10 crore.

2. Small Enterprises: These enterprises have an investment in plant and machinery ranging from ₹2.5 crore to ₹25 crore, and an annual turnover between ₹10 crore and ₹100 crore.

3. Medium Enterprises: These enterprises have an investment in plant and machinery of up to ₹125 crore, and an annual turnover between ₹100 crore and ₹500 crore.

MSME Udyam Registration

MSME registration (Udyam Registration) is an online process via the Udyam portal. It's not mandatory, but highly beneficial as it unlocks various government incentives and subsidies.

Eligibility for MSME Registration

MSMEs in manufacturing, services, wholesale, and retail sectors that meet the investment and turnover criteria can register. Eligible entities include:

• Entrepreneurs (individuals, startups)

• Private/public limited companies

• Sole proprietorships

• Partnership firms

• LLPs, Self Help Groups (SHGs)

• Co-operatives and Trusts

Documents Required for MSME Registration

• Aadhaar card

• PAN card

• GSTIN (if applicable)

• No fees for registration.

Steps to Apply for MSME Registration on Udyam Portal:

1. New Entrepreneurs: Click "For New Entrepreneurs" on the Udyam portal homepage.

2. Enter Aadhaar, validate OTP, and PAN details.

3. Fill out the enterprise details, including investment and turnover.

4. Submit and get the OTP. The Udyam Registration Certificate will be emailed.

For businesses with existing UAM registration, select the option "For those already having registration as UAM" on the portal.

MSME Registration Fees

There are no fees for MSME registration.

MSME Registration Certificate

Upon completion, the Udyam Registration Certificate, containing a 19-digit unique number and QR code, will be issued.

Benefits of MSME Registration:

• Cheaper Bank Loans: Lower interest rates (1-1.5% lower).

• Patent & Industry Setup Subsidies: Reduced costs.

• Access to Government Tenders: Easy access to government e-marketplace.

• Security Deposit Waiver: For e-tenders.

• Government Schemes: Eligibility for Credit Guarantee, Public Procurement Policy, etc.

• Priority Lending: From banks under priority sector lending.

How to Check MSME Registration Status:

• Visit Udyam portal > Click ‘Print/Verify’ > Enter Reference Number and captcha > Verify.

MSME Registration Certificate Download:

• Visit Udyam portal > Click ‘Print/Verify’ > Enter Udyam Registration Number > Get OTP > Download certificate.

Check MSME Registration by Name: You cannot check by name. To retrieve your registration number, click "Forgot Udyam/UAM No." on the portal, enter your mobile/email, and generate OTP to retrieve it.

PROFESSIONAL TAX IN MAHARASHTRA: OVERVIEW (SLAB RATES, APPLICABILITY, HOW TO PAY, DUE DATES, LATE PAYMENT PENALTY, EXEMPTIONS & RETURNS DUE DATE)

Professional tax (PT) in Maharashtra is imposed on salaried individuals, self-employed professionals, and businesses, depending on their income. The state government regulates the tax rates and income slabs.

Professional Tax Slab in Maharashtra

1. For Male Employees:

1. Monthly Salary ≤ ₹7,500: No tax payable.

2. Monthly Salary ₹7,501 to ₹10,000: ₹175/month.

3. Monthly Salary > ₹10,000: ₹200/month (₹300 for February).

2. For Female Employees:

2. Monthly Salary ≤ ₹25,000: No tax payable.

3. Monthly Salary > ₹25,000: ₹200/month (₹300 for February).

Applicability

• Who needs to pay:

  • Individuals, Hindu Undivided Families (HUFs), companies, and co-operative societies.

  • Employers must deduct the tax from employees' salaries and remit it to the municipal corporation.

How to Pay Professional Tax Online

1. Visit the official Maharashtra GST Department website.

2. Select the e-payment option.

3. Choose the correct Professional Tax Act (PTEC or PTRC).

4. Fill in the details, such as the amount, payment period, and mobile number.

5. Complete payment and obtain the receipt.

Alternatively, payments can be made via the Sales Tax Portal of GRAS, where details like TIN, mobile number, and employer name are required.

Due Date for Payment Of PTEC

• Before May 31st: Payment due by June 30th of the same year.

• After May 31st: Payment is due within one month of enrollment.

Late Payment Penalties

• Individuals: 1.25% penalty per month on unpaid tax.

• Employers: 2% interest per month on the outstanding amount.

Exemptions from Professional Tax

The following individuals are exempt from paying professional tax in Maharashtra:

• Senior citizens (65+ years).

• Parents of physically challenged children.

• Individuals with more than 40% disability.

• Badli workers in the textile industry.

· Maharashtra PT Return Filing

PTRC return due dates Maharashtra

If Tax Liability is Less than Rs. 50,000 then Return Frequency shall be Annual and due date shall be March 31 of the financial year

and

if Tax Liability is more than Rs. 50,000 then Return Frequency shall be Monthly and due date shall be Last date of each month

BELATED RETURN: SECTION 139(4), PENALTY, HOW TO FILE ,LATE PAYMENT NOTICE

If you miss the deadline to file your Income Tax Return (ITR), you can still file a belated return under Section 139(4), but with a penalty. Here's a concise guide:

What is a Belated Return?

A belated return is filed after the original due date (31st July) but before 31st December of the assessment year. The due date for FY 2024-25 is 31st July 2025, and if missed, you can file a belated return until 31st December 2025.

Drawbacks of Filing a Belated Return

1. Interest: Under Sections 234A, 234B, and 234C.

2. Late Fee: As per Section 234F:

   • Income ≤ ₹5 lakh: ₹1,000.

   • Income > ₹5 lakh: ₹5,000.

3. Loss Carry Forward Restrictions: Business and capital losses cannot be carried forward, except for house property losses.

4. Disallowed Deductions/Exemptions: Deductions under Sections 10A, 10B, 80-IA, 80-IB, etc., are not available for late returns.

5. Notice from Tax Department: Delayed filing can lead to notices.

How to File a Belated Return

1. Online Method:

1. Step 1: Log in to the Income Tax e-filing portal.

2. Step 2: Go to ‘e-File’, select ‘Income Tax Returns’ > ‘File Income Tax Return’.

3. Step 3: Choose the relevant assessment year and select "Belated Return".

4. Step 4: Fill in the necessary details, select Section 139(4), and submit.

2. Offline Method:

2. Download the ITR Preparation Utility, fill in your details, and upload the .json file on the portal.

What Happens if You Miss the Belated Return Deadline?

If you miss the 31st December deadline, you may file ITR-U in some cases. Additionally, you can request a condonation of delay for genuine reasons.

Penalty for Late Filing

• Penalty under Section 271F: Up to ₹5,000 for not filing by the due date.

• Interest on Tax Due: Interest under Sections 234A, 234B, and 234C.

• Under-Reporting of Income: A penalty of up to 200% of the tax payable.

What to Do if You Receive a Late Payment Notice

1. Review the Notice: Understand the issue and required actions.

2. Gather Documents: Include Form 16, Form 26AS, proof of investments, etc.

3. Respond on Time: Pay attention to deadlines to avoid additional penalties.

4. Consult a Tax Professional: For assistance with your response.

5. Monitor Submission: Ensure acknowledgment of your response.

Note: It's advisable to file your returns by the original due date (31st July) to avoid penalties and complications.

REVISED INCOME RETURN FILING ELIGIBILITY, STEPS TO FILE, PENALTY, CONSEQUENCES AN DUE DATES

The revised return under Section 139(5) must be filed by December 31 of the assessment year or before the assessment is completed, whichever is earlier. It can be filed even after the original return is processed. There is no limit on the number of times a return can be revised. For FY 2023-24 (AY 2024-25), the deadline for filing belated and revised ITRs is December 31, 2024.

Eligibility for Filing a Revised Return:

• Any taxpayer who has filed an original return under Section 139(1), including individuals, businesses (companies, partnerships, HUFs), and those who filed a belated return, can file a revised return under Section 139(5).

Steps to File a Revised Return:

1. Log in to the e-filing portal with your credentials.

2. Choose the income sources you have, and the portal will auto-select the applicable ITR form.

3. Upload Form 16 or skip if unavailable.

4. Enter PAN, DOB, and other personal details.

5. Verify and enter employment, investment, and bank details.

6. Upload Form 26AS for auto-population of TDS details.

7. Select "Revised Return" and enter the acknowledgment number of the original return.

8. Cross-check the details, compare tax under both regimes, and file the return.

Penalty for Filing Revised Return:

• No penalty if filed by July 31 and e-verified within 30 days.

• If filed after the due date, it's treated as a belated return, attracting late fees under Section 234F.

Consequences of Filing a Revised Return:

• Minor changes (e.g., correcting personal details) won't have consequences.

• Significant corrections (e.g., undeclared income) may lead to scrutiny and potential penalties.

• If the revised return reveals higher taxable income, additional tax may apply.

Important Considerations When Filing a Revised Return:

• The revised return substitutes the original return entirely.

• It must be filed before the due date for the assessment year or before the assessment is completed.

• You can revise your return multiple times, but only before the assessment is completed.

• For AY 2024-25, revised returns can be filed until 31st December 2024.

• After the assessment is complete (under Section 143(3)), a revised return can't be filed.

• If your return has already been processed, you can still file a revised return before the assessment is complete.

· Revised Return After Processing:

• A revised return can be filed even after the original return has been processed but before the assessment is complete.

· Revised Return Processing Time:

• Generally, it takes around 10 days for the revised return to be processed after e-verification.

· Filing Immediately After a Mistake:

• You can file a revised return as soon as you discover an error or omission in your original or belated return.

· Correcting Defective Returns:

• A revised return can correct any errors in the original return that caused it to be defective.

· Deadline for Revised Return:

• The revised return must be filed by 31st December of the relevant assessment year or before the completion of assessment.

· Filing Revised Return After Scrutiny Notice:

• You can file a revised return after receiving an intimation under Section 143(1), but not after a scrutiny order (Section 143(3)) or best judgment assessment (Section 144).

· Changing Tax Regime:

• If your original return was filed under the old regime, you can switch to the new regime in the revised return, but not vice versa.

· Claiming Additional Refund:

• You can file a revised return to claim a higher refund if you missed a deduction in the original return.

· Multiple Revisions:

• You can revise your return multiple times before the assessment is completed.

· Revised Return After a Tax Notice:

• You can still file a revised return even after receiving a notice under Section 143(1) if the assessment is not yet complete.

MINIMUM ALTERNATE TAX (MAT) OVERVIEW:

MAT is a tax paid by companies making high profits but paying little to no tax due to exemptions and deductions under the Income Tax Act. The aim of MAT is to ensure that these companies contribute a minimum tax based on their book profits.

Tax Calculation: MAT is calculated as 15% of Book Profits (with effect from AY 2020-21). Book profits are adjusted with specific additions and deletions from net profit.

Additions to Book Profits:

• Income tax paid or payable

• Transfer to reserves

• Dividend proposed or paid

• Depreciation

• Provision for unascertained liabilities

• Expenses related to exempt income (except certain sections)

Deletions from Book Profits:

• Income exempt under sections 10, 11, and 12 (except 10AA and 10(38))

• Reserves or provisions withdrawn

• Deferred tax credited

• Loss brought forward or unabsorbed depreciation

MAT Credit: Companies can claim MAT credit if they pay tax under MAT provisions. The credit can be set off against tax payable under normal provisions in future years. The credit can be carried forward for 15 years.

Illustration: For FY 2023-24, ABC Ltd has taxable income of Rs. 40 lakhs (normal provisions) and Book profits of Rs. 75 lakhs.

1. Tax payable under normal provisions:

   • Rs. 40,00,000 × 30% = Rs. 12,00,000

   • Education cess: 4% = Rs. 48,000

   • Total: Rs. 12,48,000

2. Tax payable under MAT provisions:

   • Rs. 75,00,000 × 15% = Rs. 11,25,000

   • Education cess: 4% = Rs. 45,000

   • Total: Rs. 11,70,000

MAT Credit Carry forward Example:

Since MAT tax payable (Rs. 11,70,000) is higher, the company pays MAT tax and can claim a MAT credit of Rs. 2,34,000 (Rs. 11,70,000 – Rs. 9,36,000).

 2020-21: MAT payable - Rs. 8,00,000, Normal tax - Rs. 5,00,000. MAT credit available - Rs. 3,00,000.

 2021-22: MAT payable - Rs. 9,00,000, Normal tax - Rs. 6,50,000. MAT credit available - Rs. 2,50,000, total MAT credit - Rs. 5,50,000.

 2022-23: MAT payable - Rs. 10,00,000, Normal tax - Rs. 7,00,000. MAT credit available - Rs. 3,00,000, total MAT credit - Rs. 8,50,000.

 2023-24: MAT payable - Rs. 7,00,000, Normal tax - Rs. 10,00,000. No new MAT credit, total MAT credit - Rs. 5,50,000 (from previous years).

 2024-25: MAT payable - Rs. 6,00,000, Normal tax - Rs. 11,00,000. MAT credit set-off - Rs. 5,00,000, remaining MAT credit - Rs. 50,000.

• MAT Credit Set-off: MAT credit can only be set off when the tax payable under normal provisions is higher than under MAT, and the set-off is limited to the difference between the two.

Conclusion: MAT ensures that profitable companies pay at least a minimum amount of tax, and the MAT credit allows them to offset the excess tax paid in future years.

MERGERS AND ACQUISITIONS IN INDIA , TAX CONSIDERATIONS,CARRY FORWARD OF LOSSES, CROSS BORDER TREATIES

Key Drivers of Mergers and Acquisitions in India (2024):

· High M&A activity driven by digital transformation, sector-specific reforms, and global economic shifts.

· Significant M&A in technology, pharmaceuticals, renewable energy, financial services, and e-commerce.

· India remains attractive for domestic and cross-border deals due to business-friendly reforms.

Key Tax Considerations:

1. Capital Gains Tax:

o Short-term capital gains (STCG): 15% for listed equity shares sold within 12 months.

o Long-term capital gains (LTCG): 10% for shares held for more than 12 months, if gains exceed INR 1 lakh.

o Exemptions under Section 47 for certain mergers, demergers, or amalgamations.

2. Carry Forward of Losses and Unabsorbed Depreciation:

o Amalgamated companies can carry forward and set off accumulated losses and unabsorbed depreciation under Section 72A.

o Conditions include industrial activity for three years and retention of 75% of fixed assets for five years post-merger.

3. Indirect Taxes and GST:

o GST impacts transactions involving assets, real estate, intellectual property, or services.

o Exemption for transfer of business as a going concern.

o GST applies to individual assets or intellectual property purchases.

4. Stamp Duty:

o Transfer of immovable property or shares attracts stamp duty, rates vary by state.

o Companies may restructure to reduce stamp duty burden.

5. Cross-Border M&A and Double Taxation Treaties:

o Withholding taxes, transfer pricing regulations, and DTAAs are critical.

o India has DTAAs with several countries to avoid double taxation.

o Transfer pricing regulations ensure arm's length transactions.

Recent Tax Reforms Affecting M&A in 2024:

· Corporate tax rate reduced to 22% for domestic companies and 15% for new manufacturing entities.

· Clarifications on indirect transfers provide certainty for foreign investors.

· Equalization Levy taxes digital transactions, impacting tech sector M&A.

PROCEDURE TO FILE FORM 36 FOR ITAT APPEAL, WHERE TO DOWNLOAD, APPEAL FEES, ITAT, APPEAL TO ITAT, CAUSE LIST, HOW TO CHECK STATUS

What is Form 36? Form 36 is used to file an appeal against an order passed by the Commissioner of Income Tax (CIT) to the Income Tax Appellate Tribunal (ITAT). The appeal must be filed within 60 days of the order. The form requires details like the order being appealed, relief sought, grounds of appeal, and the taxpayer's personal information.

Where to Download Form 36? Form 36 can be downloaded from the official Income Tax Department's e-filing portal. It is also available through a Google search linking to the official site.

Appeal Fees for ITAT

• Rs. 500: When assessed income is up to Rs. 1 Lakh.

• Rs. 1500: When assessed income is between Rs. 1 Lakh and Rs. 2 Lakhs.

• Rs. 10,000 or 1% of assessed income (whichever is less): When assessed income exceeds Rs. 2 Lakhs.

• Rs. 500: For appeals unrelated to determined income (e.g., appeals for penalties).

• No fee: For cross-objections.

What is ITAT? ITAT, established in 1941, is a quasi-judicial body that resolves income tax-related disputes. It hears appeals against orders passed by the CIT or Assessing Officer.

Procedure of Appeal to ITAT

• Filing an appeal to ITAT is a legal privilege, not an inherent right.

• No appeal can be filed against orders where no right to appeal is granted by statute (e.g., Section 264 orders).

• Writ petitions can be filed in the concerned High Court for cases where no appeal is allowed.

ITAT Cause List The ITAT Cause List contains case details such as:

• Appellant's name

• Respondent's name

• Case number

• Filing date

• Appeal type

• Hearing date The list is updated regularly on the official ITAT website.

How to Check ITAT Appeal Status?

1. Visit the ITAT Judicial Information Portal.

2. Choose between 'Search by Appeal Number', 'Search by Filing Date', or 'Search by Assessee Name'.

3. Select the Bench and Appeal Type.

4. Enter the required information and captcha code.

5. Click 'Search' to view the appeal status.