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Mint
3 days ago
- Business
- Mint
I-T department is cross-verifying claims in real time. You've been warned.
NEW DELHI : For a long time, people have been getting away with making inflated or false claims in their income tax returns (ITRs). Unless returns are picked up for post-filing scrutiny by officials, the income tax (I-T) department can do little to stop individuals from beating the system. But this income tax season, this is going to change. The I-T department is rolling out an integrated verification system designed to automatically cross-check information against multiple government databases at the time of ITR filing. Imagine a taxpayer filling out inaccurate details of their investment claim—home loan details, house rent allowance (HRA), or insurance—the system will immediately throw up an error and prompt the taxpayer to modify the return. Also Read: How you can save tax by getting a mobile phone, laptop or car lease from office Meaning: Taxpayers will be caught red-handed if they try to play smart. 'You can no longer fake a loan account number or a policy document number," said Ashish Karundia, founder of Ashish Karundia & Co., Chartered Accountants. 'These are now directly mapped to your permanent account number (PAN) or Aadhaar." Cross-platform data sharing Insurance companies, for instance, already share data with the government. So, if a person tries to claim a deduction using someone else's insurance policy number, the system can identify the discrepancy. The real-time verification now extends to HRA claims, loans for housing and education, and even deductions on electric vehicles. Each claim is verified using backend integrations with banks and platforms such as the m-Parivahan app. "As soon as a taxpayer inputs any detail, say a loan number or an insurance policy, the system cross-verifies it instantly with the information they already have. If something doesn't match, it throws an error and prompts the taxpayer to modify their return," Karundia added. To be sure, so far, verification has been happening manually and after the detection of a post-filing discrepancy. 'The I-T department would look at your return, flag inconsistencies, and then issue a notice. It was slow and added to the workload of tax officials," he said. Now, the department aims to entirely automate this process. To do so, the newly notified ITR forms require taxpayers to provide a detailed breakup of income tax deductions through specific drop-down fields, replacing the earlier practice of entering a single consolidated figure, according to CA Vijaykumar Puri, Partner at VPRP & Co LLP. Also Read: Legal minefield: Decoding capital gains tax on the sale of leasehold and tenancy rights He explained how earlier, someone could simply write ₹1.5 lakh under Section 80C without specifying if it was in PPF, ELSS, or LIC. 'Now, taxpayers must specify the exact amounts invested in instruments like PPF, ELSS, or LIC. This added transparency will not only deter fake claims but also give the tax department clear visibility into the nature of each deduction," he said. A nudge towards the new tax regime The move from human-led scrutiny to system-led verification is crucial for ensuring better compliance and fewer fraudulent claims. 'It significantly reduces the scope for manual oversight and any manipulation. It eliminates case-by-case verification, conserves departmental resources, and ensures quicker, more reliable compliance," he added. Less human involvement also means that people won't be able to fabricate investment proofs like rent receipts for claiming HRA deduction. 'When people know that everything is digitally captured, the chance of fraud automatically goes down," Karundia said. Karundia explained that the move is a step closer to former finance minister Arun Jaitley's broader strategic vision of lower tax rates, fewer exemptions, and minimal discretion introduced. In essence, by automating cross-verification and reducing human intervention, the I-T department is pushing taxpayers towards an exemption-less new tax regime. Also Read: Capital gains on equities: Here's all you need to know when filing tax returns this year The I-T department on 27 May extended the ITR filing due date for FY25 (AY26) from 31 July to 15 September. The decision was made after a delay in issuing the notification of ITR forms.
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Business Standard
19-05-2025
- Business
- Business Standard
Old or new tax regime? A step-by-step guide to choose what's best for you
As the ITR filing season for the financial year 2024-25 (FY25) begins, individual taxpayers need to make an important choice- stick with the default new tax regime or opt for the old one. The new regime offers lower tax rates, but does not allow most tax deductions. On the other hand, the old regime permits popular tax deductions and exemptions under Sections 80C, 80D, HRA, LTA, and more, but comes with comparatively higher slab rates. Who Should Choose What? · Old Regime is ideal for those who: Invest in tax-saving instruments (PPF, ELSS, NPS) Claim home loan interest, HRA, LTA, and medical insurance deductions Have a structured salary and financial plan focused on savings · New Regime is best suited for: If you wish to continue with the old tax regime while filing your ITR, here's how to do it: 1. Login to the income tax e-filing portal Visit and log in with your PAN credentials. 2. Start filing your ITR Select 'File Income Tax Return' and choose the assessment year as 2025–26 for income earned in FY25. 3. Choose the correct ITR form Select the appropriate ITR form based on your income type (usually ITR-1 or ITR-2 for salaried individuals). 4. Navigate to 'personal information' section Within the form, under the 'Personal Information' tab, you will find an option asking whether you want to opt out of the new tax regime. 5. Select 'Yes' to opt for the old regime Choose 'Yes' when asked if you want to opt for the old tax regime under Section 115BAC(6). 6. Continue with filing and submit before the deadline Fill in your income details, claim eligible deductions, and complete the process before the deadline (July 31, 2025, for most taxpayers). Switching back to the old tax regime can be financially rewarding for those with planned investments and deductions. Use an online income tax calculator to compare both regimes based on your specific financial profile.
India Today
13-05-2025
- Business
- India Today
Old vs new tax regime: Should your home loan decide for you?
Budget 2025 brought big changes for salaried taxpayers. With the basic exemption limit raised to Rs 12 lakh under the new tax regime, many people may now pay little or no tax, even without using any deductions. This makes the new regime attractive and much simpler to there's a catch. The new tax regime doesn't allow popular deductions like HRA, LTA, Section 80C (for investments like PPF and ELSS), or Section 80D for health insurance. One major loss is the home loan interest HOME LOAN MATTERS IN OLD REGIMEAfter the 2025 Union Budget, Indian taxpayers are at a crossroads, whether to opt for the old or new tax regime. According to CA (Dr) Suresh Surana, 'When choosing between the old and new income tax regimes, the impact of a home loan may often be a crucial factor, particularly for individuals with significant housing finance obligations.'He explained, 'Under the old regime, taxpayers are entitled to key deductions related to home loans on interest paid under Section 24(b) for a self-occupied property (restricted to Rs 2 lakhs in the case of self-occupied property, whereas no such restriction applies in the case of let out/ deemed to be let out property), and up to Rs 1.5 lakh on principal repayment under Section 80C, subject to the overall threshold limit.''Additionally, first-time homebuyers may be eligible for further deductions under Sections 80EE or 80EEA for previously availed home loans, depending on the value of the property and the amount of the loan,' mentioned THE NEW REGIME OFFERS (AND MISSES)advertisementContrastingly, the new regime brings simpler and lower tax rates. However, it takes away several key deductions, including home loan if you're still repaying a loan, especially in the initial years, you may find the old regime more tax-efficient. 'Those who have repaid their loans or do not claim housing loan benefits may benefit from the simplified and concessional rate structure of the new regime,' stated HIKE UNDER SECTION 87A: A GAME CHANGEROne major update under Budget 2025 is the increased rebate under Section 87A, from Rs 25,000 to Rs 60,000.'This has significantly improved its attractiveness to middle-income taxpayers. As a result, individuals with net total income of up to Rs 12 lakh benefit from the nil-tax liability under the new regime compared to the old tax regime, irrespective of the quantum of home loan interest. Therefore, for taxpayers with net total income of up to Rs 12 lakh, the new regime proves more beneficial, even if they are servicing a home loan,' said REGIME GAINS EDGE BEYOND RS 12 LAKH INCOMEOnce your income crosses Rs 12 lakh, things start to shift. 'It is only when such net total income exceeds Rs 12 lakh that the deductions available under the old regime, including home loan interest, start to play a decisive role in reducing overall tax liability,' mentioned added, 'In such cases, the ability to claim higher deductions may outweigh the lower slab rates under the new regime, making the old regime more tax-efficient for high-income individuals with significant interest outgo on housing loans.'BEYOND HOME LOANS: OTHER CONSIDERATIONSHome loan benefits are important, but they aren't the only ones to think about. Other deductions under the old regime, like Section 80D (health insurance), Section 80G (donations) and HRA (house rent allowance), also make a pointed out that, 'The home loan is an important variable in the tax planning equation, but the choice between regimes should be based on a comprehensive evaluation of all relevant factors, rather than on a single benefit alone.'As per Shefali Mundra, tax expert at ClearTax, 'Your income level matters; higher earners with many deductions may save more under the old regime. Also, if you regularly invest in options like PPF, ELSS, or NPS, the old regime could work better for you. But if your focus is on keeping things simple and having more cash in hand now, the new regime may suit you more.'advertisement"Choosing between the old and new tax regimes is a nuanced decision. While home loan benefits are a significant consideration, they should be weighed alongside income levels, investment strategies, and financial objectives. Taxpayers are encouraged to conduct a comprehensive analysis or consult financial advisors to determine the most beneficial regime for their circumstances," stated other words, choosing the right tax regime is no longer a one-size-fits-all decision. While home loan benefits can be a major deciding factor, especially for higher earners, taxpayers must look at the bigger picture. Income level, deductions, financial goals, and investment habits all matter. The best approach? Run the numbers for both regimes and let logic, not just your loan, guide your choice.
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Business Standard
13-05-2025
- Business
- Business Standard
68% of IT workers missed out Rs 49,000 in tax savings-How to avoid mistakes
If you're a salaried professional in India—especially in IT—chances are you paid more tax than you needed to in FY 2024-25. In fact, according to a recent analysis by 1 Finance, 68% of IT professionals missed out on tax savings worth Rs 49,094 on average! The reason? Poor tax planning and limited awareness of deductions IT professionals often earn high CTCs, but when it comes to tax planning, many choose the DIY route—relying on limited information, sticking with the default tax regime, or taking last-minute decisions. The result? Missed deductions, wrong tax regime choices, and unnecessary tax payments. To understand just how widespread these inefficiencies are, 1 Finance studied the tax profiles of 1,865 IT professionals for the financial year FY 2024-25. What's going wrong? 1. Wrong Tax Regime Choices About 33% of professionals chose the wrong tax regime, often by default or based on assumptions—not calculations. Old vs New Regime: Many didn't factor in available deductions under the old regime (like HRA, 80C, and 80D) before opting for the new, 'zero-deduction' regime. Quick Fixes: Some made last-minute declarations without consulting a tax advisor, resulting in missed benefits. 2. Overlooked Deductions and Benefits Even among those who stayed in the old regime, key deductions went unused: HRA not claimed correctly due to mismatched rent receipts or employer documentation gaps. Section 80C left partially unutilized, especially by those who didn't invest in ELSS or life insurance early in the year. 3. Corporate NPS: A Missed Opportunity Perhaps the biggest surprise? 8 out of 10 professionals missed out on Corporate NPS benefits. This low-cost, employer-facilitated pension scheme can help you: Save an additional Rs 50,000 under Section 80CCD(2) (on top of 80C) Build long-term retirement savings with tax deferral benefits But most employees either don't opt in or their companies don't promote it, fearing administrative work or legal complexity. Employees, on the other hand, avoid it due to the long lock-in period and lack of clarity around how it works. Despite Corporate NPS contributions being fully deductible for companies under Section 36(1)(iva), very few employers offer this benefit, and even fewer employees take full advantage of it. 4. Compliance gaps and costly mistakes a CA can help avoid Even beyond missed deductions, DIY tax filing often leaves hidden compliance gaps—errors that a qualified CA would catch and correct upfront. Among the IT professionals: 4% needed to deduct TDS on rent of more than ₹50K/month. Non-compliance could lead to 1%-1.5% monthly interest and a penalty of ₹200 per day for default. 13% was required to pay advance tax, which, if not paid timely, leads to interest of 1% per month. 31% had two or more income streams (e.g., salary + freelancing), increasing the chance of using the wrong ITR form or missing income disclosures. 15% held cryptos, an area where misreporting or incorrect ITR selection is common. What You Can Do Differently Compare regimes annually: Don't stick with the same tax regime without reviewing your income and deductions each year. Explore Corporate NPS: Ask your employer about setting it up. If available, it's one of the most underutilized tools to save beyond 80C. Don't wait till March: Tax planning is a year-long process. Spread your investments and keep track to avoid rushed decisions.
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Business Standard
13-05-2025
- Business
- Business Standard
ITR 2025: Which form to use, what documents you need, and how to save tax
The tax season is here, and with it comes the annual ritual of preparing to file your Income Tax Return (ITR). For millions of taxpayers across the country—whether salaried employees, freelancers, business owners, or investors—filing your return accurately and on time is both a legal obligation and an opportunity to optimize your finances. If you want to file your income tax return smoothly, avoid errors, and potentially save on taxes, here are some essential tips by Shefali Mundra , Tax expert at Clear Tax Choose the right tax regime Taxpayers can choose between the old and new tax regimes. The old regime allows various deductions and exemptions, whereas the new regime offers lower tax rates with limited exemptions. Evaluate which regime benefits you more based on your income and eligible deductions. Many salaried individuals with high deductions (like 80C, HRA, and home loan interest) may benefit from the old regime, while those with simpler finances may find the new regime more attractive. Pick the Right ITR Form Choosing the correct ITR form is crucial. Filing the wrong one could result in your return being treated as defective. ITR-1: Income up to ₹50L from salary, one house property, and other sources. ITR-2: For those with capital gains, multiple properties, or foreign income. ITR-3: Income from business or profession. ITR-4: Presumptive income scheme for small businesses or professionals. Gather Key Documents in Advance Organize all relevant documents before you begin: Form 16 from your employer Form 26AS and Annual Information Statement (AIS) Bank interest certificates, rent receipts, capital gains statements Investment proofs (PPF, ELSS, insurance, etc.) PAN and Aadhaar Don't Miss Out on Deductions Maximize your tax savings by claiming deductions under: Section 80C (up to ₹1.5L): PPF, EPF, ELSS, principal on home loan Section 80D: Health insurance premiums Section 24(b): Interest on housing loans HRA, LTA, and other exemptions if you qualify Ensure that all claims are backed by valid documentation. Check Your Tax Credit Details Before filing, cross-verify the TDS reflected in Form 26AS and AIS against your actual income. Any mismatches must be clarified with the deductor to avoid refund delays or scrutiny. How to decide between old and new regime? If you claim deductions like Section 80C (PPF, ELSS), HRA, home loan interest, etc., the Old Regime may save you more. If you have a simple income structure with minimal deductions, the New Regime may be more beneficial due to lower slab rates.
