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Time of India
6 days ago
- Business
- Time of India
Tax cuts, refunds, ITR deadline extension drag India's direct tax numbers down
India's net collection of direct taxes so far this fiscal year fell nearly 4% from a year earlier, as tax cuts, large refunds and an extended deadline to file returns weighed. Government officials said there was no cause for worry as they expect collections to pick up from next month and meet the projections for the fiscal year. Economists also expect the numbers to improve as the year progresses. Finance Value and Valuation Masterclass - Batch 4 By CA Himanshu Jain View Program Artificial Intelligence AI For Business Professionals Batch 2 By Ansh Mehra View Program Finance Value and Valuation Masterclass - Batch 3 By CA Himanshu Jain View Program Artificial Intelligence AI For Business Professionals By Vaibhav Sisinity View Program Finance Value and Valuation Masterclass - Batch 2 By CA Himanshu Jain View Program Finance Value and Valuation Masterclass Batch-1 By CA Himanshu Jain View Program Direct tax collections net of refunds fell to ₹6.64 lakh crore between April and August 11 from ₹6.91 lakh crore a year earlier, according to data released by the Central Board of Direct Taxes on Tuesday. Net collection of corporate tax grew about 2.3%, but non-corporate tax, including income tax , fell 7.4%. Gross direct tax collections fell nearly 2% from a year earlier to ₹7.99 lakh crore. The income tax department issued refunds of ₹1.35 lakh crore in this period, up 10% from the previous fiscal year, the data government has projected a near 13% increase in direct tax revenue for FY26 at ₹25.2 lakh crore. Net corporate tax collections were ₹2.29 lakh crore. Net non-corporate tax collections, which include collections from individuals, Hindu Undivided families and firms, totalled ₹4.12 lakh crore. The government had announced a cut in personal income tax in the February budget. It also extended the last date for filing income tax returns to September 15 from the usual July 31. Because of the extended deadline, many taxpayers have not yet paid their income taxes or filed returns. These numbers are now expected to reflect in the collections in the coming months. "It is too early to jump to any conclusion ... A clear picture on the collection trend will emerge only at the end of second quarter," a senior official told ET, adding that the government is confident of meeting FY26 direct tax targets "comfortably". The official said collections should pick up September onwards. Experts also have similar views. "...the growth rates in net personal income tax and corporate tax collections are likely to improve as the year progresses, and the base normalises," said Aditi Nayar, chief economist at ratings firm ICRA . Nayar said both personal and corporate tax would be required to grow in high double digits in the remaining part of FY2026 to meet the FY2026 targets. Securities transaction tax (STT) mop-up was ₹22,362 crore between April and August 11, up 2.3% from ₹21,599 crore a year earlier. The government aims to collect ₹78,000 crore in STT in the current financial year.
India.com
10-08-2025
- Business
- India.com
ITR Filing 2025: Multiple Property Sales In A Year — Does Section 54 Exemption Apply to All?
photoDetails english Updated:Aug 10, 2025, 05:33 PM IST What Is Section 54 Exemption? 1 / 10 Section 54 of the Income Tax Act lets you save tax on long-term capital gains earned from selling a residential house, if you use the profit to buy or build another residential property in India within a specific time frame. Who Can Use This Rule? 2 / 10 Only individuals or Hindu Undivided Families (HUFs) are allowed to claim this benefit. Companies and partnership firms aren't eligible. Which Properties Qualify? 3 / 10 You must sell a long-term capital asset (held for over two years) that's a residential house. The new property bought with the proceeds must also be a residential house in India, not a commercial property or land alone. Time Limits for Reinvestment 4 / 10 If you buy a new house, do so within one year before or two years after the sale of the old property. If you build a new house, you have three years from the sale date to finish construction. How Many Houses Can You Buy With Exemption? 5 / 10 Usually, you can claim exemption by investing the gains into one new residential property. From Assessment Year 2020-21, there's a special option: if your total gains are up to Rs 2 crore, you can buy two houses—but only once in your lifetime. Can You Claim Exemption For Multiple Sales in a Year? 6 / 10 If you sell more than one house in a year, you can get Section 54 exemption for each, as long as all conditions are met separately for each sale and reinvestment. However, the two-house option is strictly limited to a one-time use for gains up to Rs 2 crore. New Limits for High-Value Gains 7 / 10 From Assessment Year 2024-25, the total exemption is capped at Rs 10 crore. If your capital gains or cost of your new house go above this, the excess will be taxed; only up to Rs 10 crore qualifies for exemption. What If You Cannot Invest Right Away? 8 / 10 If you can't reinvest the gains before your income tax return due date, deposit the money in a Capital Gains Account Scheme. Use these funds for your property purchase/construction later and still qualify for exemption. Important Record-Keeping 9 / 10 Keep detailed records for every transaction—whether you buy ready property, under-construction flats, or redevelopment units. Proper documentation and intent are crucial for the claims process. Take Expert Help 10 / 10 Real estate and tax rules can be complex and change often. Get professional advice to make sure you follow every Section 54 requirement and avoid losing your tax benefit due to small mistakes.
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Business Standard
21-06-2025
- Business
- Business Standard
Net direct tax collection dips 1.39% to Rs 4.58 trn till June 19 in FY26
Net direct tax collections from April 1 to June 19 in FY26 dipped by 1.39 per cent year-on-year to ₹4.58 trillion due to higher refunds, income tax relaxation for salaried individuals and the impact of increased capital expenditure by companies. Of this, non-corporate tax — which includes taxes paid by individuals, Hindu Undivided Families, firms, bodies of individuals, associations of persons, local authorities, and artificial juridical persons — grew marginally by 0.71 per cent on a yearly basis to ₹2.72 trillion during the same period. Net corporate tax during the same period declined by 5.13 per cent to ₹1.72 trillion, while securities transaction tax (STT) increased by 12.13 per cent to ₹13,013 crore, according to official data. According to Samir Kanabar, tax partner at EY, the marginal dip in net tax collections is mainly due to the tax relaxation extended to the salaried class in the Union Budget 2025. 'Since individuals are paying less tax, the government is receiving lower tax deducted at source (TDS) from salaries. On the corporate side, the fall in tax collection is partly because companies are getting large refunds and also because many of them have made big Capex investments,' said Kanabar. 'When businesses spend on setting up factories, buying machinery, or expanding operations, they get tax deductions under the Income Tax Act, which reduces their taxable income and ultimately lowers the corporate income tax they pay,' he added. Gross direct tax collections rose by 4.86 per cent year-on-year to ₹5.45 trillion, while refunds surged by 58.04 per cent to ₹86,385 crore during the same period. Of the total refunds, the major chunk comprised corporate refunds amounting to ₹76,832.08 crore, which grew by 67.31 per cent. According to experts, these refunds pertain to past years and may have been cleared now. Of the total gross direct tax, corporate tax amounted to ₹2.49 trillion, non-corporate tax contributed ₹2.82 trillion, STT totalled ₹13,013 crore, and other taxes stood at ₹259.61 crore. 'The growth in corporate tax collections appears to be broadly in line with expected profit growth. In the case of non-corporates, collections may have been impacted by lower bonus payouts and modest salary increments. As for refunds, these likely pertain to previous assessment years and may simply reflect bunching of processing activity towards the end of the first quarter,' said Madan Sabnavis, chief economist at Bank of Baroda. Meanwhile, advance tax collections registered moderate growth of 3.87 per cent in the first quarter of FY26, compared with last year's year-on-year growth of 27.34 per cent. Advance tax is paid by individuals and businesses in four instalments within specific due dates — June 15, September 15, December 15 and March 15. The non-corporate advance tax decreased by 2.68 per cent year-on-year to ₹33,928.32 crore till June 19 in FY26, while corporate advance tax rose by 5.86 per cent to ₹1.21 trillion during the same period. The Centre has estimated direct tax collections of ₹25.2 trillion for FY26. Net direct tax collection in FY25 grew by 13.57 per cent to ₹22.26 trillion, exceeding the initial budgeted target of ₹22.07 trillion.
Mint
10-06-2025
- Business
- Mint
The HUF tax hack everyone's talking about—but few understand
If you were to take social media influencers at face value, a Hindu Undivided Family (HUF) might seem like the ultimate tax hack. A new legal entity with its own PAN? Double the deductions, right? No wonder that every year as tax season approaches, I get a familiar call: "Vijay, should we open an HUF to save taxes?" The short answer might be yes, but the real answer is: it depends. Read this | Maximise your tax savings with an HUF: A smart yet underused strategy Let's unpack what an HUF really is, how it works, when it makes sense, and when it can turn into a tax-planning headache. First, what exactly is an HUF? A Hindu Undivided Family isn't something you incorporate with paperwork. It comes into existence automatically when a Hindu (including Jain, Sikh, or Buddhist) male gets married and has children. Under Hindu law, this family becomes a legal entity, eligible to get a separate PAN, file its own return, and even own property. Yes, the HUF can earn income, invest, pay taxes at slab rates, and claim deductions just like an individual. That means more flexibility in your tax planning arsenal. So why do people use HUFs? Two words: tax saving. Imagine you're a salaried individual earning ₹25 lakh a year. You also inherit a house that fetches ₹6 lakh annually in rent. If this rent is added to your income, it's taxed at your slab rate: 30%. But if the same house is gifted to your HUF, that rental income is taxed under a different PAN, separately and likely at a lower rate. The same logic applies to interest, dividends, capital gains, or even a business run under the HUF banner. The more income the HUF earns, the more room there is to optimise your tax outgo. But what's the catch? Here's the big one: you can't just 'shift" your income to the HUF. For income to be taxed in the hands of the HUF, it must arise from assets gifted to or inherited by the HUF. Transferring your salary or business income to it? That's not valid. Worse, if you gift assets to your HUF, any income they generate could still be taxed in your hands under clubbing provisions (Section 64 of the Income-tax Act, 1961). To steer clear of these pitfalls, HUFs should ideally be funded with: Read this | FAQs on HUF: Tax benefits, formation, and key rules explained So while it may be tempting, you can't route your salary or existing investments through the HUF and expect to save on taxes magically. Legal vs Practical: Where people go wrong Many taxpayers start an HUF, transfer money from their personal account to it, and begin investing, expecting tax breaks. This often raises red flags, especially if the amounts are large or frequent. If a tax officer suspects that the HUF is being misused as a personal tax shelter, reassessments and penalties may follow. Another wrinkle: HUFs are legal persons, and over time, all coparceners (i.e., family members) gain rights to the assets. If you ever dissolve the HUF or want to sell its assets, every coparcener must sign off. Disagreements can, and often do, lead to prolonged family disputes. Also worth noting: since the 2005 amendment to the Hindu Succession Act, daughters are coparceners too, with equal rights. This is a landmark step toward equality, but it also adds legal complexity to HUF-held assets. When does an HUF make sense? An HUF can be a smart tool if you're receiving ancestral wealth or gifts and want to structure it for long-term benefit. For example: You inherit ₹1 crore from your father and invest it through your HUF. The HUF earns ₹7 lakh a year in interest income — taxed in its own hands. You save tax while building wealth under a common family structure. HUFs are also useful for estate planning — they can hold family gold, property, and investments with continuity across generations. Also read | Kalyani family dispute: Gaurishankar files documents to show HUF exists, belying brother's exclusive claims over assets HUFs are among India's oldest legal tax-saving structures. Used right, they're a powerful ally in your financial journey. But beware the oversimplified advice floating around social media — 'open HUF and save lakhs in taxes" is rarely the full picture. Like most tax tools, the HUF works best when used with clarity, planning, and the right intent. Vijaykumar Puri, partner at VPRP & Co LLP, Chartered Accountants.
