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India Today
7 days ago
- Business
- India Today
New Income Tax Bill 2025: Will changes in the revised bill impact taxpayers?
The Lok Sabha has passed a revised version of the Income Tax Bill, 2025, just a week after the earlier draft was withdrawn. The updated Bill, presented by Finance Minister Nirmala Sitharaman on August 11, incorporates most of the recommendations made by the Select Committee. It is set to replace the six-decade-old Income Tax Act, first draft of the new Bill was introduced in February this year as part of the biggest reform to India's direct tax laws in more than sixty years. However, the government withdrew it last week to make corrections and Sharma, Partner at Global Employer Services, Tax & Regulatory Services, BDO India, said the biggest benefit of the new law is its simpler language. 'A common man may easily understand it with lesser effort compared to the old law,' she added that most of the Select Committee's recommendations have been included. The new tax regime announced in Budget 2025 remains part of the Bill, and taxpayers will still need to assess which regime works best for them when filing returns. She also clarified that there are no changes to the tax rates announced in Budget key update in the revised Bill is a clear tax deduction for commuted pension, or lump sum pension payments, for certain applies to those receiving pensions from specific funds listed in Schedule VII of the Bill, such as the LIC Pension Fund. In the earlier draft, this exemption was not clearly mentioned, which led the Select Committee to suggest its inclusion. The aim was to ensure fair tax treatment for non-employees receiving pensions from approved funds, similar to the benefits already given to Kanabar, CEO of Dhruva Advisors, welcomed several changes made in the revised Bill. 'There were a number of provisions against which representations were made to the Select Committee. These have now been accepted in the Bill presented,' he highlighted three major changes. First, the proposal to levy Alternate Minimum Tax on Limited Liability Partnerships (LLPs) has been restrictions placed on charitable trusts in the earlier draft have been rolled provisions related to Transfer Pricing and the definition of Associated Enterprises have been relaxed. 'A set of very welcome changes. Glad that the representations to the Select Committee have borne fruit,' he example of a change in the definition of Associated Enterprise is in how management and control are the earlier Bill, two enterprises could be considered associated if they had common management or control at any time during the year. Kanabar said this would have created a 'subjective challenge.' Now, it has been clarified that only in specific circumstances will management and control be considered common, and the test will be applied as of the end of the year. 'This will take away the subjectivity and all litigation that goes with it,' he charitable trusts, Kanabar pointed out that the revised Bill restores the ability to reinvest capital gains and spend funds in the following year, a provision that had been removed in the earlier LLPs, he said the removal of Alternate Minimum Tax was important, calling it 'an error in drafting the earlier Bill' that has now been individual taxpayers, Kanabar said the Bill offers important clarifications. This includes how standard deduction is applied when computing income from house property after deducting municipal taxes, and how pre-construction interest is treated for let-out properties. 'The clarification is welcome,' he The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)- EndsMust Watch
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Business Standard
21-06-2025
- Business
- Business Standard
Net direct tax collection drops by 1.39% to Rs 4.58 trillion so far in FY26
Net direct tax collections till June 19 in the financial year 2025-26 (FY26) dipped by 1.39 per cent year-on-year to Rs 4.58 trillion, due to higher refunds, income tax relaxation provided to 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 person - grew marginally by 0.71 per cent on yearly basis to Rs 2.72 trillion during the same period. Net corporate tax during the same period declined by 5.13 per cent to Rs 1.72 trillion, while securities transactions tax (STT) increased by 12.13 per cent to Rs 13,013 crore, according to the data. According to Samir Kanabar, tax partner with EY, the marginal dip in net tax collections is majorly due to tax relaxation given to 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 increased by 4.86 per cent year-on-year to Rs 5.45 trillion, while refunds rose significantly by 58.04 per cent to Rs 86,385 crore during the same period. Of the total refund, major chunk comprised of corporate refunds totalling Rs 76,832.08 crore which grew by 67.31 per cent. According to experts, this refund relates to past years which may have been cleared now. Of the total gross direct tax, corporate tax amounted to Rs 2.49 trillion, non-corporate tax contributed Rs 2.82 trillion , STT totalled Rs 13,013 crore and other taxes stood at Rs 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 a moderate growth of 3.87 per cent in the first quarter of FY26. This is in comparison to last year's year-on-year growth of 27.34 per cent. Advance tax is paid by individuals and businesses in four installments within specific dues dates - June 15, September 15, December 15 and March 15. The non-corporate advance tax decreased by 2.68 per cent on year to Rs 33,928.32 crore till June 19, in FY26, while corporate advance tax rose by 5.86 per cent to Rs 1.21 trillion during the same period. The Centre is estimated to collect Rs 25.2 trillion as direct taxes in FY26. Net direct tax collection in FY25 grew at 13.57 per cent to Rs 22.26 trillion, exceeding the initial budgeted target of Rs 22.07 trillion.
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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.
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Business Standard
30-04-2025
- Business
- Business Standard
Govt notifies ITR forms; LTCG up to Rs 1.25L allowed under ITR-1, ITR-4
The government has notified the income tax return forms 1 and 4 for assessment year 2025-26, and made it easier for individuals with long term capital gains of up to Rs 1.25 lakh from listed equities to file returns. The government has also made certain changes in the form with regard to deductions claimed under 80C, 80GG and other sections and has provided a drop down menu in the utility for tax filers to select from. Also, assessees will have to furnish in the ITR section-wise details with regard to TDS deductions. Once the utility for filing ITR is made available by the I-T department, people can start filing ITR for income earned in 2024-25 fiscal. The last date for filing ITR for individuals and those who do not have to get their accounts audited is July 31. Usually, the ITR forms are notified before the end of the fiscal, mostly around February/March. This time, however, the ITR forms and the filing utility got delayed as revenue department officials were pre-occupied with the new Income Tax Bill, which was introduced in Parliament in February. ITR forms 1 and 4 for assessment year (AY) 2025-26 are to be filed by individuals and entities with total income of up to Rs 50 lakh a year. Now, salaried individuals and those under presumptive taxation scheme, having long-term capital gains (LTCG) of up to Rs 1.25 lakh in a fiscal year will be able to file ITR-1 and ITR-4, respectively. Earlier, such persons/entities were required to file ITR-2. Under I-T law, LTCG of up to Rs 1.25 lakh from sale of listed shares and mutual funds are exempt from tax. Gains exceeding Rs 1.25 lakh/ annum are subject to 12.5 per cent tax. EY India Tax Partner Samir Kanabar said allowing those with minimal LTCG to continue using ITR-1 or ITR-4 reduces the burden of navigating more complex forms. "This move reflects a clear shift towards enhancing taxpayer services by simplifying the return filing process for individual taxpayers. The change is expected to encourage greater voluntary compliance, reduce filing-related stress, and make the system more user-friendly for small taxpayers," Kanabar said. Like last year's form, ITR-1 also seeks detail from individuals if they have incurred expenditure exceeding Rs 2 lakh for travel to a foreign country for yourself or for any other person. It also seeks detail on whether an asseessee has incurred an expenditure exceeding Rs 1 lakh on consumption of electricity during the previous year. ITR Form 1 (Sahaj) and ITR Form 4 (Sugam) are simpler forms that cater to a large number of small and medium taxpayers. Sahaj can be filed by a resident individual having annual income up to Rs 50 lakh and who receives income from salary, one house property, other sources (interest) and agricultural income up to Rs 5,000 a year. Sugam can be filed by individuals, Hindu Undivided Families (HUFs) and firms (other than Limited Liability Partnerships (LLPs)) having total annual income up to Rs 50 lakh and income from business and profession. ITR-2 is filed by individuals and HUFs not having income from profits and gains in business or profession. Sandeep Jhunjhunwala, Tax Partner at Nangia Andersen LLP said so far salaried individuals having income under the head capital gains were required to file form ITR-2 even where the capital gains were exempt by virtue of the threshold limit prescribed under Section 112A, resulting in elaborate disclosure requirements including information about accrual or receipt of capital gain, details of securities etc. This inconvenience is reduced with the new form ITR-1 for AY 2025-26 incorporating a small section for reporting the income in the nature of LTCG on which tax is not payable by virtue of the exemption limit provided in Section 112A. "However, in cases, where the taxpayer earns LTCG under Section 112A in excess of Rs 125,000 or where the taxpayer earns any other LTCG other than that taxable under Section 112A or earns short term capital gains or has carried forward or brought forward capital losses or derived income from any combination of the above, the salaried individual would have to resort to Form ITR-2 for filing return of income," Jhunjhunwala said. A similar change has been made to form ITR-4 which applies to taxpayers resorting to presumptive taxation for their business income. The new ITR-4 form for AY 2025-26 subsumes reporting of LTCG subject to tax under Section 112A of the IT Act within the limit of Rs 1.25 lakh. AKM Global Partner-Tax Sandeep Sehgal said, "this change streamlines the tax filing process, making it more accessible and less burdensome for small investors and salaried individuals, thereby encouraging timely and accurate compliance". (Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
BBC News
06-02-2025
- Automotive
- BBC News
Carmaker Kia becomes latest global firm to face tax trouble in India
Indian tax authorities have sent a confidential notice to South Korean car maker Kia Motors accusing it of evading millions of dollars in amount could be as high as $155m (£125m) and the notice was sent in April last year, according to India told the BBC it has already filed a "detailed response supported by comprehensive evidence and documentation" to the tax claim, issued by a customs commissioner in the city of Chennai. It did not provide further details. The BBC has approached the finance ministry for comment. Kia has a manufacturing facility in the southern Indian state of Andhra Pradesh and has sold more than a million cars in India since its launch in which first reported the story, said the government's 432 page notice accused Kia of importing the components for its Carnival car model in separate lots rather than as a single shipment, a move that attracts significantly lower customs year, Indian officials slapped a similar tax notice of $1.4bn on German auto giant Volkswagen's unit, Skoda Auto Volkswagen has challenged the demand in the Bombay High Court and said it is "availing itself of all legal remedies".The pile up of these new tax disputes and lack of quick resolution mechanisms could have significant implications for foreign investment into India, whose economy has slowed in recent foreign direct investment (FDI) into the economy has halved over the last year, according to calculations by HSBC Securities, due to a number of cases also raise concern among foreign investors about policy uncertainty, say experts."The issue is being agitated before the courts and so it would not be appropriate to comment on the merits of the revenues' claim," says Dinesh Kanabar, tax expert and former Deputy CEO of KPMG India."What, however, is concerning is the dispute resolution process in India takes several years and, in the meantime, there is a risk of having to make a part payment of the demand."If India is to revive FDI inflows, addressing "ease of business and the tax dispute resolution process" will be critical, he has been a spate of high-profile tax disputes between the Indian government and global corporations where litigation has dragged on for most high-profile was a $2bn tax demand on Vodafone over its purchase of the Indian arm of Hutchison in 2007, where the court ruled in favour of the UK telecoms Edinburgh-based oil and gas major Cairn Energy was embroiled in a longstanding $1.4bn dispute with the taxmen over a 2014 retrospective bill that went to an international tribunal. Cairn won the case and the government was forced to settle last year."We need a degree of accountability at the tax office, given that the track record of defending demands in appeal is quite poor," said Mr Kanabar.
