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Business Standard
02-07-2025
- Business
- Business Standard
CBDT sets Cost Inflation Index at 376 for FY26 for capital gains
The Central Board of Direct Taxes (CBDT) has notified the Cost Inflation Index (CII) for the financial year 2025–26 at 376, up from 363 in 2024–25. The new index will be used to calculate long-term capital gains for the assessment year 2026–27 and subsequent years. The notification will come into effect from April 1, 2026. The CII helps taxpayers adjust the purchase price of assets for inflation, thereby reducing their taxable capital gains when those assets are sold. According to Amit Maheshwari, tax partner at AKM Global, a tax and consulting firm, the revision of the CII to 376 for FY26 is an annual update that enables taxpayers to adjust their capital gains for inflation more accurately each year. 'This effectively reduces the tax liability on long-term capital assets and ensures that individuals and businesses are taxed only on real gains, not on notional appreciation due to inflation. It is a key mechanism that brings fairness and efficiency to India's capital gains tax regime. Historically, CII was used in cases of long-term capital gains for assets such as land, buildings, patents, gold, securities, etc,' said Maheshwari. Notably, the Finance Act 2024 withdrew the benefit of indexation using the CII for all assets sold after July 23, 2024. However, taxpayers selling land or buildings acquired before that date can still choose between paying tax at 12.5 per cent without indexation or 20 per cent with indexation. 'In that case, taxpayers have the option to pay tax at 12.5 per cent without indexation or 20 per cent with indexation. Hence, the revised CII of 376 is useful for taxpayers who will sell land and buildings acquired before July 23, 2024,' Maheshwari added.
Mint
02-07-2025
- Business
- Mint
CBDT raises cost inflation index to ease capital gains tax burden
New Delhi: The Central Board of Direct Taxes (CBDT) has revised a key metric used to calculate inflation-adjusted purchase price of assets, enabling sellers to claim greater tax relief on asset sales. An official notification showed that the cost inflation index (CII), used to neutralize the impact of inflation on asset prices, has been raised to 376 from the earlier 363. A higher index boosts the inflation-adjusted purchase price of an asset, thereby reducing the taxable capital gains. Capital gain is calculated as the difference between the sale price and the indexed purchase price, also factoring in the cost of improvements. The revised index applies to the current financial year (FY26) and the corresponding assessment year 2026-27 and beyond. The assessment year refers to the period in which income earned during the previous financial year is assessed and tax returns are filed. The rationale is that long-term capital gains (LTCG) on assets such as land and buildings should apply only to real profits, excluding gains purely due to inflation. However, the scope of indexation benefits has been narrowed. The Finance Act of 2024 restructured capital gains tax provisions as part of the government's broader push to simplify the tax system. Under the new rules, indexation benefits are broadly available for assets sold before 23 July 2024. A grandfathering clause allows resident individuals and Hindu Undivided Families (HUFs) to continue claiming indexation even on sales made after this date, provided the asset was acquired before 23 July 2024. In such cases, they can opt to pay LTCG tax at 20% with indexation, rather than the new flat 12.5% rate without indexation. This option, however, is not available to non-resident Indians, companies, or limited liability partnerships. The annual revision of CII enables taxpayers to adjust their capital gains for inflation more accurately every year and it is a key mechanism that brings fairness and efficiency to India's capital gains tax regime, said Amit Maheshwari, tax partner at AKM Global, a tax and consulting firm. Historically, CII was used in case of long-term capital gain for assets such as land, building, patents, gold, securities etc, Maheshwari said. The concept of indexation using CII was removed in Finance Act 2024 and post 23 July 2024, none of the assets are eligible for CII benefit, Maheshwari added. 'However, a choice was provided to taxpayers in case of sale of land and building which was acquired prior to 23 July 2024. In that case, taxpayers have option to pay tax at 12.5% without indexation or 20% with indexation. Hence, revised CII of 376 is useful for taxpayers who will sell the land and building pertaining to period before July 23, 2024,' explained Maheshwari. This year's notification has come later than usual, diverging from the typical May-June schedule. It follows the delayed release of income tax return forms for FY 2024–25, reflecting a broader slowdown in the tax compliance calendar, said Rajat Mohan, senior partner at AMRG & Associates. With a modest 3.3% rise over last year's CII of 363, the new index offers only partial relief against inflation in long-term capital gains taxation, Mohan added. 'However, the delay may affect early tax planning, audit preparation, and advance tax estimation, highlighting the need for greater administrative predictability going forward,' said Mohan.
Time of India
17-06-2025
- Business
- Time of India
At Rs 1.5 lkh cr, advance tax mop-up grows just 4% amid global uncertainties
The Centre's advance tax collections have grown at a tepid pace till June 15 this fiscal, suggesting muted income growth amid global headwinds. The total collection was ₹1.54 lakh crore, up 4% from a year earlier, slowing sharply from the corresponding 27% growth last year, dragged down by lower personal income tax payments. The amount collected was as of 11 pm on June 15. To be sure, with the last two days for making payments falling on a weekend, collection may improve further when these are reconciled later this week, officials added. Advance tax is paid in four instalments in a fiscal year—June 15, September 15, December 15 and March 15. ET Bureau 'A low growth amid high refunds in Q1 may be suggestive of a moderate pace of growth and expected profits, given the continuing global uncertainties related to tariffs and geopolitics,' said Aditi Nayar, chief economist, ICRA . 'Pace of Collections could Vary' The ₹ 1.54 lakh crore included ₹ 1.21 lakh crore advance corporate tax and ₹ 32,970 crore in advance personal income tax. Last year at the same point, advance tax collection was up 27% at ₹1.48 lakh crore—₹1.14 lakh crore as corporate tax and ₹ 34.36 crore as personal income tax. Live Events 'Overall, the numbers suggest that while the economy is stable, the pace of collections could vary depending on how key sectors perform amid global turmoil and how refunds are processed,' said Amit Maheshwari, tax partner, AKM Global, a tax and consulting firm. The Reserve Bank of India (RBI) expects the economy to grow 6.5% in the current fiscal, same as last year. However, initial data has been mixed—while goods and services tax (GST) collection rose 12.6% and 16.4% in April and May, respectively, industrial growth printed at 2.7% in April. Direct taxes The total income tax collections net of refunds as on June 16 was ₹4.56 lakh crore, marginally down by 1.5% on account of the high base effect and an over 60% increase in refunds. Net collections included corporate tax of ₹1.72 lakh crore and ₹2.84 lakh crore of personal income tax, including securities transaction tax (STT). The income tax department issued refunds of ₹85,675 crore, up 61% against the same period of previous year. Before adjusting for refunds, gross collections stood at ₹5.41 lakh crore, up about 5%. Among the minor heads, securities transactions tax (STT) collected during the April 1-June 15 period amounted to ₹13,012 crore, ₹3.34 lakh crore tax deducted at source and ₹28,096 crore self-assessment tax. The Centre has budgeted to collect ₹25.2 lakh crore as direct taxes in FY26 . Net direct tax collection in FY25 grew 13.6% to ₹22.3 lakh crore, exceeding the initial budgeted target.
Mint
15-06-2025
- Business
- Mint
Charitable and religious trusts, research institutions to face increased I-T scrutiny
NEW DELHI : Income tax return (ITR) forms of charitable trusts and research institutions that have wrongfully claimed tax exemptions, as well as entities and individuals that have had repeated additions to their tax liability, will be automatically selected for scrutiny this year. In its latest guidelines, the Central Board of Direct Taxes (CBDT) has allowed its senior field officers until 30 June to issue notices on such ITRs. Charitable and religious trusts, as well as research institutions, claiming tax exemption under the Income Tax Act's Section 11 must register again, as per the changes in law introduced with effect from 1 April 2021 to improve compliance and to avoid roving enquiries into their affairs. Also Read: Here's all you need to know about Form 16 before filing your income tax return The CBDT's guidelines said that cases where such registration has not been granted or has been revoked by the end of March 2024 and the institution has claimed tax exemption in 2024-25, shall be scrutinized by the department's faceless assessment centre. Cases where withdrawal of registration is set aside in appellate proceedings will be excluded. In addition to registration, charitable and religious trusts and institutions must ensure that 85% of the donations are used for charitable or religious purposes to be eligible for the benefit. Universities and research institutions that do not claim tax benefits under other provisions of the law can also claim tax exemption under Section 11. Individuals and entities that have been subject to a survey—a visit by tax officials that is less stringent than a search—and those that have been searched after 1 April 2023 will also have their ITRs automatically scrutinized this assessment year. Also Read: New income tax bill provisions grant wide search powers to authorities, make privacy of taxpayers vulnerable Also, taxpayers in metro cities and other places, who have had additions made to their tax liability repeatedly in the past, above specific thresholds, will get tax scrutiny notices by the end of June. So would cases flagged by any other regulator, law enforcement agency, or intelligence agency for alleged tax evasion. Stricter, clearer norms The guidelines for compulsory selection of ITRs for scrutiny in 2025-26 are consistent with those of prior years, but some noteworthy changes have been introduced in the threshold limits for recurring issues from past assessments, according to experts. 'Previously, additions exceeding ₹25 lakh for cases in eight metro jurisdictions and ₹10 lakh for cases in non-metro jurisdictions triggered automatic scrutiny. Under the revised guidelines, these thresholds have been increased to ₹50 lakh and ₹20 lakh, respectively. The move is expected to significantly reduce the number of cases selected for compulsory scrutiny," said Manish Garg, lead- transfer pricing and litigation, AKM Global, a tax and consulting firm. 'Additionally, the guidelines now prescribe stricter timelines to forward the details of selected cases to assessment units, aiming to streamline the assessment process. These changes will not only ease the compliance burden on taxpayers but also provide both tax authorities and assessees with adequate time for a more thorough and balanced assessment proceeding," added Garg. Also Read: Mint Quick Edit | Income tax: How close should authorities look? The apex direct tax policymaking body clarified that international tax matters and complex cases handled by the specialized wing of the department, central charge, are not covered under the department's faceless assessment scheme. Queries emailed to the CBDT seeking comments for the story remained unanswered until the time of publishing.
Mint
04-06-2025
- Business
- Mint
Companies have to file annual returns, disclosures for FY25 in new web-based forms
New Delhi: Businesses will have to make their most important statutory filings, especially annual returns, financial statements and cost audit reports, in the revamped and web-based forms in the government's portal from 14 July. The revamped version of the ministry of corporate affairs portal—MCA21—is highly tech-driven and AI-enabled to improve the security of filings and to enable real-time verification of the data being entered. These 38 key statutory forms, including 13 annual filing forms and six audit forms, are the final set of company forms to be migrated to the new format, said an official announcement. This will complete the revamp of the MCA21 portal. These were not included among those migrated last year as the government did not want the annual return filing cycle to be disrupted by technical glitches during the transition. India has over 1.8 million active companies. Making the forms available in July gives businesses ample time to familiarise with the new format this year. Companies have six months from the end of a financial year to hold their annual general meeting and then one month to file their financial statements and 60 days from the AGM to file annual returns. The web-based forms replace PDF forms for improved user experience and more efficient regulatory monitoring of businesses. The rebuilt filing portal allows authorities to detect financial stress and governance lapses in companies at an early stage and take remedial action. Also, defaults in compliance with certain statutory obligations may be automatically flagged to companies for rectification. Forms for reporting appointment, removal and resignation of statutory auditors, disclosure of related parties, corporate social responsibility and investor complaints are among the 38 now being migrated to the new version. Since the revamped MCA21 portal (version three or V3) allows filling the forms directly online, the transition to it is expected to bring considerable advantages for both businesses and professionals by way of improved user interface, more accuracy, and enhanced data security, said Sandeep Sehgal, partner-tax at AKM Global, a tax and consulting firm. 'Complete transition to the V3 portal will also help streamline compliance processes, making regulatory filings faster and more efficient,' Sehgal said. 'Once the complete integration of MCA forms is completed on one platform, it will further strengthen the regulatory ecosystem by enabling better data integration and thus helping build a more connected and responsive compliance environment.' Two-factor authentication required in the new forms makes it impossible to file a company document without the registered user coming to know about it, helping prevent fraud, Mint reported on 1 July last year. The ministry has also replaced the requirement of obtaining the Registrar of Companies (RoC) approvals for several corporate disclosures with just an online acknowledgement of the filing to be considered compliant. The upgraded system enables RoCs to conduct data analytics efficiently and detect compliance breaches.
