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Time of India
2 days ago
- Business
- Time of India
Parliamentary panel suggestions on Income Tax Bill 2025 tabled in Lok Sabha
New Delhi: The Parliamentary Select Committee appointed to review the new Income Tax Bill 2025 has proposed to change the definition of "beneficial owner" to allow carry forward losses as individuals who derive benefits directly or indirectly from shares during the tax year. The 31-member Select Committee, chaired by BJP leader Baijayant Panda , has made 285 suggestions to the draft Income tax bill 2025 in a 4,575 page report tabled in Lok Sabha Monday. Explore courses from Top Institutes in Select a Course Category Healthcare Public Policy Data Science Degree Artificial Intelligence healthcare Others Operations Management Management Finance Data Analytics Project Management Leadership Design Thinking others Product Management Cybersecurity MBA Technology CXO Digital Marketing MCA PGDM Data Science Skills you'll gain: Financial Analysis in Healthcare Financial Management & Investing Strategic Management in Healthcare Process Design & Analysis Duration: 12 Weeks Indian School of Business Certificate Program in Healthcare Management Starts on Jun 13, 2024 Get Details While most of the recommendation are aimed for greater clarity, there were 32 major recommendations including reinstating the deduction in respect of inter-corporate dividends absent in the original draft, a standard 30% deduction to be calculated post-deduction of municipal taxes and extending pre-construction interest deductions to even let-out properties. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like 20 Pieces of Clothing Older Women should Avoid Learn More To ease the pain points for common taxpayers the report also recommends allowing for 'Nil' tax deduction certificates, and more discretion for officers to waive penalties when non-compliance is not deliberate and allow refunds in case of late filings of tax returns for small taxpayers. The committee has also called for more clarity on the definition of non-performing assets, intending to resolve the long-standing dispute over the definition of NPA under banking and tax laws. The panel wants the term 'parent company' clearly defined, and asked the department to fix gaps in clauses covering capital gains and sought proper provisions for non-profit organisations, highlighting that religious-cum-charitable trusts should not lose exemptions for anonymous donations. The committee calls for eliminating any residual references to the 1961 Act to make the new code self-contained and litigation-resistant. Live Events "Collectively, these recommendations underscore the committee's focus on promoting taxpayer protection, enhancing fairness, and reducing compliance burdens," said Amit Maheshwari, Tax Partner, AKM Global, a tax and consulting firm. If enacted, these provisions are expected to strengthen transparency, minimize disputes, and further the government's ambition of creating a contemporary, efficient, and user-friendly tax regime." Experts said the report will add more clarity to the new bill left out in the original draft. "Importantly, the report addresses concerns of charitable and not-for-profit entities by advocating clearer definitions, replacing "receipts" with "income" for tax purposes, and restoring the concept of "deemed application", urges inclusion of professionals under electronic payment norms, prescribes qualifications for valuers, and recommends contextual fairness in GAAR provisions," Sandeep Jhunjhunwala, M&A Tax Partner at Nangia Andersen LLP, said.
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Business Standard
11-07-2025
- Business
- Business Standard
Delhi High Court stays ₹1,140 crore angel tax demand against OYO
The Delhi High Court on Friday stayed a ₹1,140 crore angel tax demand from hospitality and hotel aggregator OYO's parent company, Oravel Stays Private Limited, for the assessment year 2020–21. The tax demand was issued under Section 56(2)(viib) of the Income Tax Act—commonly known as the "angel tax" provision—which applies when unlisted companies issue shares at a value exceeding their 'fair' market price. This section seeks to tax the premium received by a closely held company on the issue of shares that exceeds the fair market value (FMV) of such shares, treating the excess premium as 'income from other sources.' The tax department had argued that investments made by Oravel into its Indian subsidiary were issued at a premium and were therefore taxable. OYO challenged this, arguing that the funds infused by the holding company into its subsidiary were capital in nature, not income, and therefore should not attract tax under the angel tax provisions. OYO filed an appeal before the Commissioner of Income Tax (Appeals) to challenge the order passed by the assessing officer and also filed a stay petition before the officer, which was rejected. OYO then filed a writ petition before the Delhi High Court, asserting the merits involved in the case. Earlier, in May 2023, a division bench of the High Court had directed the Commissioner of Income Tax (CIT) to accord a personal hearing to OYO for the stay on the income tax demand of ₹1,140 crore. This was followed by another plea before the Delhi High Court for a complete stay on the tax demand. The division bench had observed that the CIT had not dealt with its application, which was preferred before him, in respect of the order passed by the Assessing Officer (AO) under Section 220(6) of the Income Tax Act, 1961. OYO had challenged the order denying the stay on the recovery of the complete tax demand and asked the department not to treat OYO as an assessee in default under Section 220(6) of the Income Tax Act, 1961, for the entire outstanding demand of ₹11,39,93,05,320 until the Commissioner of Income Tax (Appeals) decided the appeal. The High Court also directed the CIT to dispose of the application at the earliest possible time, though not later than four weeks. The CIT will accord a personal hearing to the authorised representative of OYO and also allow the filing of written submissions. "In case an order is passed by the CIT that is adverse to the interests of the petitioner, the order of the CIT will not be given effect for a period of two weeks from the date when the order is received by the petitioner," the court had said. Commenting on the order, Amit Maheshwari, Tax Partner at law firm AKM Global, said, 'While the Finance Act, 2024, has completely abolished the angel tax provision under Section 56(2)(viib), legacy cases continue to be litigated at various forums. The quantum of tax demand in such cases is often substantial, placing considerable financial strain on companies asked to pay upfront or secure stay orders. This stay order is thus a significant relief for OYO. It also sends a broader message on the judicial sensitivity toward the hardships faced by startups and growth-stage companies as a result of aggressive valuation-related tax interpretations.'
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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.
Mint
21-06-2025
- Business
- Mint
Jump in refunds depresses Centre's net direct tax revenue
New Delhi: A sharp jump in tax refunds has led to a modest dip in the union government's net tax revenue receipts from corporate and personal income to ₹4.59 trillion so far this year, official data showed. The union government's net direct tax revenue up to 19 June this year contracted 1.4% annually, although, before adjusting for refunds, it recorded 4.9% growth to ₹5.45 trillion, the Central Board of Direct Taxes (CBDT) said on Saturday. The Income Tax Department issued ₹86,385 crore of corporate and personal income tax refunds in the period, a 58% jump from the year-ago period. The bulk of it was in the corporate tax component. After refunds, non-corporate tax receipt, which mainly comprises personal income tax revenue, stood at ₹2.73 trillion, a slight improvement over the collections in the same period a year ago. Net corporate tax revenue of ₹1.73 trillion, on the other hand, clocked a 5% dip from the year-ago period. Before adjusting for refunds, corporate tax collections saw 9.5% growth and non-corporate taxes a near 1 % improvement, CBDT data showed. Sluggish growth in personal income tax Personal income tax collection growth remained sluggish after the government offered tax relief to middle-income earners in the FY26 budget presented on 1 February, which was estimated in the budget to result in revenue erosion of about ₹1 trillion a year. The tax relief was offered as a consumption stimulus for the economy which, over time, could result in improved demand for goods and services, income growth and better tax revenue collection. 'Refunds have increased by 58.04% as on 19 June compared to corresponding period of last year reflecting better taxpayer services and quicker issuance of refunds,' CBDT said. In terms of modes of payment, advance tax collection of corporate and non-corporate taxes so far this year stood at ₹1.5 trillion, an improvement of 3.87% from the year-ago period. 'Decent growth momentum' This rise in advance tax collection establishes that companies have experienced decent growth momentum in terms of reportable profits in the first quarter, said Amit Maheshwari, Tax Partner at AKM Global, a tax and consulting firm. 'However, the marginal dip in overall net collections can be attributed to higher tax refunds issued in first quarter of FY26. Overall, the numbers suggest that while the economy is stable, the pace of collections could vary depending on how key sectors perform in the face of global turmoil and how refunds are processed,' said Maheshwari.
