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Business Standard
14-07-2025
- Business
- Business Standard
Fake tax deductions: What taxpayers must know as I-T Dept launches raids
The Income Tax (I-T) Department has launched nationwide raids at over 200 locations to crack down on fraudulent tax deduction claims, targeting individuals and intermediaries allegedly helping taxpayers inflate deductions under the old tax regime, including bogus political donations, tuition fees, and medical expenses, news agency ANI reported on Monday. 'The Income Tax Department is conducting raids in connection with false deductions of political donations. This action comes after the Department found several bogus bills claimed by several intermediaries under 80GGC,' ANI posted on its X handle. 'Searches were also underway in connection with bogus medical expenses and tuition fees. Raids were underway on more than 200 locations,' ANI reported, quoting sources. Misuse of paperless filing flagged Authorities pointed out that the shift to paperless filing of income tax returns has made it easier for some taxpayers to inflate deductions, assuming they would escape scrutiny. However, recent initiatives such as the I-T Department's 'NUDGE' campaign flagged suspicious claims and encouraged taxpayers to revise their returns before facing penalties. Why political donations are under scrutiny Tax deductions for political donations, allowed under Section 80GGC of the Income Tax Act, are a key focus. These deductions enable individuals to reduce their taxable income if contributions are made to registered political parties or electoral trusts. 'The Income Tax Department flags political donations to ensure transparency and prevent misuse of tax benefits,' said SR Patnaik, partner (head – taxation), Cyril Amarchand Mangaldas. 'Taxpayers are required to submit valid proofs of payments and receipts to substantiate donations. In case of unsubstantiated claims, it may lead to further scrutiny and penalties.' Should you rely on AI tools? The department's recently launched TaxAssist AI tool has also been in focus, but experts caution against over-relying on it. 'The tool is new and its performance hasn't been tested extensively. Taxpayers may still need to consult a professional, especially in complex cases.' said Patnaik What should taxpayers do? Experts suggest to- Maintain proper records: Bank statements, transaction proofs, and receipts are critical. Avoid cash contributions: Only digital or banking channels qualify for deductions. Be cautious of intermediaries: Don't engage agents who offer to 'arrange' deductions. Respond to notices promptly: Use TaxAssist for guidance, but seek professional advice if needed. Tax experts advise taxpayers to file honest returns and avoid taking shortcuts that could lead to prosecution.
Economic Times
13-07-2025
- Business
- Economic Times
ITR-2 and ITR-3 excel utility released by Income Tax Department; Taxpayers with capital gains, crypto, other incomes can now file ITR
ET Online Attention Taxpayers! Excel Utilities of ITR-2 and ITR-3 for AY 2025-26 are now live and available for filing. The Income Tax Department has made available the excel utilities for ITR-2 and 3 forms. This allows those with taxable capital gains, crypto income, and more to begin filing their income tax returns (ITRs) starting today. The extended ITR filing deadline for FY 2024-25 (AY 2025-26) is September 15, 2025. Previously only ITR-1 and ITR-4 were released (both online and excel utility) which enabled a limited set of taxpayers with specified income classifications to file their ITR. Do note that only the excel utilities have been released. That means taxpayers who plan to file their ITRs through the online e-filing portal will have to wait. The online filing mechanism is yet to be enabled. Soon this facility is likely to be enabled by income tax department which will be separately notified. Also Read | ITR-1 vs ITR-2 vs ITR-3 vs ITR-4: Which form applies to your income? The Income Tax Department said on X (formerly Twitter) on July 11, 2025: 'Attention Taxpayers! Excel Utilities of ITR-2 and ITR-3 for AY 2025-26 are now live and available for filing.' Read below to know more about ITR-2 and ITR-3 excel utilities. What is an Excel based ITR utility? In the download section of the income tax department's e-filing ITR portal, you can find the ITR-2 and ITR-3 utilities to download. After downloading, you will receive a Windows zip file. Extract this zip file and open the Excel file. The Excel file contains various schedules and options where you should enter your information as per requirements and declarations. After completing this, log in to the ITR e-filing portal to upload the file and submit your ITR. Remember to verify the filed ITR within 30 days of submission. Also read: ITR filing for AY 2025-26: 7 prominent changes in ITR excel utilities for FY 2024-25, which taxpayers including salaried should know Who can file ITR-2? According to the income tax department website as of July 11, 2025, ITR-2 can be filed by individuals or HUFs who: Are not eligible to file ITR-1 (Sahaj) Do not have income from profit and gains of business or profession and also do not have income from profits and gains of business or profession in the nature of: interest salary bonus commission or remuneration, by whatever name called, due to, or received by him from a partnership firm Have the income of another person like spouse, minor child, etc., to be clubbed with their income – if income to be clubbed falls in any of the above categories. SR Patnaik, Partner (head - taxation), Cyril Amarchand Mangaldas, says: "The Form ITR-2 needs to be filed by individuals and Hindu Undivided Families ('HUF') who do not have any income from profits and gains of business or profession. Any individual who is eligible to file ITR-1 (which is applicable on individuals having income under the head of salaries, income from house property to the extent of one house property, and income from other sources, except winnings from lottery or race horses) is ineligible to file ITR-2." Also read: Income Tax: Changing these details on e-Filing website? Here's are the ways you can e-verify it What are the key updates to ITR-2 for FY 2024-25 (AY 2025-26)? The key updates to ITR-2 form include the following: Schedule-Capital Gain split for gains before/ after July 23, 2024 (post changes in Finance Act, 2024) Capital loss on share buyback allowed if corresponding dividend income is shown as income from other sources (post 01.10.2024) Asset & liability reporting limit raised to Rs 1 crore of total income Enhanced reporting for deductions [80C,10(13A)], etc. TDS section code to be reported in Schedule-TDS. Aseem Mowar, Tax Partner, EY India told ET Wealth Online earlier: "The new ITR-2 form simplifies filing for taxpayers earning between Rs 50 lakh and Rs 1 crore by removing the need to report assets and liabilities. Additionally, the form now mandates specifying the section under which TDS has been deducted, enhancing transparency. Furthermore, the reporting of capital gains has been refined, requiring taxpayers to indicate whether asset transfers occurred before or after July 23, 2024, ensuring accurate tax rate application. Overall, the new ITR-2 Form streamlines the reporting requirements and may help reduce return processing errors/defects." Also read: ITR filing due date extended but deadline to pay final tax without penalty is July 31 or Sept 15 now for FY 2024-25? Who needs to file ITR-3? Chartered Accountant Pranesh Jain says: ITR-3 is required for individuals and HUFs with income from business or profession, plus possibly other income sources. This includes: Business/professional income (other than presumptive basis taxation income), partnership income (non-LLP), derivatives trading, unlisted shares, capital gains (long term capital gain of shares upto 1,25,000 can be covered in ITR4 ), plus other simple terms, ITR - 3 is filed for both Individual and HUF but when the taxpayer has income from Business and Professions. For Example, if the taxpayer has business income as well as income from any other source such as capital gains or income from transactions of digital assets (crypto) or income from a partnership firm etc. then the taxpayer will have to file his return in ITR 3. What are the key updates to ITR-3 for FY 2024-25 (AY 2025-26)? The key updates to ITR-3 form include the following: Schedule-Capital Gain split for gains before/ after 23.07.2024 (post changes in Finance Act, 2024) Capital loss on share buyback allowed if corresponding dividend income is shown as income from other sources (post 01.10.2024) Asset & liability reporting limit raised to ₹1 crore of total income Reference of sec 44BBC (cruise biz) added Enhanced reporting for deductions [80C,10(13A)] etc. TDS section code to be reported in Schedule-TDS Ankit Jain, Partner, Ved Jain and Associates, says: "ITR-3 also includes provisions for Section 44BBC, requiring specific disclosures for taxpayers engaged in the business of operating ships or cruises." Chartered Accountant Gopal Bohra, Partner, Direct Tax, N. A. Shah Associates LLP, says, "The significant change in ITR-3 is the increased threshold monetary limit of total income from Rs 50 lakh to Rs 1 crore to report the Asset & Liabilities under 'Schedule AL' of ITR. Now, individual taxpayers will be required to furnish the details of specified Assets & Liabilities in Schedule AL only if total income for the FY 2024-25 (AY 2025-26) exceeds Rs 1 crore and this move will make tax filing simpler for such an additional number of taxpayers whose total income is in the range of Rs 50 lakh to 1 crore."
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Business Standard
30-05-2025
- Business
- Business Standard
Can you switch tax regimes? rules for salaried and business taxpayers
As Indians file their taxes, many of them are likely wondering if they should adopt the old or new regime. The first offers exemptions and deductions and the other lower tax rates but no deductions: either of them will shape your take-home income. Can you switch between the two regimes? If yes, how often? Experts say that while salaried individuals have flexibility, those with business income face tighter controls. Here's a breakdown of what the rules allow, and the pitfalls to avoid. Salaried individuals can switch regimes every year Salaried taxpayers can toggle between the old and new regimes every financial year while filing their Income Tax returns (ITR). This means you don't have to commit to one regime forever. 'A salaried individual has the flexibility to switch between the old and new tax regimes every financial year,' said Amit Bansal, partner at Singhania & Co., a legal consultancy firm. 'They can reassess their financial situation and choose a regime that offers better tax benefits.' Even if you declared a particular regime to your employer for the purpose of tax deducted at source (TDS), the choice isn't binding. 'The intimation to the employer is only for TDS purposes,' said S R Patnaik, partner (head - taxation) at Cyril Amarchand Mangaldas. 'The final regime selection must be made by the individual while filing their ITR.' Restrictions on professionals, business income If you have income from business or profession, you can switch from the new regime to the old regime only once. After that, unless your business income ceases, you cannot go back to the new regime. Income earned by professionals such as Doctors, Lawyers, Accountants, etc. is termed professional income. 'Once individuals with business or professional income opt for the new tax regime, they can return to the old regime only once,' said Bansal. 'This is to ensure consistency in tax planning and avoid regime-hopping.' To exercise this switch, the taxpayer must file Form 10-IEA before the due date of filing their ITR. Missing this deadline means being locked with the default regime. Can you change tax regime while filing ITR? Experts say salaried individuals can change regimes at the time of filing their return, even if they picked another one for employer TDS purposes. But this has practical challenges. 'If a salaried person opts for the old regime at the time of filing but hasn't submitted deduction proofs to the employer, the mismatch can trigger a notice,' said Aarti Raote, partner at Deloitte India, a professional services firm. 'Form 16 would reflect a different regime, leading to delays in assessment.' Common mistakes to watch out for Experts flagged a few frequent errors: Not comparing both regimes carefully using reliable tax calculators. Assuming the employer's regime choice is final, it's not. Failing to maintain deduction proofs when switching back to the old regime. Missing deadlines for submitting forms like 10-IEA (for business professionals). 'The most important thing is that taxpayers must choose their regime before the due date for filing the ITR,' said Patnaik. 'One frequent mistake is not estimating income and deductions accurately before choosing a regime,' said Raote Bottom line According to rules, salaried individuals can switch regimes annually, while business professionals can do so only once, and with conditions. Making the right choice requires a proper evaluation of income, deductions, and future plans like home or education loans. The tax regime you choose isn't just a checkbox, it's a financial strategy. Choose wisely, file on time, and when in doubt, consult a professional.
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Business Standard
21-05-2025
- Business
- Business Standard
Do NRIs have to file tax returns in India: What's the rule and process
It is the time to file Income Tax returns (ITR) and many non-resident Indians (NRIs) are likely asking: Do they need to do so in India? While the process is simple, experts say NRIs need to carefully give details about their earnings. Do NRIs need to pay income tax in India? 'An NRI is liable to pay tax in India only on the income earned or received in India. This includes rent from Indian property, interest on Non-Resident Ordinary (NRO) accounts, which is savings or current account in Indian Rupees for NRIs in India, or capital gains from Indian assets,' said S R Patnaik, partner and head of taxation at law firm Cyril Amarchand Mangaldas. Who is considered as NRI? According to the Income-Tax Department, an individual's residential status is the first factor in determining tax liability. If you've spent less than 182 days in India in a financial year, you're typically considered a non-resident — and taxed accordingly. How is filing taxes different for NRIs? 'Resident individuals are taxed on global income and can use ITR-1 (Sahaj) for simple income sources. NRIs, however, must use ITR-2 if they don't have business income, or ITR-3 if they do,' Patnaik explained. Common mistakes by NRIs in ITR filing 'NRIs often misclassify their residential status or forget to update banks and mutual funds about the change,' said Amit Bansal, partner at Singhania & Co, a global legal consultancy firm. Also Read 'They also tend to use the wrong ITR form or miss reporting Indian income such as interest earned in NRO accounts.' Bansal advised NRIs to maintain travel records, inform Income Tax Department promptly, and consult a professional to ensure correct classification and filing. Foreign income and reporting: What's mandatory? 'If you're an NRI for tax purposes, your foreign income is not taxable in India,' Patnaik said. 'Also, unlike residents, NRIs are not mandated to disclose foreign bank accounts or assets under Schedule FA. However, they may do so voluntarily.' According to the Central Board of Direct Taxes, mandatory foreign asset disclosure applies only to individuals classified as residents under the Income Tax Act, especially those falling under the Resident but Not Ordinarily Resident (RNOR) category. ALSO READ | No major policy shifts for NRI tax filing for AY 2025–26 The CBDT has released the ITR forms applicable for Assessment Year 2025-26. Form ITR-2 has been updated for clarity and no NRI-specific policy changes or exemptions have been introduced, according to the two experts.
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Business Standard
06-05-2025
- Business
- Business Standard
ITR-2 updates: Who benefits and who needs to be careful
The Income Tax Department announced the revised ITR 2 form for AY 2025 26 this week, reflecting a push for more detailed disclosures and tighter compliance. Here, through insights from tax experts, we explain what ordinary taxpayers need to know and how to navigate the changes. Date based capital gains reporting 'The new form separates capital gains before and after July 23, 2024,' explains Dr. Simarjeet Singh, assistant professor of Finance at Great Lakes Institute of added "post date sales can opt for a flat 12.5 per cent tax rate without indexation, versus the earlier 20 per cent with indexation." • Two sets of calculations are now required. • Precise record keeping of sale dates is crucial to avoid filing errors. Claiming share buyback losses 'Retail investors finally have clarity on buyback losses,' says Amit Bansal, partner at Singhania & Co. He added "from October 1, 2024, capital losses on share buybacks can be claimed only if corresponding dividend income is reported under Schedule OS." • Cross reference losses and dividends carefully. • Omission can lead to disallowed claims and notices. Higher asset disclosure threshold The reporting bar under Schedule AL has jumped from ~50 lakh to ~1 crore. 'This is a relief for upper middle income taxpayers,' notes Dr. Kirti Sharma, associate professor at Great Lakes. "Filers earning up to ~1 crore need not list every asset and liability in detail, freeing them from cumbersome schedules." Detailed deductions and TDS codes · TDS section reporting: Taxpayers must now state the exact section code (e.g., 192 for salary, 194I for rent) rather than just the deductor name and amount. · Chapter VI 'A breakdown: Deductions under sections like 80C must specify sub categories (PF, LIC, tuition fees), while 80G donations require the ARN. 'These moves signal a shift to verification readiness,' warns SR Patnaik, head of taxation at Cyril Amarchand Mangaldas. 'The department's data 'matching will flag inconsistencies.' Expanded foreign and digital asset reporting · Schedule FA/FSI: Overseas investments now need more granular details, including Legal Entity Identifiers for high value transactions. · Virtual digital assets: Trades remain taxed at 30 per cent under section 115BBH, with no set??'off for losses—making exact reporting non 'negotiable. Tips for smooth self filing Here are detailed, step-by-step tips by Dr. Kirti Sharma. 1. Start Well Ahead: Spread the process over days to reduce fatigue??'induced mistakes. 2. Gather your documents: Form 16/16A, AIS/Form 26AS, bank statements, capital gains statements and donation ARNs. 3. Use pre??'fill utilities: The income??'tax portal's JSON uploader now accommodates most new disclosures. 4. Compare tax regimes: Run numbers under both old and new regimes before choosing to opt out of Section 115BAC. SR Patnaik supported the broader idea of being well-prepared and vigilant during self-filing. In sum, the revamped ITR '2 strikes a balance. It lightens the load for many salaried and retired taxpayers by raising thresholds, yet demands greater diligence from those with capital gains, foreign holdings or digital assets. 'For straightforward incomes, it remains navigable,' Singh concludes, 'but complexity now truly warrants professional advice for anyone with multiple income streams.'
