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Economic Times
14-07-2025
- Business
- Economic Times
Cut income tax by Rs 29,000 under new tax regime: How Gurugram-based Kumar can reduce tax to only 6.9% of income
Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads WRITE TO US FOR HELP (Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of .) Gurugram-based Karan Kumar is a sales manager and doesn't pay a very high tax because his income is modest. He has opted for the new tax regime , which is a good decision as he does not claim too many tax deductions. Even if his company rejigs his pay structure to include some of the tax-friendly perks, he will still pay a higher tax in the old the new tax regime, there are no tax deductions and exemptions, but the standard deduction is higher at Rs.75,000 and the tax slabs are wider, with lower rates. Sudhir Kaushik of TaxSpanner believes that there is room for further tax savings in the new regime if Kumar asks his employer to offer the NPS Section 80CCD(2), up to 14% of the basic salary allocated to the NPS by the employer is tax-free. If his company puts 14% of his basic income in the NPS, the monthly contribution will be Rs.11,666, and the annual contribution of Rs.1.4 lakh will cut his tax by around Rs.29, contribution to the NPS will reduce his monthly take-home salary. However, it will not affect his overall liquidity if he reduces the contribution to the Public Provident Fund. Right now, Kumar puts Rs.1.5 lakh in the PPF each year, which does not fetch any tax benefit under the new tax regime. He should reduce this amount to Rs.10,000 a year and channelise the remaining Rs.1.4 lakh to the should also continue with his health and life insurance plan despite no tax benefits in the new too much tax? Write to us at etwealth@ with 'Optimise my tax' as the subject. Our experts will tell you how to reduce your tax by rejigging your pay and investments.
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Business Standard
24-06-2025
- Business
- Business Standard
Earning from reels or brand deals? Here's how influencers must file ITR
From choreographed reels to brand shoutouts, India's growing tribe of digital influencers is turning social content into serious income. But as the money flows in from YouTube AdSense, affiliate links, Instagram collaborations and freebies, so does the tax department's scrutiny. With digital footprints becoming increasingly trackable, creators can no longer afford to ignore the tax implications of their online hustle. 'All income from reels, brand deals, affiliate links, and even barter collaborations, if total gifts exceed ~50,000 in a year, must be reported under 'business and professional income' in your ITR,' said Sudhir Kaushik, co-founder and chief executive officer of TaxSpanner. 'Even free gadgets or hotel stays count as taxable perks.' What you must report Unlike salaried employees, influencers are treated as self-employed professionals or business owners under tax laws. According to Ankit Jain, partner at a law firm, Ved Jain and Associates, 'Income from brand promotions, affiliate commissions, online workshops, event appearances, merchandise sales, or even foreign payments must be reported. Under Section 194R, brands offering free items worth over ~20,000 must deduct 10 per cent TDS on fair market value, this applies even if the influencer receives no cash.' Pallav Pradyumn Narang, partner at CNK & Associates LLP, an all-service firm, echoed this. 'Everything received in exchange for content, whether in cash, kind, crypto, or vouchers, falls under the taxable head of 'Income from Business or Profession',' Narang said. Deductions that lighten the tax load Influencers can reduce their taxable income by claiming relevant expenses. 'Costs like studio rent, internet bills, software tools, camera gear, or travel for brand shoots are deductible if used for business,' said Shefali Mundra, chartered accountant and tax expert at ClearTax. 'Even salaries paid to video editors or assistants can be claimed. For high-value items like laptops or lighting equipment, only depreciation is allowed under Section 32,' Mundra said. Jain recommended that creators 'maintain a separate business bank account to avoid mixing personal and professional expenses. This simplifies accounting and strengthens your defence in case of scrutiny.' ITR-3 or ITR-4? Choose wisely Not all influencers qualify for the presumptive taxation route. 'If your work involves skills listed under Section 44AA, like technical consultancy or film artistry, and your gross receipts are under ~75 lakh, you may opt for presumptive tax and file ITR-4,' explained Kaushik. 'Otherwise, you'll need to use ITR-3 and maintain proper books.' Savani added that content creators can choose between the old and new tax regimes based on which offers better deductions. Skip the guesswork -- be fully compliant Under-reporting income or choosing the wrong ITR form can backfire. 'AIS and Form 26AS already reflect what brands, platforms, and banks report to the tax department,' said Savani. 'Even minor mismatches can trigger notices, audits, and penalties up to 200 per cent of the tax due.' Mundra further warned that failing to pay advance tax can attract interest under Sections 234B and 234C. 'Foreign earnings, GST on sponsored posts, and high-value freebies are under the scanner. Don't wait for a notice, file cleanly and smartly.' Final word Being an influencer may feel fun and free-spirited, but when it comes to taxes, it's serious business. From the first brand deal to the last swipe-up link, every rupee (or ring light) counts. The Income Tax Department is watching your follower count and your Form 26AS, so file right, stay compliant, and keep creating without worry.
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Business Standard
20-06-2025
- Business
- Business Standard
Taxman knows more than you think: Here's why clean ITR filing matters
Some taxpayers underreport income or inflate deductions in order to save money that goes to the government. But experts warn that this is a high-stakes gamble in today's data-driven tax environment. With the Income Tax Department now armed with sophisticated tools and deep access to financial information, from your bank transactions and property deals to your stock market activity, there's little room to hide. Taxman's eyes everywhere: What the department already knows 'The Income Tax Department gets financial data from multiple channels, banks, mutual funds, employers, registrars, and more,' says Suresh Surana, charter accountant. This includes: TDS/TCS details from Form 24Q/26Q High-value transactions under the Statement of Financial Transactions (SFT) Integrated PAN-linked records from property sales, share investments, and foreign remittances Salary, rent, capital gains, and GST data through the Annual Information Statement (AIS) and Form 26AS According to Kinjal Bhuta, secretary of the Bombay Chartered Accountants' Society, the department also uses 'AI tools, regulatory data-sharing, and even social media activity' to detect suspicious patterns. Common mistakes (and misdeeds) that can trigger trouble From fudging rent receipts to ignoring side income, many taxpayers, especially salaried and self-employed, unknowingly (or knowingly) cross the line. 'False Section 80C claims, hiding freelance income, or underreporting cash sales are frequent issues,' says Sudhir Kaushik, chief executive officer of TaxSpanner. Surana adds that claiming deductions without valid proofs or routing business income through personal accounts is another red flag. Bhuta also warns against 'non-disclosure of foreign assets, ignoring bank interest, or assuming that TDS alone covers tax obligations.' Penalties can be steep, even jail time Taxpayers caught misreporting face penalties under Section 270A: 50 per cent of tax due for underreporting 200 per cent if it's deemed wilful misreporting 'In extreme cases,' says Surana, 'Section 276C can trigger prosecution with jail up to seven years if tax evasion exceeds Rs 25 lakh.' Kaushik concurs, 'With AIS and digital tracking, ignorance is no longer a valid excuse.' Staying safe: Honest filing starts with these steps Experts say the best protection is vigilance. Cross-check prefilled ITRs with your Form 16, AIS and TIS Report all income salary, capital gains, FD interest, foreign income Correct mismatches, if any, and maintain proof for deductions 'Even exempt income like agricultural earnings should be disclosed,' says Bhuta. TaxBuddy's founder, Sujit Bangar adds, 'AIS should be your checklist. If a transaction appears there, explain or report it.' As Kaushik puts it, 'Tax transparency is tighter than ever. The best strategy is to stay ahead by being accurate.'
