1. TDS Rates for Resident Individuals and Entities

Note: TDS Rates without PAN – 20% flat (if TDS is lower than 20%)

---

2. Key Changes Effective from April 1, 2025

• Introduction of Section 194T:

  • TDS on Payments by Partnership Firms to Partners: A new section 194T has been introduced, mandating a 10% TDS on payments exceeding ₹20,000 made by partnership firms to their partners.

• Revised Threshold Limits:

  • Section 193 (Interest on Securities): Threshold limit increased to ₹10,000.

  • Section 194A (Interest other than Interest on Securities): For senior citizens, the threshold limit is ₹50,000; for others, it is ₹40,000.

  • Section 194D (Insurance Commission): Threshold limit increased to ₹15,000.

  • Section 194G (Commission on Sale of Lottery Tickets): Threshold limit increased to ₹15,000.

  • Section 194H (Commission or Brokerage): Threshold limit increased to ₹15,000.

---

3. Frequently Asked Questions (FAQs)

Q1: What is TDS and why is it deducted?

A: Tax Deducted at Source (TDS) is a means of collecting income tax in India, under which a certain percentage is deducted at the time of making specified payments like salary, commission, rent, interest, etc. The deducted amount is then remitted to the government on behalf of the payee.

Q2: What happens if I don’t provide my PAN to the deductor?

A: If you fail to provide your PAN,

A Complete Guide for 2025

Introduction

With the rising popularity of crypto trading and virtual digital assets (VDAs), the Indian government has implemented a structured tax regime for cryptocurrencies. As of 2025, taxpayers in India must comply with specific rules for disclosing, calculating, and paying taxes on income derived from cryptocurrencies and other VDAs. In this article, we will discuss how cryptocurrency is taxed in India, including capital gains, P2P crypto tax, and updates for Crypto Tax in India 2025.

---

Taxation of Virtual Digital Assets (VDAs) in India

The Finance Act, 2022, introduced a new framework for taxing income from VDAs, which includes:

• Cryptocurrencies (like Bitcoin, Ethereum)

• NFTs (Non-Fungible Tokens)

• Any other digital asset as notified by the government

Key Provisions:

1. Flat Tax Rate of 30% on profits from the transfer of VDAs.

2. 1% TDS (Tax Deducted at Source) on all transactions above a specified threshold.

3. No deduction for expenses (except cost of acquisition).

4. No set-off of losses from VDA against other income or future crypto gains.

---

How to Calculate Tax on Cryptocurrency in India

Step 1: Identify the Transaction

• Selling crypto for INR

• Swapping one crypto for another

• Using crypto for purchases

• Receiving crypto as payment or mining rewards

Step 2: Determine Income

Use this formula for each transaction:

Taxable Income = Sale Value – Purchase Cost

No deduction is allowed for transaction fees, platform charges, or mining costs.

Step 3: Apply 30% Tax Rate

Example:
If you bought Bitcoin for ₹1,00,000 and sold it for ₹1,50,000:
Profit = ₹50,000 → Tax = ₹15,000 (30%)

Step 4: Deduct TDS

A 1% TDS is deducted at source if the annual transaction volume exceeds ₹10,000 (₹50,000 for specified persons). This TDS can be adjusted while filing your Income Tax Return (ITR).

---

P2P Crypto Tax in India

Peer-to-peer (P2P) crypto transactions are also taxable. Since these bypass centralized exchanges, the responsibility to deduct TDS and report income lies entirely with the buyer/seller.

Points to Remember:

• Keep a detailed record of wallet addresses and transaction history.

• Even unregulated exchanges and wallet-based trades are tracked via KYC and crypto analytics tools used by tax authorities.

---

Crypto Capital Gains Tax in India

Crypto profits are not taxed like stocks or mutual funds. Here’s how it differs:

Even gifting or transferring crypto to others may be considered a transfer and taxed accordingly.

---

Crypto Tax in India 2025: Latest Updates

As of FY 2024-25 (AY 2025-26), the following remain applicable:

• No changes in the 30% tax or 1% TDS regime.

• Crypto platforms must issue Form 16A for TDS deduction on crypto transactions.

• Reporting of crypto in Schedule VDA in ITR is mandatory for individuals, even for small trades.

The government continues to refine tax enforcement on crypto with better data integration from exchanges, wallet addresses, and foreign trading platforms.

---

Filing Crypto Income in ITR

• Use ITR-2 or ITR-3, depending on other sources of income.

• Disclose income from VDA under the “Income from Other Sources” or “Capital Gains” section.

• Report all crypto-related transactions in Schedule VDA.

• Adjust 1% TDS in TDS Schedule while filing.

---

Why You Should Consult a Professional

Cryptocurrency tax in India involves complexities like exchange conversions, P2P trade records, and form filing. Consult a CA for Income Tax Filing, especially if:

• You traded on foreign platforms

• You had high-volume trades or losses

• You received airdrops, mining income, or crypto payments

• You require a CA Report for VISA or NRI disclosures

---

Keywords Optimized in This Article:

• Cryptocurrency tax in India

• How to calculate tax on cryptocurrency in India

• Crypto capital gains tax India

• P2P crypto tax India

• Crypto tax in India 2025

• Taxation of virtual digital assets in India

• CA for Income Tax Filing

• CA near me for ITR Filing

• CA Report for VISA

• CA for NRI Tax Filing

---

FAQs on Cryptocurrency Tax in India

1. Is cryptocurrency legal in India?

Crypto is not illegal, but it is unregulated. However, it is fully taxable.

2. How much is the tax on crypto in India?

A flat 30% tax is levied on gains from cryptocurrency, regardless of income level.

3. Is crypto trading on foreign exchanges taxed?

Yes. Income must be disclosed, and 1% TDS is applicable if the transaction is routed via an Indian exchange or platform.

4. Can I adjust crypto losses against other income?

No. Crypto losses cannot be set off against any income, including crypto gains in another year.

5. Do I have to pay tax on airdrops and mining rewards?

Yes. These are considered income and taxed at the applicable slab rate in the year received.

6. Which ITR form should I use to report crypto?

Usually ITR-2 or ITR-3, based on the nature of income and business activities.

7. Do I need to show my wallet transactions?

Yes, especially in the case of P2P or foreign transactions. The IT Department may ask for logs, wallet IDs, or exchange records.

8. How is TDS applied on crypto trades?

TDS of 1% is deducted at source on transactions above ₹10,000. This is deducted by the exchange or buyer.

9. Is gifting cryptocurrency taxable?

Yes. Gifts in excess of ₹50,000 in a financial year are taxable unless received from a relative.

10. Can NRIs be taxed on crypto income in India?

Yes, if the income accrues or arises in India or is received in India.

Contact Us for Expert Assistance

Navigating the complexities of cryptocurrency taxation in India requires expert guidance. Whether you’re filing your first crypto return, calculating P2P gains, or managing capital gains from multiple exchanges, our team is here to help.

You can get in touch with N C Agrawal & Associates, your trusted CA for Income Tax Filing, CA for NRI Tax Filing, and CA for Cryptocurrency Tax Filing at:

📞 +91 9718046555
📧 info@ncagrawal.com

Let us assist you in filing your taxes accurately and compliantly.

Foreign Assets Disclosure in ITR: Applicability, Penalties, and Filing Guide

Introduction

With increasing global income and foreign investments, Indian taxpayers are required to be more transparent about their foreign assets and income. The Income Tax Act, 1961, mandates disclosure of foreign assets in the Income Tax Return (ITR) under Schedule FA. Non-disclosure can lead to severe penalties under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.

In this guide, we will explain everything about foreign asset disclosure in ITR, its applicability, the schedule FA, and the consequences of non-disclosure.

What is Foreign Asset Disclosure in ITR?

Foreign asset disclosure refers to reporting details of overseas assets and income held by a resident Indian taxpayer in their annual income tax return. This includes foreign bank accounts, properties, financial interests, trusts, and more.

Foreign Asset Disclosure in ITR: Applicability

Who is required to disclose foreign assets in ITR?

• Resident and Ordinarily Resident (ROR) individuals in India are required to disclose foreign assets.
• Non-Resident (NR) and Resident but Not Ordinarily Resident (RNOR) individuals are not required to disclose foreign assets.

Note: Disclosure is mandatory even if the asset does not generate any income during the year.

From which year is Foreign Asset Disclosure in ITR mandatory?

The requirement for foreign asset disclosure in the ITR started from Assessment Year 2012-13 (FY 2011-12). It became more stringent with the introduction of the Black Money Act in 2015.

Types of Foreign Assets to be Disclosed in Schedule FA

Schedule FA is a detailed section in the ITR form that captures information on:

1. Foreign Bank Accounts – Including savings, current, or term deposits.
2. Financial Interests – Shares, securities, bonds held in foreign companies or entities.
3. Immovable Property – Real estate or buildings situated abroad.
4. Trusts – Details of foreign trusts where the taxpayer is a trustee, beneficiary, or settlor.
5. Any other capital asset – Such as artwork, jewelry, etc., held abroad.
6. Signing Authority – If the taxpayer has authority in any foreign account.

Salaried employees receiving shares of the foreign holding company under ESOPs or RSUs must also disclose such holdings even if no income is generated.

If such shares are sold, the gains must be reported in ITR and capital gains tax must be paid accordingly. Even if the shares are vested but not sold, Schedule FA disclosure is still mandatory.

How to Fill Schedule FA in ITR

Step-by-Step Instructions:

1. Select the correct ITR Form – Usually ITR-2 or ITR-3 is applicable for those disclosing foreign assets.
2. Navigate to Schedule FA – Available in the ITR form after logging into the Income Tax e-filing portal.
3. Provide Year of Acquisition – Mention the year the foreign asset was acquired.
4. Country Details – Mention the country of location.
5. Nature of Asset/Account – Indicate whether it is a bank account, property, or financial interest.
6. Income Generated – Specify if any income was derived from the foreign asset.
7. Tax Details – Mention if the income was taxed in the foreign country.

Pro Tip: Keep documents like foreign bank statements, investment records, and property details handy while filing.

Penalty for Non-disclosure of Foreign Assets in Income Tax Return

The Black Money Act, 2015 prescribes heavy penalties:

• Penalty of INR 10 lakh per undisclosed foreign asset.
• Prosecution for up to 7 years.
• Additional taxes and interest may be levied.

Even if the foreign asset did not generate income, non-disclosure invites penalties.

How does the government identify undisclosed foreign assets?

• India has signed Information Exchange Agreements with many countries under FATCA and CRS.
• Foreign banks and institutions share details of accounts held by Indian residents.
• Data analytics and AI-based red flagging systems are used by the Income Tax Department.
• Cross-verification of foreign income declarations with Form 67, Form 26AS, and passport data.

Why Consult a Professional?

Disclosing foreign assets involves technical details and risks. A professional CA for NRI Tax Filing, CA for Income Tax Filing, or CA Report for VISA can assist with accurate and compliant filing. Many individuals also consult a CA near me for ITR filing to ensure that Schedule FA is properly completed.

FAQs on Foreign Asset Disclosure in ITR

1. Do NRIs need to disclose foreign assets in Indian ITR?

No. Only Resident and Ordinarily Resident (ROR) individuals need to disclose foreign assets in India.

2. What if I had a foreign asset but no income from it?

Disclosure is still mandatory even if no income is earned from the asset.

3. Which ITR forms allow foreign asset disclosure?

Primarily ITR-2 and ITR-3 contain Schedule FA for foreign asset reporting.

4. Is disclosure required for jointly held foreign assets?

Yes. If you are a joint holder or have signing authority, it must be disclosed.

5. Can I revise my return if I forgot to disclose?

Yes. If discovered early, file a revised return before the due date.

6. What documents are needed to fill Schedule FA?

Foreign bank statements, property documents, and investment proof should be retained.

7. Is the value of the foreign asset required in INR?

Yes, values should be converted and reported in Indian Rupees.

8. What if I disclosed foreign income but forgot the asset?

Both income and asset disclosure is mandatory. Partial disclosure is considered non-compliant.

9. Is a CA’s help mandatory for filing Schedule FA?

Not mandatory, but highly recommended due to complexity.

10. I received RSUs from my US employer. Should I disclose them?

Yes, even if they are not sold. Holding or vesting of foreign shares must be reported in Schedule FA. On sale, capital gains must be disclosed and taxed in India.

Conclusion

Foreign asset disclosure in ITR is a critical compliance requirement for Indian residents with overseas income or assets. It ensures transparency and helps avoid harsh penalties under Indian tax laws. If you need expert help, consult a CA for NRI Tax Filing, CA for Income Tax Filing, or CA near me for ITR filing to ensure your Schedule FA is accurate and compliant.

Trump’s 26% Tariff on India: Comprehensive Impact Analysis and Sector Exemptions

Introduction

President Donald Trump’s second administration has announced a new set of tariffs targeting India, marking a significant development in US-India trade relations. According to recent announcements, the United States has imposed a 26% “reciprocal tariff” on certain Indian goods, while exempting key sectors like pharmaceuticals. This article examines the context, details, and potential impacts of this policy decision for both nations.

What Is a Reciprocal Tariff?

A reciprocal tariff is a trade policy instrument designed to match or counterbalance tariffs imposed by another country. The core principle is simple: if Country A charges a certain percentage tariff on goods from Country B, then Country B imposes an equivalent tariff on goods from Country A. Key aspects include:

• Equivalence Principle: Tariffs are set to match what the other country charges
• Specific Targeting: Often applied to the same or similar categories of goods
• Policy Objective: Intended to create a “level playing field” in trade relations
• Negotiation Tool: Frequently used as leverage to pressure trading partners to reduce their own tariffs

In the case of Trump’s policy, the administration characterizes the 26% tariff as reciprocal because it claims this percentage matches what India charges on various American goods entering its market.

Background of US-India Trade Relations

The United States and India have maintained complex trade relations over the years, with bilateral trade reaching approximately $150 billion annually before 2025. While the two countries have strengthened strategic partnerships in defense, technology, and diplomacy, trade tensions have persisted across multiple administrations.

Previous points of contention included:

• India’s tariff structures on American products
• Intellectual property protection concerns
• Market access issues for US companies
• Digital services taxes
• Agricultural trade barriers

Details of the New Tariff Policy

According to recent announcements, the Trump administration has implemented a 26% tariff on certain goods imported from India. This measure appears to be part of President Trump’s broader “America First” trade agenda, which he has reinstated upon returning to office in January 2025.

Key aspects of the new tariff policy include:

• A 26% duty applied selectively to Indian exports
• Described as “reciprocal,” suggesting it matches tariffs India imposes on US goods
• Specific exemptions for critical sectors including pharmaceuticals
• Likely targets sectors where India maintains relatively high import duties

Exempted Sectors: Strategic Carve-outs in the Tariff Policy

Despite the broad application of the 26% tariff, the Trump administration has strategically exempted several sectors from these duties:

1. Pharmaceuticals and Medical Devices: In recognition of India’s critical role in the global pharmaceutical supply chain and its position as a major supplier of generic medications to the US market, pharmaceutical products have been exempted. This includes:
   • Generic prescription medications
   • Active pharmaceutical ingredients (APIs)
   • Medical devices and diagnostic equipment
   • Vaccines and biological products
2. Information Technology Services: While physical goods are the primary target of tariffs, IT services—a cornerstone of US-India economic relations—remain unaffected by this policy.
3. Essential Agricultural Products: Certain essential food items and agricultural goods have been excluded, particularly those that might impact US food security or inflation.
4. Defense-Related Equipment: Items related to defense cooperation between the two nations have been exempted to maintain strategic security partnerships.
5. Raw Materials for Essential Industries: Certain raw materials critical to US manufacturing have been excluded to prevent supply chain disruptions in key industries.

These exemptions reflect a targeted approach to the tariff policy, aimed at minimizing disruption to sectors considered strategically important for bilateral cooperation or domestic economic stability.

Global Context: Countries Affected by Trump’s Tariff Policy

The tariff on India is part of a broader international trade policy implemented by the Trump administration. Countries facing new or increased tariffs include:

1. China: Facing the highest tariffs at 60%, continuing the trade tensions from Trump’s first term
2. Mexico: 25% tariff on imports, despite USMCA trade agreement
3. Canada: 25% tariff, also a USMCA partner
4. European Union members: 20% tariff on various goods
5. Japan: 20% tariff on automotive and electronic goods
6. South Korea: 20% tariff despite existing trade agreements
7. Vietnam: 20% tariff, targeting its growing manufacturing sector
8. India: 26% reciprocal tariff
9. Brazil: 20% tariff on agricultural and industrial goods
10. Indonesia: 20% tariff on textiles and manufactured goods
11. Thailand: 20% tariff focusing on electronics and automotive parts
12. Malaysia: 20% tariff on electronics and semiconductor components

Potential Impact on India’s Economy

Export Sectors at Risk

India’s export sectors most vulnerable to these tariffs include:

1. Textiles and Apparel: India exports approximately $8 billion worth of textiles and garments to the US annually, representing a significant portion of its manufacturing exports.
2. Jewelry and Precious Stones: The gems and jewelry sector is a major export earner for India, with the US as a primary market.
3. Engineering Goods: Steel products, auto parts, and machinery exports could face disruption.
4. Chemical Products: Non-pharmaceutical chemical exports may experience pricing challenges in the US market.
5. Leather Products: The leather industry, which employs millions in India, could face decreased competitiveness.

Macroeconomic Implications

The tariffs could have several broader impacts on India’s economy:

• Trade Deficit Concerns: India’s trade surplus with the US (approximately $30 billion) could shrink.
• GDP Impact: Economists estimate a potential negative impact of 0.3-0.5% on India’s GDP growth if the tariffs are broadly implemented.
• Currency Pressure: The Indian rupee may face depreciation pressure as export earnings decline.
• Employment Effects: Manufacturing sectors targeted by tariffs could see job losses, particularly in labor-intensive sectors like textiles.

India’s Potential Responses

India has several options to respond to these tariffs:

Diplomatic Engagement

• Negotiations through established bilateral trade forums
• Seeking exemptions for additional sectors
• Proposing gradual tariff reductions on both sides

Retaliatory Measures

• Implementing counter-tariffs on US goods
• Targeting US agricultural products, aircraft, or other politically sensitive exports
• Adjusting procurement policies for government contracts

WTO Dispute Resolution

• Filing formal complaints through World Trade Organization mechanisms
• Building coalitions with other affected trading partners

Market Diversification

• Accelerating trade agreements with the European Union, United Kingdom, and other partners
• Enhancing participation in regional frameworks like RCEP or CPTPP

Global Trade Implications

The US-India tariff tensions reflect broader shifts in global trade dynamics:

• Deglobalization Trend: This represents another step in the fragmentation of global trade networks.
• Supply Chain Reconfiguration: Companies may accelerate efforts to diversify manufacturing locations.
• Regional Trade Blocks: May strengthen the formation of regional economic partnerships.
• Developing Economy Impact: Other emerging economies may benefit from trade diversion or suffer from similar protectionist measures.

Conclusion

The Trump administration’s 26% reciprocal tariff on Indian goods introduces significant uncertainty into what has been a growing economic relationship. This policy, part of a broader international tariff strategy affecting multiple countries, creates immediate challenges for specific export sectors while potentially reshaping global trade flows. The strategic exemptions for pharmaceuticals and other critical sectors suggest a nuanced approach rather than a blanket policy.

For India, this development presents both challenges and opportunities—forcing a reconsideration of export dependencies while potentially accelerating economic partnerships with other global markets. How both nations navigate this tension will significantly influence not just bilateral relations but also the broader architecture of international trade in a period of increasing economic nationalism.

Disclaimer

This article is provided for informational purposes only and does not constitute professional advice. The information contained herein is based on publicly available data and analysis as of April 2025, but specific details may change as policies evolve. The tariff rates, exemptions, and affected sectors mentioned are subject to official government announcements and may be modified by the relevant authorities.

This content represents the author’s understanding of the situation based on available information and should not be relied upon for business, legal, or financial decisions without consulting appropriate professionals and official sources. The analysis of potential impacts is speculative and not a guarantee of future economic outcomes.

No part of this content should be construed as an endorsement or criticism of any political position or policy decision. Readers are encouraged to verify all information independently and consult with qualified professionals regarding any actions they may take in response to these tariffs.

In recent times, many so-called “finfluencers” and “fraudcasters” have been spreading a misleading narrative about taxation. According to them, if your taxable income exceeds ₹12,00,000—even by ₹1—you will lose the rebate and suddenly have to pay ₹62,400+ in taxes. This claim sounds alarming, but it is entirely false.

The above myths emerged immediately after the Budget 2025 without proper interpretation. The summary of personal taxes slabs as per Budget 2025 can be read by clicking here.

Thankfully, the Income Tax Act provides for Marginal Relief, ensuring that an additional ₹1 in income does not create an unfair tax burden. Let’s break this down in simple terms.

The Finfluencer & Fraudcast Myth

They claim that if your income is ₹12,00,001, your tax liability will jump to ₹62,400+. The idea of suddenly losing the rebate sounds frightening and discouraging for taxpayers. However, this is a misinterpretation of tax laws and how rebates work under the new tax regime.

The Truth: Marginal Relief Applies

Under the new tax regime, taxpayers earning up to ₹12,00,000 get a rebate under Section 87A, effectively making their tax liability zero. But what happens if your income is ₹12,00,001?

Instead of immediately paying ₹62,400+ in tax, Marginal Relief ensures that you pay only ₹1 in tax!

Yes, you read that right! If your taxable income is just ₹1 above ₹12,00,000, you will not face a sudden, steep tax burden. Instead, the tax amount is adjusted in such a way that you only pay the additional tax corresponding to the extra income.

What Is the Maximum Income for Marginal Relief?

Marginal relief is available until your income reaches approximately ₹12,73,934.

• If your taxable income is between ₹12,00,001 and ₹12,73,934, marginal relief ensures you only pay tax on the excess amount above ₹12,00,000.
• Once your income exceeds ₹12,73,934, the tax liability surpasses the additional income over ₹12,00,000, and marginal relief no longer applies.

Key Takeaways

✅ Marginal Relief exists to prevent unfair tax jumps.
✅ If your taxable income is between ₹12,00,001 and ₹12,73,934, tax is adjusted fairly.
✅ You do NOT suddenly lose all benefits or pay ₹62,400+ in tax for earning ₹1 more.
✅ Don’t believe misleading financial myths—always check official tax laws!

Frequently Asked Questions (FAQs)

1. What is Marginal Relief?

Marginal Relief is a provision in the Income Tax Act that ensures taxpayers do not face a sudden jump in tax liability when their taxable income slightly exceeds ₹12,00,000 under the new tax regime.

2. How does Marginal Relief work?

If your taxable income exceeds ₹12,00,000 by a small margin, Marginal Relief ensures that you only pay tax on the excess amount instead of facing a sudden, steep tax liability.

3. Does Marginal Relief apply to all taxpayers?

Marginal Relief applies to taxpayers under the new tax regime whose taxable income is between ₹12,00,001 and ₹12,73,934.

4. What happens if my income exceeds ₹12,73,934?

If your taxable income crosses ₹12,73,934, your tax liability exceeds the additional income over ₹12,00,000, and Marginal Relief no longer applies.

5. Is it true that earning ₹1 more than ₹12,00,000 leads to ₹62,400+ in taxes?

No, this is a myth. Marginal Relief prevents such an unfair tax burden. If your income is ₹12,00,001, your actual tax liability is just ₹1, not ₹62,400+.

6. How can I ensure I am calculating my tax correctly?

It is always best to consult a qualified Chartered Accountant (CA) to understand your tax liability and Marginal Relief calculations accurately.

7. Where can I get more reliable tax information?

Always refer to official government resources or consult a professional CA instead of relying on misinformation spread by unverified sources online.

Final Thoughts

The idea that a ₹1 increase in taxable income can create a huge tax burden is a misconception spread by those who don’t understand taxation properly. Marginal relief is a critical feature in our tax system that ensures fairness and prevents sudden financial shocks. So, the next time someone tells you that earning slightly more will lead to a massive tax jump, you’ll know the truth!

For professional tax guidance, always consult a qualified Chartered Accountant (CA) instead of relying on misleading online advice!

 

 

 

 

The Finance Bill, 2025, has introduced changes in personal income tax rates for the Assessment Year (AY) 2026-27. This article provides a detailed overview of the tax slabs under both the new tax regime (default) and the old tax regime (optional) while comparing tax liabilities at different income levels.

---

Personal Income Tax Rates for AY 2026-27

New Tax Regime (Default) – Section 115BAC

Total Income (₹)	Tax Rate
Upto ₹4,00,000	Nil
₹4,00,001 – ₹8,00,000	5%
₹8,00,001 – ₹12,00,000	10%
₹12,00,001 – ₹16,00,000	15%
₹16,00,001 – ₹20,00,000	20%
₹20,00,001 – ₹24,00,000	25%
Above ₹24,00,000	30%

• Health & Education Cess: 4% applies to the total tax liability.
• Surcharge: Additional tax for income exceeding ₹50 lakh.
• No deductions or exemptions allowed.

---

Old Tax Regime (Optional) – No Change in Rates

Category	Income up to ₹2.5L	₹2.5L – ₹5L	₹5L – ₹10L	Above ₹10L
Individuals (<60 yrs)	Nil	5%	20%	30%
Senior Citizens (60-79 yrs)	Nil (₹3L limit)	5%	20%	30%
Super Senior Citizens (80+ yrs)	Nil (₹5L limit)	–	20%	30%

• Rebate under Section 87A: Available for income up to ₹5 lakh (maximum rebate ₹12,500).
• Allows deductions under 80C, 80D, HRA, LTA, etc.

---

Comparison of Tax Liability under Both Regimes

To understand the impact of these tax rates, let’s compare tax liability for incomes of ₹20 lakh, ₹30 lakh, and ₹40 lakh under both regimes.

Tax Calculation for Different Income Levels

Total Income (₹)	New Regime (₹)	Old Regime (₹) (After ₹2L deductions)
₹20,00,000	₹2,08,000	₹3,66,600
₹30,00,000	₹4,99,200	₹6,78,600
₹40,00,000	₹8,11,200	₹9,90,600

Tax Breakdown for ₹20,00,000

✅ New Regime:

• Tax on first ₹4,00,000 – Nil
• ₹4,00,001 – ₹8,00,000 @ 5% = ₹20,000
• ₹8,00,001 – ₹12,00,000 @ 10% = ₹40,000
• ₹12,00,001 – ₹16,00,000 @ 15% = ₹60,000
• ₹16,00,001 – ₹20,00,000 @ 20% = ₹80,000
• Total Tax = ₹2,00,000 + 4% Cess (₹8,000) = ₹2,08,000

✅ Old Regime (After ₹2L Deductions – Net Income ₹18,00,000):

• ₹2.5L – ₹5L @ 5% = ₹12,500
• ₹5L – ₹10L @ 20% = ₹1,00,000
• ₹10L – ₹18L @ 30% = ₹2,40,000
• Total Tax = ₹3,52,500 + 4% Cess (₹14,100) = ₹3,66,600

---

Disclaimer:

This article is for informational purposes only and should not be considered as professional tax advice. While every effort has been made to ensure accuracy, tax laws are subject to change, and individual circumstances may vary. Readers are advised to consult with a qualified Chartered Accountant or tax professional before making any tax-related decisions. The author and publisher disclaim any liability for any decisions made based on the content of this article.

 

Here’s a table of the new TDS rates as per the Finance Bill, 2025:

Section	Nature of Payment	Current TDS Rate	Proposed TDS Rate
194D	Insurance Commission	5%	2%
194LBC	Income from Securitisation Trust	25% (Individuals/HUF), 30% (Others)	10% (for all)
194LBA	Income from Business Trust	No change	No change
193	Interest on Securities	No threshold	Exempt up to ₹10,000
194A	Interest (other than on securities)	₹40,000 (General) / ₹50,000 (Senior Citizens)	₹50,000 (General) / ₹1,00,000 (Senior Citizens)
194B	Winnings from Lottery	₹10,000 aggregate in FY	₹10,000 per transaction
194BB	Winnings from Horse Race	₹10,000 aggregate in FY	₹10,000 per transaction
194G	Commission on Lottery	₹15,000	₹20,000
194H	Commission/Brokerage	₹15,000	₹20,000
194-I	Rent	₹2,40,000 per FY	₹50,000 per month
194J	Professional/Technical Fees	₹30,000	₹50,000
194LA	Compensation for Land Acquisition	₹2,50,000	₹5,00,000

These changes will be effective from April 1, 2025 or any date as notified by the goverment

Introduction

Tax Deducted at Source (TDS) on rent paid to a Non-Resident Indian (NRI) landlord is governed by Section 195 of the Income Tax Act, 1961. If you are paying rent to an NRI landlord, it is essential to comply with TDS deduction regulations to avoid penalties. This article explains the applicable TDS rate, lower TDS deduction process, Form 15CA & 15CB requirements, determination of NRI status, impact of DTAA, Budget 2017 amendments, and consequences of non-compliance, with an example for clarity.

How to Determine Whether a Landlord is an NRI

Before deducting TDS, the tenant must verify if the landlord qualifies as an NRI under the Income Tax Act, 1961. A landlord is considered an NRI if:

1. Stay in India: The landlord stays in India for less than 182 days in the relevant financial year.
2. Past Stay Record: If the landlord was in India for less than 365 days in the preceding four years and less than 60 days in the current financial year, they are considered an NRI.
3. Self-Declaration: In some cases, the landlord can provide a self-declaration (Along with CA Certificate) stating their residential status, which the tenant can verify with relevant documents (passport, visa, or foreign address proof).

If the landlord is an NRI, the tenant must deduct TDS under Section 195, rather than Section 194I applicable to resident landlords.

TDS Rate on Rent Paid to NRI

As per Section 195, the applicable TDS rate on rent paid to an NRI is 30% (plus applicable surcharge & cess) on the gross rent amount. Unlike resident landlords, where TDS is deducted at 10% under Section 194I, rent paid to an NRI is subject to a higher rate.

Impact of DTAA (Double Taxation Avoidance Agreement)

If the NRI landlord resides in a country that has a DTAA (Double Taxation Avoidance Agreement) with India, they may be eligible for a lower TDS rate. The landlord can claim DTAA benefits by:

1. Providing a Tax Residency Certificate (TRC) from their country of residence.
2. Furnishing Form 10F and a self-declaration stating they are eligible for DTAA benefits.
3. Ensuring compliance with Section 90/90A of the Income Tax Act for DTAA applicability.

For example, under DTAA with the USA, the TDS rate may be reduced to 15% instead of 30%, depending on the agreement terms.

Example of TDS on Rent to NRI

Assume Mr. Sharma, an Indian resident, is paying a monthly rent of ₹1,00,000 to his NRI landlord.

• TDS Calculation: ₹1,00,000 × 30% = ₹30,000
• Monthly payment after TDS deduction: ₹1,00,000 – ₹30,000 = ₹70,000
• The deducted TDS of ₹30,000 must be deposited with the Income Tax Department.

If DTAA applies and the TDS rate is 15%, then:

• TDS Calculation: ₹1,00,000 × 15% = ₹15,000
• Monthly payment after TDS deduction: ₹1,00,000 – ₹15,000 = ₹85,000

Lower TDS Deduction Process

If the NRI landlord’s actual tax liability is lower than the 30% TDS rate, they can apply for a Lower Deduction Certificate (LDC) from the Income Tax Department. Here’s how:

1. Application by NRI Landlord: The landlord must apply for a lower deduction certificate (Form 13) from the Assessing Officer (AO).
2. Certificate Issuance: The AO reviews the landlord’s tax liabilities and issues the certificate specifying a reduced TDS rate.
3. Tenant’s Compliance: The tenant can deduct TDS at the lower rate mentioned in the certificate.

Form 15CA & 15CB Requirements

For any payment made to an NRI, compliance with Form 15CA & 15CB is mandatory before remittance:

1. Form 15CA: A declaration by the payer (tenant) to be submitted online before making the remittance to an NRI landlord.
2. Form 15CB: A certificate issued by a Chartered Accountant (CA) certifying that the tax deduction is in compliance with the Income Tax Act.
3. Submission: If the remittance exceeds ₹5,00,000 in a financial year, both Form 15CA & 15CB are required. Otherwise, only Form 15CA is sufficient for smaller amounts.

Budget 2017 Amendment Impact

Budget 2017 introduced stringent compliance measures for TDS on payments made to NRIs, emphasizing stricter enforcement of Form 15CA & 15CB. The following changes were made:

1. Expanded scope of TDS deduction: TDS compliance for rental payments to NRIs is closely monitored, making it necessary for tenants to deduct and deposit TDS accurately.
2. Strengthened penalties: Non-deduction or non-payment of TDS now attracts higher interest rates and penalties.

Consequences of Not Deducting TDS on NRI Rent

Failure to deduct or deposit TDS can lead to serious tax implications, including:

• Interest on Late Deduction/Deposit:
  • 1% per month for failure to deduct TDS.
  • 1.5% per month for failure to deposit TDS after deduction.
• Penalty Under Section 271C: The tenant may be liable to pay an equivalent amount as a penalty.
• Disallowance of Rent Expense: If TDS is not deducted, the rent paid may be disallowed as a business expense for tax purposes.
• Tenant in Default: If the tenant fails to deduct and deposit TDS, they will be considered a “defaulter” and held liable for the unpaid tax amount, along with penalties and interest.

Conclusion

Compliance with TDS on rent paid to NRI landlords is crucial to avoid penalties and legal issues. If you are unsure about tax deductions or need assistance with a lower TDS application, consult N C Agrawal& Associates, CA in Delhi and Noida to ensure seamless compliance.

You can also read our Article on TDS applicabilty on sale of property by NRI by clicking here

For expert advice, reach out to N C Agrawal & Associates, offering specialized tax and compliance services for residents and NRIs.

Tax Deducted at Source (TDS) is a mechanism by which the government collects tax at the source of income. The payer deducts a certain percentage of the payment as tax and remits it to the government on behalf of the payee. The TDS rates and applicable sections under the Income Tax Act for the Financial Year (FY) 2024-25 (Assessment Year 2025-26) are outlined below:

TDS Rate Chart for FY 2024-25 (AY 2025-26):

Section	Nature of Payment	Threshold Limit (₹)	TDS Rate (%)	Effective Date
192	Salary	As per income tax slab rates	As per slab rates	–
192A	Premature withdrawal from EPF	₹50,000	10%	–
193	Interest on securities	₹10,000	10%	–
194	Dividend	₹5,000	10%	–
194A	Interest other than on securities	₹40,000 (₹50,000 for senior citizens)	10%	–
194B	Winnings from lotteries, crossword puzzles, etc.	₹10,000	30%	–
194BA	Winnings from online games	No threshold	30%	–
194BB	Winnings from horse races	₹10,000	30%	–
194C	Payment to contractors/sub-contractors (single transaction)	₹30,000	1% (Individual/HUF), 2% (Others)	–
194C	Payment to contractors/sub-contractors (aggregate in FY)	₹1,00,000	1% (Individual/HUF), 2% (Others)	–
194D	Insurance commission	₹15,000	5%	–
194DA	Payment in respect of life insurance policy	₹1,00,000	5%	–
194EE	Payments from National Savings Scheme	₹2,500	10%	–
194F	Payments on account of repurchase of units by Mutual Fund or Unit Trust of India	No threshold	20%	Up to 30-09-2024
194F	Omitted	–	–	From 01-10-2024
194G	Commission on sale of lottery tickets	₹15,000	5%	–
194H	Commission or brokerage	₹15,000	5%	Up to 30-09-2024
194H	Commission or brokerage	₹15,000	2%	From 01-10-2024
194I(a)	Rent for plant and machinery	₹2,40,000	2%	–
194I(b)	Rent for land, building, furniture, etc.	₹2,40,000	10%	Up to 30-09-2024
194I(b)	Rent for land, building, furniture, etc.	₹2,40,000	2%	From 01-10-2024
194IA	Payment on transfer of certain immovable property other than agricultural land	₹50,00,000	1%	–
194IB	Payment of rent by certain individuals or HUF	₹50,000 per month	5%	Up to 30-09-2024
194IB	Payment of rent by certain individuals or HUF	₹50,000 per month	2%	From 01-10-2024
194IC	Payment under specified agreement	No threshold	10%	–
194M	Payment of certain sums by certain individuals or HUF	₹50,00,000	5%	Up to 30-09-2024
194M	Payment of certain sums by certain individuals or HUF	₹50,00,000	2%	From 01-10-2024
194O	Payment of certain sums by e-commerce operator to e-commerce participant	₹5,00,000	1%	Up to 30-09-2024
194O	Payment of certain sums by e-commerce operator to e-commerce participant	₹5,00,000	0.1%	From 01-10-2024

Key Changes Effective from 1st October 2024:

• Section 194H (Commission or Brokerage): TDS rate reduced from 5% to 2%.
• Section 194IB (Rent by Individuals or HUF): TDS rate reduced from 5% to 2%.
• Section 194M (Payments by Individuals or HUF): TDS rate reduced from 5% to 2%.
• Section 194O (E-commerce Transactions): TDS rate reduced from 1% to 0.1%.
• Section 194F (Repurchase of Units by Mutual Funds or UTI): This section has been omitted.

These changes aim to simplify tax compliance and reduce the burden on taxpayers. It’s essential to stay updated with these modifications to ensure accurate TDS deductions and adherence to tax regulations.

if you further need to study the detail about TDS deposit dates and tds return filing process, the same can be read at TDS Deposit dates and Return Filing

Dear Taxpayer, ANIL KAUSHAL (BOSPKXXXXL)
It is observed that you have claimed deduction under section 80GGC of Rs 500000 in your ITR for A.Y. 2023-24. It is requested that the claim may be verified and mistake, if any, may be rectified by updating the ITR for A.Y. 2023-24 by 31.03.2025.

Warm regards
Income Tax Department

Did you received the above message from income tax department? worried about , what should do?

Steps to Take Upon Receiving a SMS for Section 80GGC Deduction Discrepancy or verification

If you have received a notice from the Income Tax Department regarding a claimed deduction under Section 80GGC, it is crucial to verify and rectify the details to ensure compliance with tax laws. Section 80GGC allows taxpayers to claim deductions for donations made to political parties. However, any discrepancies or unverified claims can lead to legal and financial complications.

As a leading CA Firm in Delhi and Noida, we guide taxpayers through the proper steps to resolve such issues effectively.

Steps to Take After Receiving the Notice

1. Verify the Claimed Deduction

• Check your filed Income Tax Return (ITR) for A.Y. 2023-24 to confirm the amount claimed under Section 80GGC.
• Ensure that the donation was made to a registered political party or electoral trust through a valid payment mode (excluding cash).
• Cross-check the acknowledgment or receipt of the donation from the concerned party.

1. Gather Supporting Documents

• Please make sure you are in possession of Donation receipt or Obtain a donation receipt from the political party or trust.
• Keep a copy of the bank transaction statement as proof of payment.

1. File an Updated ITR (ITR-U) if Required

• If you find any mistake in the claim, file an Updated Return (ITR-U) under Section 139(8A) before 31st March 2025.
• The ITR-U can be filed online through the Income Tax e-Filing Portal.
• Ensure accurate reporting to avoid penalties or further scrutiny.

1. Respond to the Notice Properly (in case if you have received the Tax Notice)

• If your claim is correct, respond to the Income Tax Department with necessary documents.
• Use the Compliance Portal on the Income Tax website to submit your response.
• If required, seek assistance from a professional CA Firm in Delhi and Noida for drafting a response.

• We have already highlighted this matter earlier, emphasizing that the government is actively monitoring and identifying fake deductions claimed through updated ITRs. This issue was recently addressed and published on our website. You can read the full article by clicking here

Why Choose a CA Firm in Delhi and Noida?

Handling tax notices and rectifications requires expertise in income tax laws and compliance. Professional assistance ensures:
✅ Correct tax filing and compliance with regulations.
✅ Proper documentation and legal response to the tax department.
✅ Avoidance of penalties due to incorrect claims.

If you have received a similar notice, contact our expert team at N C Agrawal & Associates, a trusted CA Firm in Delhi and Noida, for hassle-free assistance in resolving tax discrepancies and filing Updated ITR.