The upcoming Direct Tax Code (DTC) 2025 in India is designed to replace the existing Income Tax Act of 1961, aiming to modernize, simplify, and enhance the efficiency of the tax system. Key features include:

1. Residency Simplification: The DTC will reduce residency categories from three (Resident and Ordinarily Resident, Resident but Not Ordinarily Resident, and Non-Resident) to two: Resident and Non-Resident.
2. Unified Financial Year Basis: The concepts of Previous Year and Assessment Year will be removed, with the Financial Year becoming the sole reference point for tax purposes.
3. Integration of Capital Gains: Capital gains may be taxed as regular income, which could increase tax rates for some taxpayers.
4. Updated Income Terminology: “Income from Salary” will be renamed as “Employment Income,” and “Income from Other Sources” will become “Income from Residuary Sources,” though the main income categories remain unchanged.
5. Expanded Audit Eligibility: In addition to Chartered Accountants (CA), Company Secretaries (CS) and Cost and Management Accountants (CMA) may also be authorized to conduct tax audits, enhancing accessibility and competition in tax audit services.
6. Streamlined Sections and Schedules: Fewer sections in the tax code aim to simplify compliance and reduce litigation complexity.
7. Revised TDS and TCS Rules: Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) will apply more broadly across income types, with lower rates but wider applicability.
8. Reduction in Exemptions: Many existing exemptions and deductions are likely to be phased out, broadening the tax base and simplifying filing processes. The goal is to increase the taxpayer base from about 1% to around 7.5% of the population.
9. Corporate Tax Rate Harmonization: A unified tax rate for domestic and foreign companies aims to encourage foreign investment by creating a level playing field.
10. Lowered Tax Burden for Salaried Employees: Salaried employees may see a reduced tax burden, addressing the long-standing issue of a disproportionate tax load on this group.

The DTC 2025 is anticipated to take effect in the fiscal year 2025-26, signaling a major evolution in India’s tax framework that could impact compliance, competitiveness, and transparency across sectors.

When purchasing property from a Non-Resident Indian (NRI) seller, the buyer is required to deduct Tax Deducted at Source (TDS) on the sale amount. The TDS rate and procedures are different compared to transactions involving resident sellers. Here’s a breakdown of the process:

1. TDS Rate for NRI Seller

• Standard Rate: TDS is typically deducted at a rate of 20% plus applicable surcharge and cess on the total sale consideration if the property is classified as a long-term capital asset (held for more than 2 years).
• Short-Term Capital Gains: If the property is held for less than 2 years, the TDS rate is 30% plus applicable surcharge and cess.
• Important Note: These rates are subject to change as per the Finance Act. Ensure you verify the latest rates.

2. Procedure for Deducting TDS

• Obtain TAN: The buyer must obtain a Tax Deduction and Collection Account Number (TAN) before deducting TDS.
• Deduction of TDS: TDS should be deducted at the time of making the payment to the NRI seller, whether in advance or in installments.
• Deposit of TDS: The deducted TDS should be deposited to the government account using Form 26QB within 30 days from the end of the month in which TDS was deducted.
• Issue of TDS Certificate: The buyer must issue Form 16A (TDS Certificate) to the NRI seller within 15 days from the due date of furnishing the challan-cum-statement in Form 26QB.

3. Lower TDS Certificate Process

An NRI seller may apply for a lower or nil deduction certificate under Section 197 of the Income Tax Act if the actual tax liability is expected to be lower than the standard TDS rate.

• Application by NRI Seller: The NRI seller can apply for a lower TDS certificate from the jurisdictional Assessing Officer in India. The application is made using Form 13.
• Processing Time: The issuance of a lower TDS certificate can take a few weeks to a few months, depending on the assessment and verification process.
• Issuance of Certificate: Once approved, the Assessing Officer issues the lower or nil TDS certificate specifying the reduced rate of TDS.
• Furnishing to Buyer: The NRI seller must furnish this certificate to the buyer, who will then deduct TDS at the rate mentioned in the certificate instead of the standard rate.

4. Filing of TDS Return

• The buyer needs to file TDS returns on Form 27Q quarterly.
• The return should include details of the NRI seller, the property transaction, the amount paid, and the TDS deducted.

5. Non-Compliance Penalties

• Failure to deduct or deposit TDS may result in interest and penalties. The buyer may also be deemed an “assessee in default,” making them liable to pay the TDS amount along with interest.

6. Things to Keep in Mind

• Consultation: It is advisable to consult a tax professional or legal expert to ensure compliance with the regulations.
• Documentation: Ensure proper documentation, including the NRI status of the seller, property details, and any certificates related to TDS.
• Payment Consideration: TDS is deducted on the entire sale consideration, not just the capital gain portion.

This process ensures that the transaction is compliant with Indian tax laws, and both the buyer and seller avoid any future complications.

In India, the Income Tax Act governs the taxation of individuals based on their income, providing two distinct tax regimes: the Old Tax Regime and the New Tax Regime. Each regime offers unique advantages and considerations, impacting how taxpayers calculate their taxable income and their overall tax liability. This article explores the differences between the Old Tax Regime and New Tax Regime for the financial year 2023-24, emphasizing their tax structures, benefits, and the specific advantage provided by Section 87A.

Understanding the Old Tax Regime

The Old Tax Regime, also known as the existing tax structure, has been in place for many years. It allows taxpayers to avail various deductions and exemptions under different sections of the Income Tax Act. These deductions are crucial as they reduce the taxable income, thereby lowering the overall tax liability. Key deductions available under the Old Tax Regime include:

• Section 80C: Deductions for investments in instruments such as Employee Provident Fund (EPF), Public Provident Fund (PPF), Life Insurance Premiums, Equity Linked Savings Scheme (ELSS), etc., up to ₹1.5 lakh per annum.
• Section 80D: Deductions for health insurance premiums paid for self, family, and parents, up to specified limits.
• Section 24: Deductions for interest paid on housing loans, up to specified limits.
• HRA (House Rent Allowance): Exemption available for rent paid if HRA forms part of salary.

These deductions significantly impact the taxable income, allowing taxpayers to potentially reduce their tax outgo substantially. The tax rates under the Old Tax Regime for individuals below 60 years for FY 2023-24 are structured as follows:

Income Slab	Tax Rate
Up to ₹2,50,000	Nil
₹2,50,001 to ₹5,00,000	5%
₹5,00,001 to ₹10,00,000	20%
Above ₹10,00,000	30%

Senior citizens (60 years and above but below 80 years) and super senior citizens (80 years and above) have different slabs and rates tailored to their age brackets.

Introduction of the New Tax Regime

The New Tax Regime was introduced from FY 2020-21 onwards to simplify the tax structure by eliminating most deductions and exemptions. This regime offers a lower number of tax slabs but with slightly different rates compared to the Old Tax Regime. The idea behind the New Tax Regime is to provide a straightforward tax calculation process without the need for detailed tax planning around deductions. The tax rates under the New Tax Regime for FY 2023-24 are structured as follows:

Income Slab	Tax Rate
Up to ₹2,50,000	Nil
₹2,50,001 to ₹5,00,000	5%
₹5,00,001 to ₹7,50,000	10%
₹7,50,001 to ₹10,00,000	15%
₹10,00,001 to ₹12,50,000	20%
Above ₹12,50,000	25%

Key Differences Between the Old Tax Regime and New Tax Regime

1. Tax Structure:

• Old Tax Regime: Offers multiple tax slabs with higher rates applicable to higher income brackets. Taxpayers can reduce their taxable income significantly by availing deductions under various sections like 80C, 80D, etc.
• New Tax Regime: Provides a simpler tax structure with fewer slabs but slightly different rates. The regime does not allow most deductions and exemptions, aiming for a more straightforward tax calculation process.

2. Deductions and Exemptions:

• Old Tax Regime: Allows taxpayers to claim deductions under sections such as 80C, 80D, 24, etc., which reduce taxable income and subsequently reduce the tax liability.
• New Tax Regime: Does not allow most deductions and exemptions except those specified by the government. Tax calculation is based on gross income without adjustments for deductions.

3. Impact on Tax Liability:

• Old Tax Regime: Often results in a lower tax liability for taxpayers who can utilize deductions effectively to reduce their taxable income.
• New Tax Regime: May lead to higher tax liability compared to the Old Tax Regime, especially for those who would otherwise benefit from deductions under the old structure.

4. Section 87A Benefit:

Under both the Old and New Tax Regimes, individuals with total income up to ₹5,00,000 are eligible for a rebate under Section 87A. This rebate directly reduces the tax liability after calculating taxes:

• Rebate Amount: The rebate is the lower of 100% of the income tax liability or ₹12,500.
• Applicability: The rebate is available to resident individuals (below 60 years) whose total income does not exceed ₹5,00,000. It effectively reduces the tax burden for eligible taxpayers, making the regime more favorable, especially for lower income groups.

Example Scenario: Impact of Section 87A Benefit

Let’s consider an example where an individual’s total income after deductions under the Old Tax Regime is ₹4,80,000:

• Tax Calculation without Rebate:
• Income up to ₹2,50,000: Nil tax
• Income from ₹2,50,001 to ₹4,80,000: Tax at 5% on ₹2,30,000 (₹4,80,000 – ₹2,50,000) = ₹11,500
• Total Tax Liability = ₹11,500
• Tax Calculation with Section 87A Rebate:
• After applying the rebate of ₹11,500 (lower of 100% of tax liability or ₹12,500), the tax payable is reduced to Nil.

Conclusion

Understanding the differences between the Old Tax Regime and New Tax Regime for FY 2023-24, including the benefit of Section 87A, is crucial for taxpayers to make informed decisions about their tax planning strategies. Each regime offers unique benefits and considerations, catering to different taxpayer profiles and financial situations. Whether to opt for the Old Tax Regime with its deductions and exemptions or the New Tax Regime for its simplicity and fixed tax structure depends on individual circumstances and tax planning goals. By evaluating these factors carefully, taxpayers can optimize their tax liabilities while ensuring compliance with tax laws effectively. The inclusion of Section 87A ensures that eligible taxpayers receive additional relief, further influencing tax planning decisions.

1. NRI Meaning:

• Non-Resident Indian (NRI) refers to an Indian citizen or a person of Indian origin who resides outside India for employment, business, or any other purpose indicating an indefinite stay abroad.

2. NRI Status Calculation Process:

• NRI status is determined based on the individual’s physical presence in India during a financial year (April 1 to March 31).
• If an individual stays in India for less than 182 days in a financial year, they are considered an NRI for that year subject to meet out other conditions of status determination

3. Income Tax Applicable to NRIs:

• NRIs are taxed on income earned or accrued in India, such as income from property, capital gains, interest, dividends, etc.
• Income earned outside India is generally not taxable in India for NRIs.
• The tax rates applicable to NRIs are the same as those for residents of India.

4. Interest in NRE and NRO Accounts:

• NRE (Non-Resident External) accounts: Funds in NRE accounts are freely repatriable (can be transferred abroad) and are exempt from Indian taxes, including interest earned.
• NRO (Non-Resident Ordinary) accounts: Funds in NRO accounts are not freely repatriable, and the interest earned is subject to Indian taxes.

5. Double Taxation Avoidance Agreements (DTAA):

• DTAA aims to prevent double taxation of income in two countries.
• NRIs can benefit from DTAA provisions by claiming tax credits or exemptions in one country for taxes paid in the other country.

6. High-Value Transactions to be Kept in Mind by NRIs:

High-value transactions for NRIs can include various activities or financial transactions that involve significant sums of money or assets. Here are some examples of high-value transactions that NRIs should be mindful of:

Property Transactions:

• Purchase or sale of real estate: NRIs investing in or disposing of property in India should be aware of the high value associated with real estate transactions. This includes buying, selling, or gifting property.
• Rental income: NRIs earning rental income from properties in India should keep track of the high-value transactions associated with rental payments, lease agreements, etc.

Investments:

• Stock Market Investments: NRIs investing in the Indian stock market may engage in high-value transactions through buying or selling shares, mutual funds, or other securities.
• Fixed Deposits and Financial Instruments: Investments in fixed deposits, bonds, debentures, and other financial instruments may involve significant sums of money.

Banking and Remittances:

• Transfer of Funds: NRIs transferring large sums of money to or from India for investment, business, or personal purposes should be aware of the high-value nature of these transactions.
• Foreign Currency Accounts: Opening or closing foreign currency accounts, especially NRE and NRO accounts, involves high-value transactions that NRIs should monitor.

Loans and Borrowings:

• Loans and Mortgages: NRIs obtaining loans or mortgages from Indian banks or financial institutions for property purchase or other purposes may involve high-value transactions.
• Repayment of Loans: NRIs repaying loans or mortgages to Indian lenders also constitutes high-value transactions.

Business Transactions:

• Setting up Business Entities: NRIs establishing businesses or investing in Indian companies may engage in high-value transactions related to company formation, capital infusion, etc.
• Commercial Contracts: Business agreements, contracts, and transactions involving significant monetary values should be carefully documented and monitored.

Tax Payments and Compliance

• Payment of Taxes: NRIs fulfilling their tax obligations in India, including payment of income tax, property tax, or other levies, may involve high-value transactions.
• Compliance Reporting: Meeting reporting requirements for high-value transactions, such as filing tax returns, disclosing foreign assets, and complying with regulatory norms, is essential for NRIs.

7. Tax Filing for NRIs:

• NRIs are required to file income tax returns in India if their total income exceeds the basic exemption limit.
• Even if income is below the taxable threshold, filing a return may be necessary to claim a refund of taxes withheld at source or if certain types of income (like capital gains) are involved.
• Timely filing of tax returns and compliance with reporting requirements are crucial for NRIs to fulfill their tax obligations in India.

For personalized advice and assistance with tax matters, NRIs should consult with qualified tax professionals or chartered accountants familiar with Indian tax laws and regulations pertaining to NRIs.

When U.S. stocks are given to an employee in India, taxation can be complex due to the international nature of the income and the need to consider tax regulations in both the United States and India. Here’s a simplified overview of how taxation generally works for such cases, keeping in mind that tax laws are subject to change and can vary based on specific circumstances. Always consult a tax professional for advice tailored to your situation.

1. At the Time of Granting Stock Options:

In general, if the stock options are granted to the employee but not vested, there is no immediate tax implication in India. The taxation event occurs at the time of exercise.

2. At the Time of Exercise:

When an employee exercises their stock options (i.e., buys the stock), the difference between the exercise price and the fair market value (FMV) of the shares is taxed as a perquisite (a benefit in addition to salary) under the head “Salaries.” This is subject to income tax according to the individual’s income tax slab rates in India.

3. At the Time of Sale:

When the employee eventually sells the stocks, the gain from the sale is subject to capital gains tax. The tax rate depends on whether it’s a short-term or long-term capital gain:

• Short-term Capital Gains (STCG): If the stocks are held for less than 24 months from the date of exercise, the gain is considered short-term and is taxed according to the individual’s income tax slab rates which is applicable.
• Long-term Capital Gains (LTCG): If the stocks are held for more than 24 months, the gain is considered long-term and is taxed at 20% with indexation benefits, which adjust the purchase price for inflation to calculate the gain.

4. Double Taxation Avoidance Agreement (DTAA):

India has a DTAA with the U.S., which means taxpayers can avoid being taxed twice on the same income. If taxes are paid in the U.S. on the income from the sale of stocks, you may be eligible for a credit for those taxes against your tax liability in India. The specifics depend on the DTAA provisions and should be reviewed carefully.

5. Tax Filing in India:

It’s important for the employee to disclose international assets and foreign income in their Indian tax return if they qualify as a resident for tax purposes in India.

If you receive the RSU of a foreign company, you must disclose it under the Foreign Asset Schedule (FAS). If you paid taxes at vesting by selling shares, those shares wouldn’t be mentioned in FAS. While selling your RSU holdings, you pay tax only on the profit made and not the entire value of the shares. This also helps in avoiding double taxation

Non-disclosure can lead to penalties and interest and further Scrutiny by the tax department

6. Documentation:

Maintaining detailed records of the dates of grant, exercise, sale, and the amounts involved is crucial for calculating taxes accurately and for compliance with both U.S. and Indian tax laws.

This overview is a simplification, and the actual tax implications can vary greatly based on individual circumstances, specific types of stock options (e.g., ESOPs, RSUs), and changes in tax laws.

We will recommend to Consult with a tax professional who has expertise in cross-border taxation to navigate these complexities.

Under the Income Tax Act of India, various financial transactions are subject to reporting requirements to the Income Tax Department. These transactions, which exceed specified thresholds, are reported by the respective entities to the Income Tax Department, and the details of these transactions are compiled into the Annual Information Statement (AIS) for individual taxpayers. Here are some common transactions and their respective thresholds that are reported under the AIS:

1. Bank Transactions:

• Cash deposits or withdrawals aggregating to Rs. 10 lakh or more in a financial year in one or more savings account of a person maintained with the same bank.
• Payment made by any mode (other than cash) for credit card bills aggregating to Rs. 10 lakh or more in a financial year.
• Purchase of bank drafts or pay orders with cash aggregating to Rs. 10 lakh or more in a financial year.

1. Mutual Fund Transactions:

• Redemption of units of mutual fund for an amount exceeding Rs. 10 lakh.

1. Stock Transactions:

• Sale or purchase of shares of a company listed on a recognized stock exchange exceeding Rs. 10 lakh in value per transaction.

1. Property Transactions:

• Purchase or sale of immovable property valued at Rs. 30 lakh or more.
• Receipt of rent exceeding Rs. 2.40 lakh per annum.

1. Credit Card Transactions:

• Payment made by any mode (other than cash) for credit card bills aggregating to Rs. 10 lakh or more in a financial year.

1. Foreign Exchange Transactions:

• Purchase of foreign currency or traveler’s cheque exceeding Rs. 10 lakh or more in cash.

1. Fixed Deposit Transactions:

• Fixed deposit with banks or post office aggregating to Rs. 10 lakh or more.

1. Cash Transactions:

• Cash deposits aggregating to Rs. 10 lakh or more in a financial year in one or more saving account of a person maintained with the bank.
• Cash deposits aggregating to Rs. 50 lakh or more in a financial year in one or more accounts (other than current account and time deposit) maintained with the bank.

Reporting and Compliance:

• Annual Information Statement (AIS): The details of these high-value transactions are compiled into the Annual Information Statement (AIS) for individual taxpayers and are made available for download through the Income Tax Department’s e-filing portal.
• Verification and Compliance: Taxpayers are required to verify the accuracy and completeness of the high-value transactions reported in their AIS. Any discrepancies or omissions should be rectified promptly to ensure compliance with tax laws.
• Income Tax Return Filing: Taxpayers must accurately report all high-value transactions in their income tax returns and ensure compliance with tax laws. Failure to disclose these transactions may attract penalties or scrutiny by tax authorities.

The Annual Information Return (AIR) serves as a crucial tool for the Income Tax Department to track high-value financial transactions and ensure tax compliance among taxpayers. When significant discrepancies are identified between the information reported in the AIR and the income tax returns filed by taxpayers, the Income Tax Department may issue a notice to investigate and resolve the discrepancies. Taxpayers are required to respond to such notices promptly and provide the necessary clarification or information to address the discrepancies and ensure compliance with tax laws. It’s essential for taxpayers to accurately report their financial transactions and income to avoid potential penalties or scrutiny by tax authorities

Tax Savy Tips for #Equity Investors

Your Investment is a Short Term if a period of holding is up to 12 Month otherwise it will be treated as Long Term

Short Term Capital Gain is Taxable @ 15%

Long Term Capital Gain is exempt up to Rs.1 lakh after that taxable @ 10 % (No Indexation)

Long Term Capital Loss can be set off against Long Term Capital Gain only

Short Term or Long Term losses can be carried forward up to 8 years if you have filed ITR on or before the due date u/s 139(1)

💡Tips💡
1:Book Long Term Capital Gain up to Rs.1 lakh during the year as it was exempt from tax

2:If you have already booked a short term capital gain then to save taxes book short term capital losses and repurchase the shares on next day so that such short term losses can get set off against your taxable short term capital gains and no effect to your portfolio

3:If you have already booked a long term gain of more then 1 lakh then to save taxes book short term capital losses or long term capital losses and repurchase the shares on next day so that such short term/long term losses can get set off against your taxable long term capital gains and no effect to your portfolio.

Basic of HUF:-

A Hindu Undivided Family (HUF) is a specific family unit recognized under Hindu law, primarily in India. It represents a unique legal entity distinct from its members, primarily for taxation purposes under the Income Tax Act, 1961. The concept of an HUF stems from Hindu customary law, which encompasses not just Hindus by religion but also those who are followers of Jainism, Sikhism, and Buddhism in India, as these religions are considered part of the Hindu legal framework in certain contexts

Definition and Characteristics

Legal Entity: An HUF is treated as a separate legal entity for the purpose of assessment under the Income Tax Act. This means it has a separate legal identity from its members and can hold property, enter into contracts, and sue or be sued in its own name.

Formation: An HUF is automatically formed by a Hindu family. A common misconception is that it requires a special ceremony or registration to be constituted, but in reality, it comes into existence the moment a Hindu individual gets married and starts a family. It includes all members of a family, including wives and unmarried daughters.

Karta: The head of an HUF is called the ‘Karta’, who manages the affairs of the family and the joint family property. Traditionally, the Karta is the eldest male member of the family, but recent legal judgments have allowed for women to become Kartas under certain circumstances.

Members: The members of an HUF include all persons lineally descended from a common ancestor, including their wives and unmarried daughters. Membership in an HUF is by birth, and in the case of females, through marriage into the family.

Legal Rights and Obligations

• Property Ownership: An HUF can own property in its name. The property owned by an HUF is deemed to be owned jointly by all members of the family.
• Bank Accounts and Financial Transactions: An HUF can operate bank accounts, invest in securities, and engage in other financial activities in its name.
• Liability: The liability of the Karta is unlimited, whereas the liability of other members is limited to their share in the HUF.
• Taxation: An HUF has its own PAN (Permanent Account Number) and is required to file tax returns separately from its members. It enjoys certain tax benefits under the Income Tax Act, which can lead to tax efficiency and savings for the family.

Formation

• Automatic Creation: An HUF is automatically created at the time of a Hindu marriage. The family, including spouses and children, become members of the HUF. The creation of an HUF does not necessarily require a specific ceremonial process. The essential requirement is that there should be a family that can come under the umbrella of HUF.
• Legal Recognition: For legal and tax purposes, however, it’s important to formalize the existence of the HUF. This begins with creating it formally with the help of a Tax professional

Saving tax through a Hindu Undivided Family (HUF) involves strategic planning and understanding of the income tax laws applicable to HUFs in India. An HUF is treated as a separate entity for taxation purposes, which means it enjoys its own set of exemptions and deductions, similar to an individual taxpayer. Here are several ways through which you can save tax by forming an HUF:

1. Tax Saving through HUF- Claiming Separate Tax Exemption

• Basic Exemption Limit: Just like any individual taxpayer, an HUF is entitled to a basic exemption limit (which is ₹2,50,000 for FY 2022-23; this may change with new financial budgets). This is beneficial if the family members individually fall into higher tax brackets.

2. Income Splitting

• By channeling income through an HUF, the overall tax liability can be reduced. For example, rental income from property owned by the HUF or business income that is attributed to the HUF can be taxed in the hands of the HUF, potentially at a lower rate due to the basic exemption limit and the slab rate applicable.

3. Investment in Tax-saving Instruments

• An HUF can invest in tax-saving instruments under Section 80C of the Income Tax Act, such as ELSS, PPF, NSC, life insurance premiums, and more. The limit for deduction under Section 80C is ₹1,50,000, which is over and above the deductions claimed by the individual members.

4. Deductions under Other Sections

• Health Insurance Premiums: Premiums paid for the health insurance of HUF members can be claimed as a deduction under Section 80D.
• Education Loan: Interest paid on an education loan taken for any member of the HUF can be claimed under Section 80E.
• Home Loan Interest: If the HUF has taken a home loan, the interest component can be claimed as a deduction under Section 24.

5. Paying Salary to Members

• If any HUF member is actively involved in the operations or management of the HUF’s business, a reasonable salary paid to them for their services can be claimed as an expense by the HUF. This reduces the HUF’s taxable income.

6. Creation of a Trust

• An HUF can also create a trust for a specific purpose, and the amount given to the trust can be claimed as a deduction under the applicable sections of the Income Tax Act.

7. Gifts Received

• Gifts received by an HUF from its members can sometimes be a tax-efficient way to increase the capital of the HUF without attracting gift tax, subject to the provisions and limits under the Income Tax Act.

Planning and Documentation

To effectively save tax through an HUF, proper planning and documentation are crucial. All transactions must be legal and justified, with clear demarcation of income and investment in the name of the HUF. It’s important to maintain transparent records and comply with all tax laws to avoid scrutiny and penalties from tax authorities.

Conclusion

The Hindu Undivided Family system offers a viable tax-saving mechanism within the framework of Indian tax laws. By leveraging the benefits available to an HUF, families can significantly reduce their tax liabilities while ensuring the efficient management and transfer of wealth across generations. However, it’s crucial to adhere to the legal stipulations and ensure proper documentation and compliance to fully benefit from the HUF structure. As with all tax-related strategies, consulting with a tax professional or financial advisor to understand the implications and benefits specific to one’s situation is advisable

Income tax plays a crucial role in a country’s revenue generation and is an important aspect of financial planning for individuals. In recent years, the Indian income tax system has undergone significant changes, with the introduction of the new tax regime. This article aims to provide an overview of the income tax structure under the old and new regimes, compare the tax slabs, and discuss factors to consider when determining which regime is better suited for an individual taxpayer.

The Old Tax Regime: Under the old tax regime, the income tax structure consists of multiple tax slabs with progressive rates. The tax rates for individual taxpayers for the financial year 2021-22 are as follows:

• Up to INR 2.5 lakh: Nil
• INR 2.5 lakh to INR 5 lakh: 5%
• INR 5 lakh to INR 10 lakh: 20%
• Above INR 10 lakh: 30%

Additionally, a cess of 4% called the Health and Education Cess is levied on the total tax liability. Taxpayers can avail various deductions and exemptions under different sections of the Income Tax Act to reduce their taxable income and lower their tax liability.

The New Tax Regime: The new tax regime, introduced in the Union Budget 2020, offers reduced tax rates with fewer deductions and exemptions. It aims to simplify the income tax structure and provide taxpayers with the option to choose between the old and new regimes based on their individual circumstances. The tax rates for individual taxpayers for the financial year 2021-22 under the new regime are as follows:

• Up to INR 2.5 lakh: Nil
• INR 2.5 lakh to INR 5 lakh: 5%
• INR 5 lakh to INR 7.5 lakh: 10%
• INR 7.5 lakh to INR 10 lakh: 15%
• INR 10 lakh to INR 12.5 lakh: 20%
• INR 12.5 lakh to INR 15 lakh: 25%
• Above INR 15 lakh: 30%

It is important to note that under the new regime, taxpayers cannot claim various deductions and exemptions, including the standard deduction, house rent allowance (HRA), deductions under Section 80C, 80D, etc.

Determining the Better Option: Deciding which tax regime is better for an individual depends on several factors, including the taxpayer’s income, age, investments, and financial goals. Here are some key considerations:

1. Income Level: For individuals with lower income levels and limited investments, the new tax regime may be beneficial, as it offers lower tax rates without the need to claim deductions. However, individuals with higher incomes who can avail substantial deductions under the old regime may find it more advantageous.
2. Deductions and Exemptions: Under the old regime, taxpayers can claim deductions and exemptions, such as those available under Section 80C for investments in instruments like provident fund, National Savings Certificate, etc. If a taxpayer has significant deductions that substantially reduce their taxable income, the old regime might be more beneficial.
3. Investment Preferences: Individuals with specific investment preferences may find the old regime more advantageous. For example, taxpayers who invest in life insurance policies, health insurance, or have home loan interest payments can claim deductions under the old regime, reducing their tax liability.
4. Simplicity: The new tax regime offers a simpler structure with lower tax rates and eliminates the need to track and claim various deductions. For individuals who prefer simplicity and do not have significant deductions, the new regime

Conclusion:

Choosing between the old and new income tax regimes depends on various factors and requires a careful assessment of one’s income, investments, and financial goals. While the new regime offers lower tax rates, it comes with reduced deductions and exemptions. The old regime provides the benefit of claiming deductions but involves a more complex structure. It is advisable for taxpayers to consult with tax professionals, such as chartered accountants or tax advisors, to analyze their specific circumstances and make an informed decision that optimizes their tax liability and aligns with their financial objectives.

There are many Taxpayers who has escaped the income intentionally or unintentionally by not declaring the Saving Interest, Fixed Deposit Interest, Capital gain transactions, Purchase or sale of immovable properties and other as specified by the department under high value transactions. Taxpayers are getting the email/sms alert from the department about these high transactions value.

However, since the date of revision of income tax returns i.e. 31st march 2022 is over so taxpayers was in dilemma that how to revise or deposit the tax amount.

Now the government has come with a solution to file the Updated Tax Return in Form ITR-U along with applicable ITR Forms (I.e. ITR-1,2,3,4,5,6,7 as applicable)

Income Tax department has notified a new form for filing updated I-T returns in which taxpayers will have to give the exact reason for filing it along with the amount of income to be offered to tax. The new form (ITR-U) will be available to taxpayers for filing updated income tax returns for 2019-20 and 2020-21 fiscals.

Updated Income Tax Return can be filed from the AY 2020-21-ITR-U along with applicable ITR-1 to ITR-7 on account of Below

• Return not filed
• Income not reported correctly
• wrong heads of income
• Reduction of c/f Loss
• Reduction of Unabsorbed Dep.
• Reduction of Tax Credit
• Wrong tax

People can now deposit the tax can relax by reducing the chances of any further notices.