Income Tax

The Finance Act 2025 revised new tax regime slabs under Section 115BAC: NIL up to Rs.4 lakh, 5% (Rs.4-8L), 10% (Rs.8-12L), 15% (Rs.12-16L), 20% (Rs.16-20L), 25% (Rs.20-24L — new slab), and 30% above Rs.24L. The Section 87A rebate is Rs.60,000, making income up to Rs.12L zero-tax. For salaried employees, income up to Rs.12,75,000 is effectively zero-tax after the Rs.75,000 standard deduction.

The Income Tax Act 2025 replaces the Income Tax Act 1961 from 1 April 2026. For FY 2025-26 (AY 2026-27), the old 1961 Act still applies and ITR is filed as usual. From 1 April 2026 (Tax Year 2026-27 onwards), the new Act governs — introducing 'Tax Year' terminology, new TDS section numbers (392, 393), new form names (Form 130 for salary TDS certificate), and payment codes. Tax rates remain unchanged for the transition year.

The new regime is typically better if: income is up to Rs.12.75L (salaried), you have minimal 80C investments, no large HRA or home loan interest, or you prefer simplicity. The old regime is better if: you have significant home loan interest (up to Rs.2L), large HRA exemption, 80C investments close to Rs.1.5L, Rs.50,000 NPS under 80CCD(1B), and health insurance premiums. Our CA team computes tax under both regimes and recommends the optimal choice for every client.

Individuals, HUFs, and non-audit cases: 31 July 2026 and 31 August 2026 as the case. Audit cases (businesses/professionals): 31 October 2026. Companies with transfer pricing: 30 November 2026. Belated ITR (with Section 234F fee): up to 31 December 2026. Revised ITR to correct errors: up to 31 December 2026.

Section 234F levies Rs.5,000 if total income exceeds Rs.5 lakh, and Rs.1,000 if total income is Rs.5 lakh or below. This is in addition to interest under Section 234A on outstanding tax. If income is below the basic exemption limit (Rs.2.5L old regime, Rs.4L new regime), no 234F fee applies — but filing is still recommended for TDS refund and loss carry-forward.

For property sold after 23 July 2024: LTCG (held > 24 months) is taxed at 12.5% without indexation. For property acquired before 23 July 2024: the taxpayer can choose between 12.5% without indexation or 20% with indexation using the CII (CII for FY 2025-26 is 376) — whichever results in lower tax. STCG (held 24 months or less) is taxed at slab rates. Section 54 reinvestment exemption is available to reduce LTCG liability.

AIS (Annual Information Statement) is the tax department's comprehensive information record for your PAN — capturing TDS credits, dividends, interest from all bank accounts, mutual fund and share transactions, real estate purchases, foreign remittances, and more. The department's scrutiny algorithms are entirely AIS-driven. Any income visible in AIS that is not disclosed in your ITR is a high-risk trigger for a Section 148 (income escape assessment) notice.

Section 44AD allows eligible small businesses (not specified professionals) with annual turnover up to Rs.3 crore to declare 8% of turnover as net income (6% for digital receipts), without maintaining detailed books or undergoing tax audit. Section 44ADA applies to specified professionals (doctors, engineers, lawyers, CAs, architects) with gross receipts up to Rs.75 lakh — declaring 50% of receipts as taxable income.

Marginal relief prevents disproportionate tax for incomes slightly above the Rs.12 lakh rebate threshold. If taxable income is, say, Rs.12.10 lakh, the tax without marginal relief would be Rs.70,500 (slab computation). Marginal relief caps the actual tax payable at the income exceeding Rs.12 lakh — i.e., Rs.10,000. This prevents the effective tax rate from exceeding 100% on the marginal income above the threshold.

Yes. A revised return under Section 139(5) can be filed to correct errors, add missed income, claim additional deductions, or switch ITR form — up to 31 December 2026 for AY 2026-27. There is no limit on the number of revisions before the deadline. The last revised return replaces the previous one. If a notice has been received under Section 143(1)/143(2) before revision, inform us so the revision is filed strategically.

Section 80C (old regime only) allows up to Rs.1.5 lakh deduction for: LIC and other life insurance premiums, EPF employee contribution, PPF contributions, 5-year bank or post office tax-saving FDs, NSC (National Savings Certificate), ELSS mutual funds (3-year lock-in), principal repayment of home loan, ULIP premiums, Sukanya Samriddhi Yojana contributions, and tuition fees for up to two children.

Section 54: LTCG from sale of residential property — reinvested in one new residential house (purchased 1 year before or 2 years after sale, or constructed within 3 years) — exempt proportionately. Section 54F: LTCG from any capital asset other than residential property — entire net consideration reinvested in one new residential house — exempt in full. Section 54EC: LTCG from any long-term asset — reinvested in NHAI or REC bonds within 6 months — exempt up to Rs.50 lakh per financial year.

Equity-oriented funds (equity > 65%): STCG held up to 12 months — 20% under Section 111A. LTCG held over 12 months — 12.5% above Rs.1.25 lakh annual exemption under Section 112A. Debt mutual funds (non-equity): Both STCG and LTCG are taxed at applicable slab rates — the 20% with indexation benefit for debt MFs was removed from FY 2023-24.

Freelance income (writing, design, programming, consulting) is taxed as 'Profits and Gains from Business or Profession.' For gross receipts up to Rs.75 lakh, Section 44ADA presumptive taxation is available — declaring 50% of receipts as income without detailed books. Above Rs.75 lakh, detailed accounts are required and a Section 44AB tax audit is mandatory. Freelancers can claim business expenses (internet, equipment, workspace, software) against gross income.

Rental income is assessed under 'Income from House Property.' Gross annual rent minus municipal taxes paid = Net Annual Value (NAV). From NAV, a standard deduction of 30% is allowed (no proof required). For let-out property, home loan interest is fully deductible with no Rs.2 lakh cap (the cap applies only to self-occupied property). Net house property loss up to Rs.2 lakh per year can be set off against other income.

Advance tax is payable in four instalments: 15% by 15 June, 45% by 15 September, 75% by 15 December, and 100% by 15 March. It applies when estimated tax liability (after TDS credit) exceeds Rs.10,000 for the year. Under the new tax regime, the zero-tax threshold of Rs.12L (Rs.12.75L salaried) means many previously liable taxpayers no longer need to pay advance tax — a significant simplification.

NRIs (Non-Resident Indians under Section 6) are taxed in India only on income accrued or received in India — rent from Indian property, capital gains from Indian assets, interest from NRO accounts, dividends from Indian companies, and salary for services rendered in India. Foreign income is not taxable in India for NRIs. DTAA provisions between India and the NRI's country of residence may further reduce Indian tax liability.

Tax audit by a Chartered Accountant is mandatory for: businesses with annual turnover exceeding Rs.1 crore (Rs.10 crore if cash transactions are below 5% of total receipts/payments); and professionals with gross receipts above Rs.50 lakh. If a taxpayer below these limits opts out of the presumptive taxation scheme after opting in for 5 years, a tax audit is required for the next 5 years regardless of turnover.

Vivad Se Vishwas 2.0 (announced Union Budget 2024, operational from October 2024) is a one-time dispute resolution scheme for taxpayers with cases pending at CIT(A), ITAT, High Court, or Supreme Court. Taxpayers paying the disputed tax amount (plus a reduced payment depending on the filing date) get waiver of interest and penalties. It aims to clear India's large backlog of income tax litigation. We identify eligible clients and file declarations on their behalf.

Surcharge applies on basic tax: 10% for income Rs.50 lakh to Rs.1 crore; 15% for Rs.1-2 crore; 25% for Rs.2-5 crore and above Rs.5 crore (under new regime — capped at 25% from FY 2023-24). Under the old regime, 37% surcharge still applies for income above Rs.5 crore. Health and Education Cess at 4% applies on (tax + surcharge) for all taxpayers. Effective top marginal rate under old regime: 30% + 37% surcharge + 4% cess = 42.744%. Under new regime: 30% + 25% + 4% = 39%.