Income tax - Provisions

  തൃശൂർ ജ്വല്ലറി ഹബ്ബിൽ നടന്ന റെയ്ഡുകൾ ജിഎസ്ടി ഒഴിവാക്കലിൻ്റെ അപകടസാധ്യതകളും സുരക്ഷാ രീതികളും ഉയർത്തിക്കാട്ടുന്നു. തൃശൂർ, കേരളം – ഓഗസ്റ്റ് 2025: കേരളത്തിന്റെ സ്വർണ്ണ തലസ്ഥാനം എന്നറിയപ്പെടുന്ന തൃശൂർ, 16 ആഭരണ വ്യാപാരികളുമായി ബന്ധപ്പെട്ട 42 സ്ഥലങ്ങൾ ലക്ഷ്യമിട്ട് സംസ്ഥാന ജിഎസ്ടി ഇന്റലിജൻസ് ആൻഡ് എൻഫോഴ്‌സ്‌മെന്റ് വിംഗ് ഓപ്പറേഷൻ ആർക്കൻസ്റ്റോൺ നടത്തിയപ്പോൾ ഒരു വലിയ എൻഫോഴ്‌സ്‌മെന്റ് നടപടിക്ക് സാക്ഷ്യം വഹിച്ചു. ഈ റെയ്ഡിൽ 100 ​​കോടി രൂപയുടെ വിൽപ്പന അടിച്ചമർത്തൽ കണ്ടെത്തി, കണക്കിൽ പെടാത്ത 36 കിലോഗ്രാം സ്വർണ്ണം പിടിച്ചെടുത്തു , നികുതിയും പിഴയും ആയി 2 കോടിയിലധികം രൂപ കണ്ടെടുത്തു. നികുതി ബാധ്യതകൾ കുറയ്ക്കുന്നതിന് വിൽപ്പന അണ്ടർ-റിപ്പോർട്ട് ചെയ്യൽ, സ്റ്റോക്ക് രജിസ്റ്ററുകളിൽ കൃത്രിമം കാണിക്കൽ, വ്യാജ ഇൻവോയ്‌സുകൾ നൽകൽ തുടങ്ങിയ രീതികൾ ഉപയോഗിക്കുന്ന ജ്വല്ലറി മേഖലയിൽ ജിഎസ്ടി വെട്ടിപ്പ് തുടരുന്ന പ്രശ്‌നത്തിലേക്ക് ഈ പ്രവർത്തനം അടിവരയിടുന്നു . ജിഎസ്ടി ഒഴിവാക്കലിലെ അപകടകരമായ രീതികൾ മനസ്സിലാക്കൽ വിൽപ്പനയുടെ വ്യവസ്ഥാപിത അടിച്ചമർത്തൽ യഥാർത്ഥ വിൽപ്പനയേക്കാൾ മനഃപൂർവ്വം കുറഞ്ഞ വിൽപ്പന രേഖപ്പെടുത്തൽ. ...

business loss (non-speculative) can be set off against capital gains (both short-term and long-term), subject to restrictions under Section 71 : ✅ Allowed Business loss (other than speculative loss) can be set off against income under any head (except salary). So, if you have a business loss and a taxable capital gain, you can adjust the loss against that gain. 📌 Example: Business loss = ₹4,00,000 LTCG (u/s 112A) = ₹3,00,000 ➡ Net taxable income = ₹(4,00,000 – 3,00,000) = ₹1,00,000 (loss carried forward if return filed in time). ❌ Not Allowed Speculative business loss → can be set off only against speculative business income (not capital gains). Loss from specified business u/s 35AD → only against specified business income. Capital loss → cannot be set off against business income (only against capital gains). 👉 So the direction is: Business Loss → Capital Gain ✅ Capital Loss → Business Income ❌

 the ruling you are referring to was delivered by the SMC Bench of ITAT, Ahmedabad . 📌 Case: Jayshreeben Jayantibhai Palsana vs. ITO 📌 Bench: ITAT Ahmedabad – SMC Bench 📌 Date of Order: 12 August 2025 (some references mention 13 August 2025, but 12 Aug 2025 is the official pronouncement date) 📌 Issue: Whether rebate u/s 87A is available against tax payable on short-term capital gains (STCG) u/s 111A under the new regime u/s 115BAC(1A) . 📌 Finding: The Bench held that Sec. 87A, as applicable for AY 2024–25, does not exclude STCG u/s 111A ; hence, if the total income ≤ ₹7 lakh , rebate is allowable.

!! Academic Purpose only 🔎 How Auditors Detect / Trap Cash Siphoning 1. Related-Party Transactions (Sec. 40A(2), AS-18 / Ind AS-24) Check disclosures in notes to accounts for related-party names. Verify pricing : Compare payments to related parties vs. market rates. Audit Trail : Match invoices with actual delivery/benefit received. Trap : If related parties are paid more than fair value (inflated expenses), auditor questions management & reports under CARO/Tax Audit (Form 3CD, Clause 23/31). 2. Inflated Expenses Analytical procedures : Compare expense ratios (advertising, consultancy, repairs) vs. past years/industry average. Vouching : Verify supporting bills, contracts, and third-party confirmations. Cash flow check : Expense shown in P&L but no matching service/goods delivered. Trap : Fake vendors or repetitive round invoices without actual service. 3. Round-Tripping of Funds Bank reconciliation : Unusual high-value transactions flowing...

!! ACADEMIC PURPOSE ONLY “Tax deferred on Sweat Equity Shares / Securities – B/F” which comes up in the Income Tax Return (ITR) forms . Here’s a clear explanation: 📌 Background: Section 191(1C) & Section 115QA / 192(1C) When an employee receives Sweat Equity Shares or ESOPs (Employee Stock Options) from an employer (especially eligible start-ups), the value is taxable as a perquisite under Section 17(2)(vi). Normally, tax is payable in the year of allotment. However, Section 191(1C) read with Rule 26D allows employees of eligible start-ups (Sec 80-IAC recognized) to defer payment of tax on such perquisite. 📌 What does “Tax Deferred” mean? Instead of paying tax immediately, the employee can defer payment of tax on such ESOP perquisite. Tax becomes payable at the earliest of these events : On expiry of 48 months (4 years) from end of relevant AY, OR On the date of sale of such shares, OR On the date of ceasing employment , whichever is earlier....

Sec 80-IAC recognized start-up   means in Income-tax law: 📌 Section 80-IAC – Deduction for Profits of Eligible Start-ups 1. Eligible Start-up Definition (as per Income-tax Act, 1961) A company or LLP is treated as an eligible start-up if: Incorporation period : Incorporated between 1st April 2016 and 31st March 2025 . Nature of entity : Must be a Private Limited Company or a LLP (not a partnership firm without LLP structure). Turnover limit : Turnover should not exceed ₹100 crore in any of the previous years since incorporation. Innovation criteria : Should be working towards: innovation, development, improvement of products, processes or services, OR a scalable business model with high potential for employment generation or wealth creation. Recognition : Must be recognized as a start-up by DPIIT (Department for Promotion of Industry and Internal Trade) under its start-up scheme. 2. Tax Benefits under 80-IAC Deduction of 100% of p...

ready reckoner chart that places Salary (Sec. 17(1)), Perquisites (Sec. 17(2)), and Profits in lieu of Salary (Sec. 17(3)) side by side 📘 Ready Reckoner – Section 17(1), 17(2), 17(3) Section Covers Examples Essence Sec. 17(1) – Salary Basic monetary payments received as part of employment - Wages, Basic Salary - Advance salary - Fees, Commission, Bonus - Annuity or Pension - Leave encashment (while in service) - Employer’s contribution to RPF > 12% of salary - Excess interest (>9.5% p.a.) credited to RPF Direct and fixed compensation for services Sec. 17(2) – Perquisites Benefits/amenities provided by employer in addition to salary , in cash/kind - Rent-free accommodation - Free/concessional education - Free/Concessional travel - Employer-paid electricity/medical bills - ESOPs (taxable at exercise) - Employer’s contribution to superannuation fund > ₹1.5 lakh - Free car with driver Fringe benefits enjoyed during service Sec. 17(3) – Profits in lieu of Salary Any compensat...

perquisite valuation of concessional loan facility for employees (especially bank employees) under Income-tax Rules, 1962 . 📌 Relevant Provision Section 17(2)(viii) of the Income-tax Act, 1961 → “Perquisites” include any concession in the matter of interest on loans provided by employer. Rule 3(7)(i) of the Income-tax Rules, 1962 → Prescribes method for valuation. 📊 Valuation Method – Interest on Loan at Concessional Rate Perquisite Value = (SBI lending rate – Actual rate charged by employer) × Outstanding Loan Balance SBI rate : The rate of interest charged by the State Bank of India (SBI) as on the 1st day of the relevant financial year for the same type of loan (e.g., housing loan, car loan, personal loan). Outstanding balance : The maximum monthly balance method is used (check balance on last day of each month). Actual rate charged : The concessional rate at which employer (e.g., bank) has given the loan. ⚖️ Exemptions / Reliefs Small Loans : I...

 If a company’s buy-back of shares is covered by Section 115QA (i.e., the company itself pays buy-back tax), any income received by the shareholder on such buy-back is fully exempt in their hands. How It Works in Practice Company pays buy-back tax Section 115QA levies 20% tax (plus surcharge & cess) on the difference between the buy-back price and the issue price of the shares. This tax is paid by the company, not the shareholder. Shareholder exemption Section 10(34A) says that any income arising to a shareholder on account of a buy-back referred to in section 115QA shall be exempt . This means no capital gains tax for the shareholder, regardless of holding period or cost of acquisition. Example Issue price: ₹200/share Buy-back price: ₹500/share Gain per share: ₹300 Company buys back 1,000 shares: Taxable distributed income for company = ₹300 × 1,000 = ₹3,00,000 Company pays buy-back tax @ 20% = ₹60,000 (+ surcharge & ce...

New Income Tax Bill, 2025 — When Will It Become Law and What It Means for You India’s tax landscape is on the verge of its biggest overhaul in over six decades. The Income-tax (No. 2) Bill, 2025 has cleared both houses of Parliament and is now awaiting the final step before becoming law. Here’s everything you need to know—dates, process, and what comes next. 📜 The Journey So Far The new Bill aims to replace the Income-tax Act, 1961 , which has been the backbone of India’s direct tax framework for more than 60 years. Here’s the timeline of its progress: Stage Date / Status Passed by Lok Sabha August 11, 2025 Passed by Rajya Sabha August 12, 2025 Presidential Assent Pending Scheduled Effective Date April 1, 2026 The Bill’s smooth passage through Parliament reflects strong government backing. However, like every law, it can only take effect after receiving the President’s assent . 🗓 When Will It Become an Act? Technically, a Bill becomes an Act only a...

 difference between Salary as per Section 17(1) and Salary as per Section 17(2) . These are both definitions in the Income-tax Act, 1961 but they cover different components of salary income. 1. Salary as per Section 17(1) Scope: Basic definition of "salary" for tax purposes. Includes: Wages Annuity or pension Gratuity Fees, commission, perquisites, or profits in lieu of salary Advance of salary Leave encashment Employer’s contribution to Recognised Provident Fund (above exempt limit) Transfer of an employer’s obligation to a third party Nature: Mostly cash or direct monetary payments + certain retirement benefits. Purpose: Used for computing “Income under the head Salaries” and for determining % of salary for various allowances & perquisite valuation. 2. Salary as per Section 17(2) Scope: Specific to perquisites (benefits in addition to monetary salary). Includes: Value of rent-free accommodation Concession in rent for a...

let’s go through all four ESOP stages with the tax impact in India so you can see exactly where Section 17(2) fits in and where capital gains come into play. 1. Grant Stage What happens : Employer offers stock options to employee. Tax impact : No tax at grant — you only have a conditional right, not an asset. Section applicable : None yet, because there is no "perquisite" or "income". 2. Vesting Stage What happens : Employee earns the right to exercise options (subject to terms, like tenure or performance). Tax impact : No tax at vesting — still no transfer or actual benefit. Note : Vesting is only the "unlocking" of the right, not the receipt of shares. 3. Exercise Stage ✅ (Section 17(2) applies here) What happens : Employee chooses to exercise options, pays exercise price, and becomes entitled to shares. Tax impact : Perquisite Tax under Salary Taxable value = FMV on date of exercise − Price paid by employe...

Short-Term Capital Gains (STCG) tax rate for listed equity shares in India for Assessment Year (AY) 2025-26 (Financial Year 2024-25) : STCG Rate for Listed Shares – AY 2025-26 Transaction Date                Applicable STCG Rate (Section 111A) On or before 22 July 2024                15%    + applicable surcharge & cess On or after 23 July 2024                             20% + surcharge & cess  Why the change? This revision stems from Finance (Union Budget) 2024, where the tax rate under Section 111A for STCG was raised from 15% to 20% , applicable to listed equity shares, equity-oriented mutual funds, and business trusts, provided conditions like STT payment are met. Key Takeaway: STCG for listed equity sold before 23 July 2024: 15% STCG for listed equity sold on...

common queries raised under Section 142(1) , grouped by taxpayer type. These are based on real-world patterns of Income Tax scrutiny notices. 1. For Individuals (Salary / Other Income) Category Typical Queries Salary Income - Copy of Form 16 from employer(s) - Salary slips for specific months - Proof of allowances & perquisites claimed as exempt House Property - Rent agreement & rent receipts - Municipal tax payment proof - Loan repayment statement & interest certificate Capital Gains - Purchase/sale deeds for property - Contract notes from stock broker - Statement of mutual fund transactions Deductions & Exemptions - Proof for Section 80C investments (LIC, PPF, etc.) - Health insurance receipts (80D) - Donation receipts (80G) Bank Transactions - Bank statements for specific period - Explanation for large cash deposits/withdrawals 2. For Business / Professionals Category Typical Queries Books of Accounts - Ledger copies (sales, purchases, debtors, creditors) ...

  What Is Incriminating Material in Income Tax Law? Incriminating material refers to any document, record, statement, digital evidence, or seized item during a search or survey that directly indicates undisclosed income, transactions, or assets of the taxpayer, and can justify an addition in assessment or reassessment. 📚 Judicially Recognized Definition “Incriminating material” is any evidence unearthed during a search which: Relates to a specific assessment year , and Reveals income not disclosed in the original return or books of account 📂 Examples of Incriminating Material Type Examples 💵 Cash / Jewellery Unexplained cash or jewellery without proper source 📝 Documents Unaccounted invoices, promissory notes, loan ledgers 🖥️ Digital evidence Files/emails showing black money, hawala, or bogus transactions 📒 Books of account Parallel books of accounts 📄 Agreements Benami transactions, property undervaluation 💼 Diaries / slips Unrecorded business transac...

This article only for academic purpose !! This is not a professional advise  ✅ Checklist for an Assessee Exercising Section 115BAC (New Tax Regime): ✅ Checklist for Assessee – Exercising Option under Section 115BAC 🔹 1. Identify Type of Assessee Individual or HUF With or without business/professional income ⬜ If no business income → Can opt every year ⬜ If business income → Irrevocable (except once) 🔹 2. Understand Eligibility Conditions Assessee is not claiming disallowed exemptions/deductions Standard Deduction (₹50,000) available from AY 2024–25 onwards Rebate under Section 87A available (up to ₹7,00,000 income) 🔹 3. List of Disallowed Deductions / Exemptions Ensure the following are NOT claimed if opting for 115BAC: ✅ Allowed ❌ Not Allowed 80CCD(2) – Employer NPS Contribution 80C – LIC, PF, PPF, etc. 80JJAA – New employment deduction 80D – Health Insurance Standard Deduction (only from AY 2024-25) HRA, LTA, Entertainment Allowanc...