GST in 2025: Simplified tax rates, quicker dispute resolution, and stricter compliance

 

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Nearly ten years after its introduction, the Goods and Services Tax (GST) entered a more stable and mature phase in 2025. The emphasis moved away from resolving transitional challenges to creating a predictable, consistent, and trust-based tax system. Tax professionals have termed this phase GST 2.0, as multiple policy initiatives and compliance reforms reshaped India’s indirect tax landscape.

Experts say 2025 represents a decisive shift for GST, moving beyond legacy problem-solving towards addressing deeper structural inefficiencies. The focus this year was on curbing litigation and laying the groundwork for a more transparent and growth-oriented tax regime.

GST rate rationalisation takes centre stage

One of the most significant developments in 2025 was the rollout of GST rate rationalisation in September. The revised framework consolidated tax rates into fewer slabs — 5% for essential goods, 18% as the standard rate, and 40% for luxury and sin goods.

This restructuring aimed to ease the tax burden on widely consumed items while safeguarding government revenues. It also sought to resolve persistent classification disputes and inverted duty structures that had long fuelled litigation between taxpayers and authorities.

GST Appellate Tribunal finally operational

After prolonged delays, the GST Appellate Tribunal (GSTAT) became functional in 2025, completing the dispute resolution mechanism under GST.

The tribunal is expected to reduce pressure on high courts, ensure uniform interpretation of GST laws across states, and enable faster resolution of disputes. For MSMEs and mid-sized enterprises, this marks a crucial development that could substantially lower litigation costs and timelines.

“The operationalisation of the GST Appellate Tribunal completes the adjudication framework. It is expected to bring consistency in rulings, reduce the burden on high courts, and provide quicker and more predictable dispute resolution,” an expert said.

Government acts to safeguard revenue

In 2025, the government also addressed a key revenue concern by overturning the Supreme Court’s ruling in the Safari Retreats case, which had permitted input tax credit (ITC) on construction costs where buildings were used for taxable rentals.

Through the Finance Act, 2025, Section 17(5)(d) of the CGST Act was amended retrospectively from July 1, 2017. A subtle yet significant change in wording — replacing “plant or machinery” with “plant and machinery” — aligned the provision with the statutory definition that excludes buildings and civil structures. As a result, ITC on construction of buildings now stands explicitly blocked, even when such properties generate taxable rental income.

While the government described the earlier wording as a drafting oversight, experts noted that the amendment has far-reaching implications, particularly for the real estate and leasing sectors.

“This amendment could negatively impact businesses engaged in renting commercial properties. Its consequences may require companies to reassess financial and operational strategies,” an expert observed.

Relief for post-sale discounts

Among the more taxpayer-friendly measures introduced in 2025 was the relaxation of rules governing post-sale discounts. Following the 56th GST Council meeting, amendments to Sections 15(3)(b) and 34 of the CGST Act now permit suppliers to issue GST credit notes for post-sale discounts without linking them to individual invoices.

Experts say this reform brings GST law closer to standard commercial practices such as annual turnover-based rebates, reduces compliance burdens, minimises disputes, and improves overall ease of doing business.

As India approaches the next decade of GST, 2025 is likely to stand out as the year when the tax system transitioned decisively from stabilisation to deep structural reform.

Income Tax Department’s access to emails and social media from April 2026: What you need to know

A message widely circulating on social media claims that from April 1, 2026, the Income Tax Department will be empowered to access citizens’ social media accounts, emails, and other digital platforms to curb tax evasion. The viral claim has generated significant curiosity and concern among taxpayers about whether the tax authorities will actually receive such extensive powers.

In response to the growing confusion, the Press Information Bureau’s (PIB) Fact Check team issued a clarification through a post on X (formerly Twitter) to verify the authenticity of the claim.

What does the viral social media post claim?

According to a post shared by the handle @IndianTechGuide, the Income Tax Department would gain sweeping authority from April 1, 2026, to monitor and access private digital platforms, including emails and social media accounts, as part of efforts to tackle tax evasion.

Can the Income Tax Department access private digital accounts?

The PIB Fact Check team has clarified that the claim is misleading. It stated that the Income Tax Department will not receive any such blanket powers.

As per the clarification, Section 247 of the Income Tax Act, 2025 allows access to digital records only during authorised search and survey operations. Such action can be taken solely when there is credible evidence of significant tax evasion and a formal search operation has been initiated. In the absence of such proceedings, the department has no authority to access a taxpayer’s private digital space.

Can these powers be used for routine assessments?

The PIB further emphasised that these provisions cannot be used for routine tax processing, information gathering, or scrutiny assessments. The powers are strictly intended to combat black money and large-scale tax evasion during search and survey operations and are not applicable to law-abiding taxpayers.

Has the power to seize documents been newly introduced?

The clarification also noted that the authority to seize documents and evidence during search and survey operations has existed since the Income Tax Act, 1961 and is not a new provision under the 2025 Act.

What is black money?

Black money refers to income earned through illegal activities or income on which tax has not been paid. It may arise from legitimate sources that are not disclosed to tax authorities or from inherently illegal activities such as smuggling, illicit trade, counterfeit currency operations, arms trafficking, terrorism financing, and corruption. In essence, black money comprises assets or resources that were neither reported at the time of generation nor disclosed during their possession.

Income Tax Department Alerted 21 Lakh Taxpayers – Did You Receive the SMS? Take Action Immediately

Income Tax Alert: CBDT Launches NUDGE Campaign Against Incorrect Deductions & Exemptions (AY 2025-26)

Government of India | Ministry of Finance | Central Board of Direct Taxes
Press Release | 23 December 2025

The Central Board of Direct Taxes (CBDT) has released a significant advisory calling upon taxpayers to review their Income Tax Returns (ITRs) for Assessment Year 2025-26 and voluntarily rectify any incorrect claims of deductions or exemptions.

This action is part of the Government’s “NUDGE” Campaign (Non-intrusive Usage of Data to Guide and Enable), which focuses on encouraging voluntary tax compliance by using data analytics—without resorting to coercive or intrusive measures.

What Prompted This Action by CBDT?

Using advanced data analytics and risk management tools, the CBDT has detected several instances where taxpayers have made incorrect claims in their Income Tax Returns. These include cases where taxpayers have:

  • Claimed deductions or exemptions that are not legally admissible

  • Reported bogus or questionable donations, particularly to:

    • Registered Unrecognised Political Parties (RUPPs)

  • Quoted incorrect or invalid PAN details of donation recipients

  • Claimed deductions in excess of prescribed limits

  • Incorrectly disclosed exempt income amounts in their ITRs

Such inaccuracies lead to under-reporting of taxable income, making these returns prone to scrutiny.

📩 How Are Taxpayers Being Notified?

Taxpayers identified through this exercise are being informed through:

  • SMS

  • Email

These messages advise taxpayers to:

  • Review their already-filed ITRs

  • Voluntarily correct any errors, if found

⚠️ Important Clarification

This communication is not a statutory notice under the Income Tax Act.
It is an early compliance alert, giving taxpayers a chance to self-correct.

⏰ Deadline to Take Corrective Action

👉 31 December 2025

Before this date, taxpayers may:

  • File a Revised Return, or

  • Submit an Updated Return, wherever permitted

Timely correction can help avoid:

  • Further verification or scrutiny

  • Formal notices

  • Penalties or additional proceedings

📊 CBDT Data Shows Strong Voluntary Compliance

The CBDT has highlighted encouraging results from this approach:

  • Over 21 lakh taxpayers have already:

    • Updated their returns for AYs 2021-22 to 2024-25

    • Paid more than ₹2,500 crore in additional taxes

  • For AY 2025-26 alone, more than 15 lakh revised returns have been filed

These figures demonstrate that voluntary compliance is more effective than coercive enforcement.

✅ What Should Taxpayers Do Now?

Step-by-Step Guidance:

  1. Review your ITR carefully, especially:

    • Chapter VI-A deductions (Sections 80C, 80G, etc.)

    • Exempt income disclosures

  2. Verify supporting documents, such as:

    • Donation receipts

    • PAN details of donees

    • Eligibility criteria for exemptions

  3. If any discrepancy is found:

    • File a Revised or Updated Return

  4. If all claims are accurate and genuine:

    • No further action is required

❌ Who Does Not Need to Worry?

The CBDT has clearly assured that:

Taxpayers who have correctly claimed legitimate deductions and exemptions need not take any action.

Honest taxpayers remain fully safeguarded under this initiative.

📅 What Happens If This Opportunity Is Ignored?

  • Taxpayers may still file an Updated Return from 1 January 2026

  • However:

    • Additional tax liability will arise

    • The risk of future inquiries or assessments increases

🧠 Key Takeaway

The NUDGE Campaign reflects the government’s:

  • Trust-based, taxpayer-friendly approach

  • Emphasis on voluntary compliance

  • Strategic use of technology and data, instead of harassment

Senior Citizens Get Special Tax Advantages in 2026

Senior Citizens in India: Comprehensive Tax & Financial Benefits Guide 2026

The Government of India acknowledges the lifelong contribution of senior citizens and, in return, extends a broad set of tax concessions, exemptions, compliance relaxations, banking advantages, and lifestyle-related benefits to ensure financial stability and dignity during retirement.

This detailed guide explains 30+ benefits and features available to senior and super senior citizens in India for FY 2025–26 / AY 2026–27.

1. Definition of Senior Citizen Under Income Tax Law

As per the Income Tax Act:

  • Senior Citizen: Resident individual aged 60 years or more but below 80 years

  • Super Senior Citizen: Resident individual aged 80 years or above

  • Specified Senior Citizen (Section 194P): Resident aged 75 years or above, earning only pension and interest from the same bank, and eligible for exemption from filing ITR

2. Income Tax Slabs – New Tax Regime (FY 2025–26)

The New Tax Regime, which is now the default option, applies equally to all taxpayers, including senior citizens:

Total Income Tax Rate
Up to ₹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%

Taxpayers may still opt for the old tax regime if it offers better savings.

3. Zero Tax on Income Up to ₹12.75 Lakh – Major Relief

Under the New Regime:

  • Standard deduction on salary/pension: ₹75,000

  • Taxable income up to ₹12,00,000

  • Section 87A rebate applicable

As a result, a senior citizen earning up to ₹12.75 lakh from pension/salary pays zero income tax, making the new regime highly beneficial for retirees.

4. Higher Basic Exemption Under Old Tax Regime

Those opting for the old regime enjoy enhanced exemption limits:

Category Exemption Limit
General taxpayer ₹2,50,000
Senior Citizen (60–79 years) ₹3,00,000
Super Senior Citizen (80+ years) ₹5,00,000

5. Section 80TTB – Deduction on Interest Income

Senior citizens can claim a deduction up to ₹50,000 on interest earned from:

  • Savings bank accounts

  • Fixed & recurring deposits

  • Post office schemes

  • Co-operative bank deposits

This benefit is exclusive to senior citizens and replaces Section 80TTA.

6. Section 80D – Health Insurance & Medical Expenses

To reduce healthcare costs, senior citizens are eligible for:

  • ₹50,000 deduction for health insurance premium

  • Medical expenses allowed if insurance is not taken

  • Additional deduction for premiums paid for dependent parents

7. Section 80DDB – Deduction for Specified Diseases

For treatment of serious ailments such as cancer, kidney failure, Parkinson’s disease, etc., senior citizens can claim:

  • Deduction up to ₹1,00,000, subject to conditions and certification

8. No Advance Tax Liability (Section 207)

Senior citizens are not required to pay advance tax if:

  • They do not have business income, and

  • Their income consists only of pension and interest

This also protects them from interest under Sections 234B and 234C.

9. Relaxations in ITR Filing

Offline ITR Filing

Super senior citizens may file paper returns (ITR-1 or ITR-4) instead of mandatory e-filing.

Section 194P – ITR Filing Exemption

Eligible residents aged 75+ earning only pension and bank interest are not required to file ITR, as the bank computes and deducts tax.

10. TDS Benefits & Form 15H

  • Form 15H can be submitted to avoid TDS if total tax liability is nil

  • TDS threshold on interest income increased to ₹1,00,000 per year

  • No TDS on bank/post office interest up to this limit

11. Enhanced Family Pension Exemption

Under the new regime:

  • Exemption increased to ₹25,000 per year

  • Allowed as lower of one-third of pension or ₹25,000

12. LTCG Benefits on Equity Investments

Senior citizens enjoy:

  • Basic exemption adjustment up to ₹4,00,000

  • Additional ₹1,50,000 LTCG exemption

  • Effectively, LTCG up to ₹1.5 lakh can be tax-free

13. Reverse Mortgage – Capital Gains Exemption

Amounts received through reverse mortgage of a residential property:

  • Are not treated as transfer

  • Hence, no capital gains tax applies

14. Higher Interest Rates on Senior Citizen FDs

Banks generally offer:

  • Additional 0.50% interest for senior citizens

  • Up to 0.75% extra for super senior citizens

15. Senior Citizen Savings Scheme (SCSS)

Key features:

  • Eligibility: Age 60+

  • Maximum investment: ₹30 lakh

  • Quarterly interest payout (rate as notified)

  • Eligible for Section 80C deduction

  • Backed by Government of India

16. Other Social, Banking & Lifestyle Benefits

Senior citizens also enjoy several non-tax advantages, including:

  • Railway & state transport concessions

  • Airline fare discounts

  • Healthcare priority & hospital rebates

  • Enhanced Ayushman Bharat coverage

  • Doorstep banking services (age 70+)

  • Property tax & stamp duty rebates (state-wise)

  • Telecom concessions

  • State-sponsored old-age pension schemes

Conclusion

For FY 2026, senior citizens in India benefit from a strong combination of:

✔ Lower tax burden
✔ Simplified compliance
✔ Higher exemptions and deductions
✔ Secure investment options
✔ Banking and lifestyle privileges

These measures collectively aim to ensure financial independence, stability, and improved quality of life after retirement.

New Banking and Cash Transaction Rules from 2026

🇮🇳 Introduction – Why Banking Transactions Deserve More Attention Today

In a rapidly digitising India, almost every financial move—personal or professional—passes through the banking system. Whether it’s UPI collections, cash deposits, fixed deposits, or GST-related receipts, banks today function not just as facilitators but also as statutory reporting entities.

A common misconception among taxpayers is that only very large or suspicious transactions attract scrutiny from the Income Tax Department.
However, this assumption is incorrect.

Even regular, everyday transactions—if misunderstood, misclassified, or improperly reported—can:

  • Get reported under Specified Financial Transactions (SFT)

  • Reflect in AIS / Form 26AS

  • Trigger income-tax notices

  • Result in bank account restrictions

  • Create GST registration or compliance complications

The purpose of this article/video is not to alarm, but to educate and empower.

In this guide, we clearly explain:

  • Banking transaction limits applicable for 2026

  • Transactions that are most likely to attract scrutiny

  • Rules related to cash, UPI, fixed deposits, and withdrawals

  • How bank activity links with Income Tax and GST

  • Practical steps to remain compliant and notice-free

If you carefully apply the compliance tips shared towards the end, you can manage your finances legally, confidently, and without unnecessary tax anxiety.

1️⃣ Banking Transaction Modes & Applicable Limits

🟦 UPI (Unified Payments Interface)

UPI remains India’s most popular digital payment method.

  • Standard daily limit: ₹1,00,000 per user

  • Per-transaction limit: Generally ₹1 lakh (varies by bank)

  • Higher limits: Up to ₹5 lakh per day for specific categories such as education, healthcare, government payments, and capital market transactions (effective 15 September 2025)

💡 Banks may impose lower internal limits—always verify with your bank.

🟦 IMPS (Immediate Payment Service)

  • Usually capped at ₹5 lakh per day per account

  • Available 24×7, making it suitable for urgent, higher-value transfers (subject to bank limits)

🟦 NEFT (National Electronic Funds Transfer)

  • Minimum: ₹1

  • No statutory maximum limit

  • Banks may set daily caps

  • Suitable for large-value transfers without UPI/IMPS restrictions

🟦 RTGS (Real-Time Gross Settlement)

  • Minimum transaction value: ₹2 lakh

  • No upper limit prescribed

  • Best for very high-value, time-sensitive transfers

2️⃣ Cash Transactions & Deposit Rules

🔸 Cash Deposit Reporting (SFT)

Banks and financial institutions are required to report:

  • ₹10 lakh or more cash deposits in a savings account in a financial year

  • ₹50 lakh or more cash deposits in a current account

  • ₹10 lakh or more in fixed deposits during a financial year

👉 This does not mean tax is levied automatically, but the transaction is reported and may be examined.

🔸 Cash Receipt Restrictions – Section 269ST

  • Receiving ₹2 lakh or more in cash from a single person:

    • In one day, or

    • In a single transaction, or

    • For one occasion/event
      is prohibited.

💡 Penalty can be equal to the cash amount received.

🔸 Cash Loans & Repayments – Sections 269SS & 269T

  • Acceptance or repayment of loans/deposits in cash above ₹20,000 is not allowed.

  • Penalty equals the amount involved.

3️⃣ TDS on Cash Withdrawals – Section 194N

This provision discourages excessive cash usage and promotes transparency.

🧾 TDS Applicability on Cash Withdrawals

ITR Filing Status Withdrawal Limit TDS Rate
ITR filed for last 3 AYs Above ₹1 crore 2%
ITR not filed for last 3 AYs Above ₹20 lakh 2% up to ₹1 crore, 5% thereafter

📌 Limits apply per bank, calculated cumulatively for the financial year.

4️⃣ Specified Financial Transactions (SFT)

Banks report high-value transactions such as:

  • Cash deposits crossing prescribed limits

  • Large or unusual digital inflows/outflows

These details appear in AIS and Form 26AS and must align with your ITR disclosures.

5️⃣ GST Linkage With Bank Accounts

🟡 GST Registration Threshold

  • Goods: ₹40 lakh

  • Services: ₹20 lakh

If bank receipts exceed these limits, GST registration becomes mandatory.

⚠️ Non-linking of bank account on GST portal within 30 days may lead to GST suspension.

6️⃣ Mandatory Disclosures in ITR & GST

📌 Income Tax Return

  • All bank accounts must be disclosed

  • Unexplained SFT entries can trigger notices

📌 GST Portal

  • Primary bank account linking is compulsory

  • Non-compliance can result in registration suspension

7️⃣ Business Cash Payment Restriction – Section 40A(3)

  • Cash expenses exceeding ₹10,000 per person per day are not deductible

  • Encourages digital payments and proper documentation

8️⃣ Practical Tips to Stay Notice-Free

✅ Maintain separate accounts for business and personal use
✅ Reconcile UPI inflows with business records
✅ Avoid unnecessary cash transactions
✅ File ITR regularly to benefit from higher withdrawal thresholds
✅ Maintain documentation for all large-value transactions

🧠 Key Takeaways

  • Know your banking limits and comply with them

  • Large cash dealings attract reporting and penalties

  • Regular ITR filing provides tangible compliance benefits

  • GST-bank linkage is critical for business continuity

  • Proper record-keeping is your best defence against notices

New Regulations for TDS Return Rectification Applicable from 01-04-2026

TDS / TCS Correction Statements: Time Limit Cut Down to 2 Years (Effective 01 April 2026)

🔔 What’s the Latest Change?

The Income Tax Department has introduced a major compliance reform by reducing the time limit for filing TDS and TCS correction statements to just 2 years, applicable from 1 April 2026.

Until now, deductors had the flexibility to revise old TDS/TCS returns even after many years. This long-standing practice will no longer be permitted.

⏳ Key Change Explained: Old Rule vs New Rule

🔙 Earlier Position (Before 01.04.2026)

  • No strict statutory deadline for filing correction statements

  • Corrections were practically allowed up to 7 years or more

  • Deductors commonly rectified:

    • Incorrect PAN details

    • Challan mapping errors

    • Short or excess deduction

    • Late reporting issues

  • Corrections were accepted even after several years

🔜 New Rule (From 01.04.2026)

  • ⛔ Correction statements allowed only within 2 years

  • The 2-year period will be calculated from:

    • End of the relevant financial year

  • ❌ No correction will be permitted beyond this period

  • This is a strict and absolute deadline, not extendable in any case

📅 Last Opportunity for Old TDS/TCS Periods

Correction statements for the following quarters will be allowed only up to 31 March 2026:

  • Q4 of FY 2018–19

  • Q1 to Q4 of FY 2019–20 to FY 2022–23

  • Q1 to Q3 of FY 2023–24

⚠️ From 1 April 2026 onwards, the TRACES portal will permanently block corrections for these periods.

❌ Impact of Missing the 2-Year Deadline

Failure to file corrections within the prescribed time may result in:

  • ❌ Permanent denial of correction facility

  • ❌ Loss of TDS/TCS credit for deductees in Form 26AS / AIS

  • ❌ Disputes with employees, vendors, or contractors

  • ❌ Penalties ranging from ₹10,000 to ₹1,00,000

  • ❌ Higher compliance and audit risks

  • ❌ Interest liability and possible disallowance of expenses

✅ Reason Behind This Amendment

The department aims to promote:

  • Timely reconciliation of data

  • Faster and accurate credit to deductees

  • Reduced backlog of old corrections

  • Lower litigation and disputes

  • A shift towards real-time, technology-driven compliance

This change reflects a move towards strict timelines and disciplined reporting.

🧾 Best Practices Suggested by the Department

  • Regularly use TRACES utilities and validation tools

  • Track defaults and mismatches frequently

  • File correction statements immediately upon detecting errors

  • Train staff on the revised timelines

  • Adopt a preventive compliance approach

📌 Action Checklist for Deductors & Tax Professionals

✔ Review all pending TDS/TCS correction requirements
✔ Resolve old mismatches before 31 March 2026
✔ Strengthen internal review and control systems
✔ Inform clients and staff about the 2-year non-negotiable limit

Bogus Claims पर CBDT की बड़ी पहल | करदाताओं को भेजे गए SMS-Email नोटिस

CBDT Flags Surge in Fake Deduction Claims: What Taxpayers Must Know

1. Context of the CBDT Press Release

The Income Tax Department has recently detected a sharp rise in incorrect and fraudulent claims of deductions and exemptions being reported in Income-tax Returns (ITRs). Investigations suggest that many of these claims were routed through intermediaries and agents operating nationwide on a commission-driven model.

In response, the Central Board of Direct Taxes (CBDT) has issued a firm advisory, cautioning taxpayers against such practices and urging them to voluntarily rectify incorrect claims.

2. Meaning of Bogus Deduction Claims

Bogus deduction claims are deductions or exemptions wrongly availed without actual eligibility, solely to reduce tax liability.

As per the CBDT, the most common areas of misuse include:

  • Donations made to Registered Unrecognised Political Parties (RUPPs)
  • Contributions shown to certain charitable institutions or trusts
  • Claims lacking genuine receipts or documentary evidence
  • Deductions backed by fabricated or altered documents

In several instances, intermediaries lured taxpayers with promises of inflated refunds in return for commissions.

3. Patterns and Methods Identified by the Department

Through investigation and data analysis, the Department uncovered that:

  • Several RUPPs were either inactive or completely non-operational
  • Many entities existed only on paper, with fake or unverifiable addresses
  • Funds were moved through dummy or layered bank accounts
  • Donation receipts were issued without any real charitable or political work
  • These entries were later used by individuals and companies to suppress taxable income

Search and survey operations have already been conducted, and substantial incriminating evidence has been seized.

4. Deployment of Data Analytics and AI

The CBDT has upgraded its compliance framework using technology-led tools.

Key developments include:

  • Use of advanced data analytics and AI-based risk assessment
  • Cross-verification of data from:
    • Income-tax returns
    • Donation disclosures
    • Bank transaction records
    • Registration details of recipient entities
  • Identification of high-risk behavioural trends among taxpayers

As a result, both genuine mistakes and deliberate misreporting are now easier to detect.

5. Provisions Under Scrutiny

The press release highlights close monitoring of deductions claimed under Section 80G of the Income-tax Act, 1961, which allows tax benefits for donations to approved institutions.

Other donation-related deduction provisions may also be examined if irregularities are noticed.

6. SMS and Email Alerts to Taxpayers

As part of a taxpayer-centric initiative, CBDT has rolled out a Targeted NUDGE Campaign.

Under this campaign:

  • Taxpayers suspected of claiming incorrect deductions are receiving
    • SMS notifications
    • Email advisories
  • These alerts are being sent from 12 December 2025 onwards
  • Messages are delivered to registered mobile numbers and email addresses

The intent is corrective—not punitive—at this stage.

7. Chance to Rectify Through Revised or Updated Returns

CBDT has clarified that:

  • Many taxpayers have already revised their returns for AY 2025–26
  • Others have opted to file Updated Returns for earlier assessment years

Taxpayers are being encouraged to:

  • Withdraw incorrect deduction claims
  • Pay due tax along with applicable interest
  • Avoid penalties and prosecution

This reflects the government’s philosophy of “trust first, enforce later.”

8. Risks of Ignoring the Advisory

Failure to act on the advisory may lead to:

  • Selection of cases for scrutiny assessments
  • Levy of penalties for under-reporting or misreporting income
  • Initiation of prosecution in serious or repeat cases
  • Action against intermediaries facilitating fraudulent claims

Ignoring the warning can therefore result in severe financial and legal consequences.

9. Immediate Steps for Taxpayers

Taxpayers should promptly:

  • Re-examine their ITRs, especially donation-related deductions
  • Verify the legitimacy of donee organisations, including approval status
  • Ensure possession of valid and authentic receipts
  • File a Revised or Updated Return if any error is discovered
  • Update correct contact details on the Income Tax Portal
  • Steer clear of agents offering “guaranteed refunds”

10. Final Message

The CBDT’s advisory serves both as a warning and an opportunity.

Only claim deductions you are genuinely eligible for.
Temporary gains through fake refunds can invite long-term legal trouble.

With technology-driven monitoring now firmly in place, tax evasion through bogus deductions is no longer hidden or risk-free.

Income Tax Act 2025: Gift Tax Provisions, Exempt Relatives and Gifts

Gift Tax under the New Income Tax Act, 2025: Tax-Free Gifts and Relatives Explained

The New Income Tax Act, 2025 introduces Section 92, which governs the taxation of gifts received by individuals, Hindu Undivided Families (HUFs), and other persons. This provision replaces the earlier Section 56(2)(x) of the Income Tax Act, 1961 and offers a more organised and comprehensive framework for taxing gifts involving money, movable assets and immovable property.

In India, every gift is not taxable. Whether a gift attracts tax depends on several factors, including:

  • The value of the gift

  • The relationship between the giver and the recipient

  • The nature of the asset received

  • The occasion on which the gift is received (marriage, inheritance, will, etc.)

This guide explains the scope of Section 92, covering taxable situations, exemptions, valuation rules, clubbing provisions and practical examples.

Meaning of Gift under Section 92

Under Section 92, a gift includes money, movable property or immovable property received:

  • Without consideration, or

  • For inadequate consideration

If the value of such gift exceeds ₹50,000, it becomes taxable as income, unless it qualifies for an exemption specified under Section 92(3).

When Are Gifts Taxable? (Section 92(2)(m))

1. Monetary Gifts from Non-Relatives

If total cash or monetary gifts received from non-relatives exceed ₹50,000 in a financial year, the entire amount becomes taxable.

Example:
₹20,000 from one friend + ₹40,000 from another friend
Total = ₹60,000 → Fully taxable

2. Immovable Property (Land or Building)

a) Received without consideration
If the stamp duty value (SDV) exceeds ₹50,000, the entire SDV is taxable.

b) Received for inadequate consideration
The difference between SDV and actual consideration is taxable if it exceeds:

  • ₹50,000, or

  • 10% of consideration (whichever is higher)

Example:
SDV: ₹50 lakh
Purchase price: ₹44 lakh
Difference: ₹6 lakh → Taxable

3. Movable Property (Jewellery, Shares, Bullion, Crypto, etc.)

a) Without consideration
If fair market value (FMV) exceeds ₹50,000, the full FMV is taxable.

b) With inadequate consideration
If FMV minus consideration exceeds ₹50,000, the difference is taxable.

Example:
Jewellery FMV ₹2,00,000 bought for ₹1,30,000
Difference ₹70,000 → Taxable

Gifts That Are Fully Exempt (Section 92(3))

A. Gifts from Relatives (No Limit)

For individuals, “relative” includes:

  • Spouse

  • Parents, grandparents and other lineal ascendants

  • Children, grandchildren and other lineal descendants

  • Siblings of self, spouse or parents

  • Lineal ascendants/descendants of spouse

  • Spouses of all the above relatives

For HUFs, any member of the HUF is treated as a relative.

👉 Gifts from relatives are fully exempt, irrespective of amount.

B. Gifts Received on Marriage of the Individual

All gifts received on the occasion of one’s own marriage are tax-free, regardless of value or source.
This exemption does not apply to anniversaries or relatives’ marriages.

C. Gifts Received through Will or Inheritance

Assets received by way of inheritance or under a will are completely exempt from tax.

D. Gifts in Contemplation of Death

Gifts given in anticipation of the donor’s death are exempt.

E. Gifts from Local Authorities

Exempt as per Schedule III.

F. Gifts from Registered Charitable or Non-Profit Institutions

Allowed under Section 355(g), subject to prescribed conditions.

G. Transactions Not Regarded as Transfer (Section 70)

Gifts arising from amalgamation, demerger or business restructuring are exempt.

H. Gifts to Trusts for Benefit of Relatives

Transfers made to trusts exclusively for relatives’ benefit are tax-free.

Special Provisions for Immovable Property (Section 92(4))

If the agreement date and registration date differ, the stamp duty value as on the agreement date may be considered, provided payment is made through banking or digital modes.

If stamp duty value is disputed, the Assessing Officer may refer valuation to a Valuation Officer.

Assets Covered under “Property” (Section 92(5)(f))

  • Land or building

  • Shares and securities

  • Jewellery

  • Paintings, sculptures, artworks

  • Archaeological collections

  • Bullion

  • Virtual Digital Assets (cryptocurrency, NFTs)

Clubbing of Income from Gifted Assets

While Section 92 taxes the receipt of gifts, income generated from gifted assets is taxed under clubbing provisions.

Example:
Cash gifted to spouse → Gift exempt
Interest earned → Clubbed in donor’s income

Similar rules apply to gifts to minor children.

Employer Gifts

Gifts from employers are taxed as salary perquisites.
Only long-service awards up to ₹5,000 are exempt.

Capital Gains on Sale of Gifted Property

  • Cost of acquisition = FMV considered at time of gift

  • Holding period starts from date of receipt

Documentation for Gifts

Acceptable proof includes:

  • Bank transfer records

  • Gift deed (optional but advisable)

  • Marriage invitation and gift list

  • Photographs and source explanation

Practical Examples

  • Gift from father ₹10 lakh → Exempt

  • Jewellery from friend ₹1 lakh → Taxable

  • Flat from paternal uncle → Exempt

  • Cash gift on marriage ₹5 lakh → Exempt

  • Undervalued land purchase → Difference taxable since she is the spouse of the father under the Income Tax Act.
    Accordingly, any gift received from her is fully exempt from tax, irrespective of the amount.

Direct Tax Changes in 2025: Simplification and Reduced Compliance Take Centre Stage

India’s direct tax framework underwent several significant changes in 2025 as the government prioritised tax simplification, eased compliance requirements, and sought to encourage higher consumer spending. The reforms—ranging from an overhauled personal tax regime and simplified TDS provisions to an extended tax holiday for startups and greater clarity on capital gains—have had a wide-ranging impact across the economy.

New tax regime made the default option

The most notable reform was the decision to make the new tax regime under Section 115BAC the default choice for taxpayers. The basic exemption limit was increased to ₹4 lakh, while the rebate under Section 87A was enhanced, effectively making income up to ₹12 lakh tax-free.

Experts say the impact of this shift is already being felt. According to them, the simplified slab structure and higher rebate have raised disposable incomes, providing a clear boost to consumption-driven sectors such as manufacturing and construction.

Simplified TDS framework

Budget 2025 introduced meaningful changes to the Tax Deduction at Source (TDS) provisions under the Income Tax Act, 1961, with the objective of easing compliance for individuals and businesses. TDS rules were streamlined and threshold limits enhanced, significantly lowering the compliance burden for small taxpayers and enterprises. In addition, the turnover limit for presumptive taxation under Section 44AD was increased to ₹3 crore, offering MSMEs greater flexibility and reduced administrative overheads.

Extended tax holiday for startups

The 2025 Budget also prolonged the 100 per cent profit-linked tax deduction for eligible startups, allowing them to claim the benefit for any three years within their first ten years of operation. This incentive has now been extended until April 1, 2030. The extended timeline is expected to support startups in navigating initial loss-making years and improve their ability to attract investment.

Key reforms for IFSC entities

The Finance Act, 2025 rolled out a series of tax incentives for units operating in the International Financial Services Centre (IFSC). Offshore funds and exchange-traded funds (ETFs) are now permitted to relocate to IFSC without triggering adverse tax consequences. Additionally, non-residents trading in offshore or over-the-counter derivatives through IFSC platforms will be eligible for tax exemptions. Tax incentives for IFSC units have also been extended up to March 31, 2030.

A significant amendment was also made to deemed dividend provisions. Inter-company loans will no longer be classified as deemed dividends when the lending entity is a finance company or an IFSC-based finance unit. According to Ananthapadmanabhan, this change has prompted large corporate groups to consider moving treasury operations to India, as the clarity around treasury-related lending removes a key area of concern.

Removal of equalisation levy

Under the Finance Act, 2025, the government abolished the equalisation levy on digital advertising with effect from April 1, 2025. This step has simplified the tax framework for multinational technology companies operating in India.

Taking an overall view, Ananthapadmanabhan said the reforms have strengthened the foundation for sustained, demand-driven economic growth, which is also evident in the sharp rise in GDP growth to 8.2 per cent in the second quarter of FY26.

CBDT has sent in excess of 44,000 alerts to taxpayers, directing them to reveal their crypto transactions.

Minister of State for Finance Pankaj Chaudhary
Photo Credit: ANI

The Finance Ministry has issued more than 44,000 communications to taxpayers for failing to disclose their cryptocurrency transactions in their Income Tax Returns, Minister of State for Finance Pankaj Chaudhary informed the Lok Sabha on Monday. Simultaneously, the Enforcement Directorate (ED) has attached proceeds of crime exceeding ₹4,000 crore in crypto-linked investigations under the Prevention of Money Laundering Act (PMLA).

Finance Ministry data tabled in the Lok Sabha also revealed that Tax Deducted at Source (TDS) collections on crypto transactions have more than doubled over the past three years.

In a written response, Chaudhary stated: “Under the CBDT’s NUDGE (Non-Intrusive Usage of Data to Guide and Enable) campaign, 44,057 communications have been issued to taxpayers who invested in or traded VDAs but did not report these in Schedule VDA of their ITRs.” He added that advanced analytics—through Project Insight and internal databases—is being used to compare VDA transaction data with ITR disclosures. TDS statements filed by Virtual Asset Service Providers (VASPs) are also examined to spot discrepancies and initiate action.

Chaudhary further informed that the ED has taken action in several crypto-related cases under PMLA, leading to attachment, seizure, or freezing of assets worth ₹4,189.89 crore. So far, 29 individuals have been arrested and 22 prosecution complaints filed, while one accused has been declared a Fugitive Economic Offender.

TDS Collection Trend

In a separate written reply, Chaudhary highlighted that TDS collected by crypto exchanges increased from over ₹221 crore in 2022–23 to more than ₹511 crore in 2024–25. Maharashtra’s collection rose from ₹142 crore to ₹293 crore during this period, while Karnataka recorded the sharpest rise—from ₹39 crore to about ₹134 crore.

As per the Finance Act, 2022, a 1% TDS applies to all transfers of virtual digital assets, including those involving offshore platforms, where income is taxable in India. Chaudhary noted that several offshore cryptocurrency exchanges serving Indian users are not complying with these TDS requirements.

Survey operations conducted on three crypto exchanges uncovered TDS non-compliance amounting to ₹39.8 crore and undisclosed income of ₹125.79 crore. Additionally, search and seizure actions under Sections 132 and 133A of the Income Tax Act led to the detection of undisclosed income of ₹888.82 crore related to VDA transactions.

Chaudhary emphasized that due to the global nature of crypto assets, coordinated international action is essential. “A regulatory framework for crypto assets can be effective only with substantial global cooperation—particularly on assessing risks, benefits, and establishing common standards and taxonomy,” he said.