/ Corporate Updates

5 Important FD Facts That Will Help in Compare FD Vs NBFC FD

Picture1 FD

5 Important FD Facts That Will Help You Compare Bank FDs with NBFC FDs

Fixed deposits (FDs) have long been one of the most preferred investment options for individuals seeking security and guaranteed returns. However, choosing between bank FDs and NBFC FDs (Non-Banking Financial Company FDs) can be confusing. While both options offer a fixed interest rate and capital safety, there are key differences that investors should consider. Understanding these FD facts will help investors make an informed choice. Additionally, knowledge of joint FD rules is essential for those planning to open fixed deposits with multiple account holders.

This article highlights five crucial FD facts to compare bank FDs with NBFC FDs, their advantages, risks, and rules regarding joint FD accounts.

1. Interest Rates: Which Offers Better Returns?

One of the primary reasons investors choose NBFC FDs over bank FDs is the higher interest rates.

Bank FDs:

  • Public sector banks generally offer lower interest rates, ranging from 5% to 7.5% per annum.
  • Private sector banks offer slightly higher rates, ranging from 6% to 8% per annum.
  • Senior citizens get additional interest rate benefits (typically 0.50% higher).

NBFC FDs:

  • NBFC FDs generally offer higher returns, with interest rates ranging from 7% to 9.5% per annum.
  • Some highly-rated NBFCs provide special schemes with higher returns for long-term deposits.
  • Interest payouts can be chosen as cumulative (compounded) or non-cumulative (periodic interest payments).

Key Takeaway: If higher interest earnings are a priority, NBFC FDs may be a better option, provided the issuer has strong credit ratings.

2. Safety and Risk: Are NBFC FDs Secure?

Safety is a crucial factor when choosing between a bank FD and an NBFC FD.

Bank FDs:

  • All bank deposits (up to Rs. 5 lakh per depositor, per bank) are insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC).
  • Highly regulated by the Reserve Bank of India (RBI), ensuring strict financial compliance.

NBFC FDs:

  • NBFC FDs do not have DICGC insurance, which means deposits are not guaranteed in case of financial distress.
  • Investors must check the credit ratings assigned by agencies like CRISIL, ICRA, or CARE.
  • NBFCs with AAA ratings are considered safe, while those with lower ratings carry more risk.

Key Takeaway: Bank FDs offer higher safety, whereas NBFC FDs provide higher returns with varying degrees of risk.

3. Liquidity and Premature Withdrawal Rules

Liquidity refers to the ability to withdraw funds before maturity without significant losses.

Bank FD Withdrawal Rules:

  • Most banks allow premature withdrawals, but a penalty of 0.5% to 1% is charged on the interest rate.
  • Some banks offer flexi FDs, which allow partial withdrawals without breaking the entire FD.

NBFC FD Withdrawal Rules:

  • Many NBFCs impose stricter withdrawal conditions, especially on non-callable fixed deposits.
  • Premature withdrawal may result in higher penalties or complete disqualification from earning interest.

Key Takeaway: If liquidity is a priority, bank FDs are a better option as they offer more flexible withdrawal terms compared to NBFC FDs.

4. Taxation on Interest Earned from FDs

Understanding the taxation aspect of FD investments is crucial for maximizing returns.

  • Interest earned on both bank and NBFC FDs is taxable under “Income from Other Sources”.
  • Tax Deducted at Source (TDS) is applicable if the total interest exceeds ₹40,000 per year (₹50,000 for senior citizens).
  • Tax-Saving Bank FDs (with a 5-year lock-in) allow deductions of up to ₹1.5 lakh under Section 80C, but NBFC FDs do not provide such tax benefits.

Key Takeaway: While both bank and NBFC FDs attract taxation, tax-saving FDs are available only with banks.

5. Joint FD Rules: Understanding Ownership and Withdrawal

A joint FD account allows two or more individuals to invest together in an FD.

Types of Joint FD Accounts:

  1. Either or Survivor:

o  Either account holder can withdraw the FD amount.

o  Commonly used for hassle-free access in case of the demise of one account holder.

  1. Anyone or Survivor:

o   More than two account holders can operate the account.

o   Any one of the depositors can withdraw before maturity.

  1. Jointly Operated:

o   All account holders must sign for withdrawals and renewals.

o   Ideal for business partners or family members seeking equal control.

Bank FDs vs. NBFC FDs for Joint Accounts:

  • Most banks and NBFCs follow similar rules for joint FDs.
  • Some NBFCs may have stricter documentation requirements for joint holders.
  • Tax liability on interest is shared between joint holders based on contribution.

Key Takeaway: Joint FDs are beneficial for family members, but investors should choose the right operational mode based on financial goals.

Conclusion

Understanding these FD facts can help investors make informed decisions when choosing between bank and NBFC FDs. While NBFC FDs offer higher interest rates, they come with higher risk and lower liquidity. On the other hand, bank FDs provide better safety, liquidity, and tax-saving options. Additionally, knowing joint FD rules is essential for those investing with family members. Ultimately, investors should assess their financial goals, risk appetite, and liquidity needs before selecting the best FD option that aligns with their investment strategy.

/ Audit

Tax Audit Right: Different accounting professionals in India

FAQ’s on Tax Audit  Under Income Tax Act

Role of different accounting professionals on Tax Audit in India

This is a significant development in the ongoing debate over the role of different accounting professionals in India. ICAI President Charanjot Singh Nanda’s firm stance on reserving tax audits and other audit functions exclusively for chartered accountants highlights the longstanding jurisdictional boundaries between ICAI, ICSI, and ICMAI.

Given the recent push from ICSI & ICMAI to be included in the definition of ‘accountant’ under the proposed Income Tax Bill, 2025, it will be crucial to see how the Ministry of Corporate Affairs navigates this dispute. The fact that a coordination committee, including representatives from all three bodies, is chaired by the Ministry of Corporate Affairs Secretary suggests that the government may take a balanced approach.

Charanjot Singh Nanda’s (ICAI President) statement reinforces the institute’s firm stance on preserving tax audits as the exclusive domain of chartered accountants. His emphasis on maintaining CAs’ expertise in audits directly responds to ICSI’s request for the inclusion of company secretaries in the definition of ‘accountant’ under the proposed Income Tax Bill, 2025.

ICAI President C J S Nanda ji on Tax Audits.

The reference to Supreme Court and Delhi High Court rulings supporting the exclusive audit rights of CAs strengthens ICAI’s position. However, ICSI and ICMAI’s argument likely revolves around expanding the role of company secretaries and cost accountants in financial reporting, compliance, and tax-related work.

ICSI’s argument, which focuses on easing compliance bottlenecks, timely tax filings, and reducing the need for extensions, highlights the increasing complexities in tax compliance. However, the ICAI’s position is backed by legal precedents and historical regulatory practices that have designated tax audits as a specialized function of Chartered Accountants.

Scope of professionals eligible to conduct Tax Audits

The final decision will rest with the coordination committee under the Ministry of Corporate Affairs, where all three professional bodies. The Institute of Cost Accountants of India and the Institute of Chartered Accountants of India. The Institute of Company Secretaries of India are represented. It remains to be seen whether the government will broaden the scope of professionals eligible to conduct tax audits or uphold the traditional role of Chartered Accountants.

This debate could have far-reaching implications for professionals across the three institutions, particularly in areas like tax audits, forensic audits, and compliance-related services. Additionally, Institute of Chartered Accountants of India move to establish an International ADR Centre further signals its intent to expand its influence

How do you see this issue playing out? Would regulatory changes be likely, or do you think the status quo will be maintained? Given the strong opposition from ICAI, do you think the Ministry is likely to consider any middle ground, such as defining distinct roles for different professionals in tax compliance without encroaching on audits?

/ INCOME TAX

Tax Dept investigation Access Virtual Digital Space platform

various digital platforms

Senior tax officials can access various digital platforms during investigations into suspected tax evasion

The Income Tax Bill, 2025, proposes significant changes that expand the scope of tax investigations to include digital assets and virtual spaces starting from April 1, 2026. Starting April 1, 2026, India’s Income Tax Department will have expanded powers under the new Income Tax Bill, 2025, allowing authorized officers to access various digital platforms during investigations into suspected tax evasion or undisclosed assets. These platforms include personal emails, social media accounts, bank accounts, online investment accounts, trading accounts, and other virtual digital spaces.

This proposal is still under review in Parliament, and amendments may be made before it is enacted in FY 2026-27. Further clarifications and potential amendments may address these concerns before its implementation in 2026. However, it marks a major shift in tax enforcement, bringing digital assets and online activity under direct scrutiny. Here’s a breakdown of the key aspects:

  1. Expanded powers for income tax officials:

Under Clause 247 of the Income Tax Bill, 2025, tax officials will have the authority to:

    • Physically break open doors, lockers, safes, and other storage units if access is denied.
    • Bypass digital security measures to access computer systems and virtual digital spaces, including email servers, social media accounts, bank accounts, and online investment platforms.
    • This extends the current powers under Section 132 of the Income Tax Act, 1961, which allows the seizure of assets and books during search operations when undisclosed income or assets are suspected.

  1. Definition of Virtual Digital Space:

The bill introduces ‘Virtual Digital Space’ (VDS), which includes:

    • Email servers
    • Social media accounts
    • Online investment accounts, trading accounts, and bank accounts
    • Websites storing ownership details of assets
    • Remote or cloud servers
    • Digital application platforms
    • Any other similar digital storage or transaction space

  1. Who Has Tax Authority?

The powers to access and investigate digital assets will be granted to senior tax officials, including:

    • Joint Directors, Additional Directors
    • Joint Commissioners, Additional Commissioners
    • Assistant or Deputy Directors
    • Assistant or Deputy Commissioners
    • Income Tax Officers
    • Tax Recovery Officers

  1. Implications for Taxpayers:

This development represents a significant shift from the current Income Tax Act, 1961, which does not explicitly cover such digital domains. The new bill defines ‘virtual digital space’ broadly, encompassing email servers, social media accounts, online investment accounts, trading accounts, banking accounts, websites storing asset ownership details, remote or cloud servers, digital application platforms, and similar spaces.

Individuals and businesses suspected of tax evasion will be subject to deeper digital investigations. Since the bill allows access to personal and financial data, it raises concerns about privacy rights and data protection. Taxpayers will need to ensure proper documentation and tax payments to avoid potential searches and digital investigations. Legal experts emphasize the need for clear safeguards to balance effective tax investigations with the protection of individual digital rights and privacy.

While these measures aim to enhance the detection and prevention of tax evasion, they have raised concerns regarding taxpayer privacy and potential overreach.

/ NGO

Overview changes introduced in Income Tax Bill 2025 for NPO

NGO

Whether NGO allowed permissible commercial activities & investment modes?

The proposed Income Tax Bill, 2025, indeed aims to provide clarity for non-profit organizations (NPOs) on issues such as permissible commercial activities and investment modes. While these provisions are expected to bring more certainty and help reduce litigation, the call for further clarification is valid. Would you like a breakdown of permissible vs. non-permissible activities or insights into potential challenges in transitioning to the new framework? Here’s a breakdown of key points:

  1. Permissible Commercial Activities: The Bill addresses the need for a clear definition of what constitutes “permissible commercial activities” for NPOs, which is an important aspect as it was previously unclear under the I-T Act, 1961. Tax experts have highlighted the need for accompanying guidelines (such as FAQs or specific rules) to define these activities more clearly. This would help NPOs stay compliant while engaging in revenue-generating activities, such as selling goods or services related to their charitable purpose.
  2. Investment Modes: The Bill provides a list of permitted investment modes for NPOs in Schedule XVI, but there is a call for flexibility in updating this list. Experts suggest that rather than requiring amendments to the principal law, the government should have the power to modify the list through notifications. This would allow quicker updates in response to market changes or evolving investment opportunities, ensuring that NPOs have access to relevant and suitable investment channels without waiting for legislative changes.

Key Changes in the New Bill: This New Tax bill 2025 on NPO

Key Changes in the New Bill: This New Tax bill on NPO restructuring ensures better compliance, reduces ambiguity, and minimizes litigation risks for non-profits while maintaining their tax-exempt status.

  1. Introduction of “Registered Non-Profit Organization” – Defined as entities registered under Sections 12A, 12AA, 12AB, or 10(23C), provided their registration is not canceled.
  2. Consolidation of Tax Provisions
  • The bill integrates scattered provisions (Sections 10(23C), 11, 12A, etc.) into Chapter XVII-B, reducing complexity.
  • Standardized terminology, including the term “Registered Non-Profit Organization”, applies to entities registered under Sections 12A, 12AA, 12AB, or 10(23C).
  • Simplification & Consolidation – The existing provisions were spread across multiple sections (10(23C), 11, 12, 12A, 12AA, 12AB, etc.), making them complex and difficult to navigate.
  1. Streamlined Registration & Compliance
    • Existing NPOs need not re-register, but new approvals under Section 10(23C) will cease after October 1, 2024.
    • A structured approach to registration, income taxation, permissible commercial activities, accumulation, and compliance enhances clarity.
  2. Structured Framework (Part XVII-B) – Seven sub-parts cover:
    • Registration
    • Income
    • Commercial activities
    • Compliance
    • Violations
    • Donation eligibility
    • Interpretations

  3. Retention of Tax-Exempt Status – Impact on Donations & Exemptions

– Organizations applying 85% of their income for charitable purposes remain tax-exempt. Donor benefits (Section 80G) remain, ensuring continued tax incentives for philanthropy. 85% income application rule for tax exemption stays intact.

  1. No Additional Taxation on New Income Sources – The Bill consolidates taxability provisions without introducing new tax burdens. The bill cuts down word count from 12,800 to 7,600, removing excessive cross-references.

  2. Taxability & Investment Rules

  • Permissible commercial activities are now recognized, reducing litigation.
  • The list of permitted investments (Schedule XVI) remains, but experts suggest allowing government notifications for modifications instead of legal amendments.

  1. Removal of Redundant Provisions:

  • Section 11(1A) on capital gains – Since the cost of acquiring assets is already considered an income application, this section is removed. So Capital gains reinvestment conditions (Section 11(1A))
  • Deemed Application Provision – Simplified to reduce litigation and streamline compliance. We can say that Deemed application of income eliminated to reduce compliance burdens.
  1. No Requirement for Re-Registration & Taxation – The new Bill introduces a unified term, “registered non-profit organization”, and standardizes the definition of “registration” to avoid confusion between approval and registration. Existing approvals remain valid, allowing smooth transition under the new framework.

This is a comprehensive overview of the changes introduced in the Income Tax Bill 2025 for Non-Profit Organizations (NPOs).  It seems that further clarification and flexibility are required to support NPOs in navigating the new tax landscape effectively. These suggestions would help NPOs operate with greater confidence, ensuring that their commercial activities and investments align with the new provisions while reducing potential legal hurdles.

/ Direct Tax

Taxation on Sale of Property under Income Tax Bill, 2025

Redevelopment is taxable

Taxation on Sale of Property under Income Tax Bill, 2025

The New Income Tax Bill, 2025, introduced in the Lok Sabha on February 13, 2025, aims to simplify and modernize India’s tax laws. While the bill largely aligns with the existing provisions of the Income-tax Act, 1961, it introduces certain changes concerning the taxation of property sales and the treatment of losses from house property.

Budget 2025 Updates: the income tax rebate u/s 87A has been increased to INR 60,000, making an income up to INR 12,00,000/- tax-free under the new tax regime. However, this increased rebate is not applicable to special grade incomes such as ‘Capital Gains’.

Capital Gain Taxation on Sale of Property in india

Overview of capital gains taxation on the sale of immovable property, incorporating the recent changes effective from July 23, 2024.

Short-term vs. Long-term Capital Gains

  • STCG: If the property is sold within 24 months, taxed at applicable slab rates.
  • LTCG: If held for more than 24 months, taxed at 12.5% (without indexation) or 20% (with indexation, if acquired before July 23, 2024).

Short-Term vs. Long-Term Capital Gains on Property

Particulars Short Term Capital Gains on Property Long-Term Capital Gains on Property
Definition Sold within 24 months Sold after 24 months
Tax Rate Slab rate
(i) 20% with indexation (If sold before 23rd July 2024)
(ii) 12.5% without indexation (If sold on or after 23rd July 2024)
Indexation Benefit Not available Available (optional)
Tax Applicability Added to total income and taxed as per slab rates Taxed at fixed rates

New Tax Regime for LTCG (Post-July 23, 2024)

  • For properties bought on or after July 23, 2024: Only 12.5% tax without indexation is applicable.
  • For properties bought before July 23, 2024: Taxpayer can choose between 12.5% (without indexation) or 20% (with indexation).

Computation of Capital Gains

  • Long-Term Capital Gains before July 23, 2024: Indexed cost of acquisition & improvement can be deducted.
  • Long-Term Capital Gains after July 23, 2024: Indexation benefit is removed if opting for the 12.5% tax rate.
  • Under the Income Tax Bill 2025, for property acquired before July 23, 2024, Long-Term Capital Gains tax will be calculated as the lower of:
    • 5% (without indexation)
    • 20% (with indexation using CII adjustment)

For property acquired on or after July 23, 2024, Long-Term Capital Gains will be taxed at 12.5% without indexation. This change provides more flexibility to property sellers, allowing them to choose between indexed and non-indexed tax rates for properties bought before the cutoff date.

For properties acquired on or after July 23, 2024, the bill proposes a uniform Long-Term Capital Gains tax rate of 12.5% without the benefit of indexation. We have to be aware that the Income Tax Bill, 2025, is currently a proposal and has not yet become law. Its provisions are subject to change during the legislative process. These provisions are designed to provide relief to taxpayers with property-related losses, allowing them to offset such losses against other income and carry forward unadjusted losses for future set-off.

Tax Exemptions on Capital Gains from Property Sales

Exemptions on Short-Term Capital Gains

  • Old Regime:
    • Income below Rs. 2,50,000 (for individuals below 60 years) is exempt.
    • Income below Rs. 3,00,000 (for individuals aged 60-80 years) is exempt.
  • New Regime:
    • Exemption applies if total income is below Rs. 4,00,000.

Exemptions on Long-Term Capital Gains.

Long-Term Capital Gains tax exemptions are available u/s 54, 54F, 54EC, and 54GB.

Tax Exemption Under Section 54

  • To qualify for this exemption: Asset must be classified as a long-term capital asset. The asset sold must be a residential house. A new residential house must be purchased within 1 year before or 2 years after the sale (or constructed within 3 years). The new property must be located in India. The exemption is capped at 10 crore (effective April 1, 2023). The exemption applies to two residential properties (limited to Rs. 2 crore and only once in a lifetime).

Tax Exemption Under Section 54F

  • For exemption under Section 54F: The taxpayer must reinvest the entire sale proceeds in another residential property. Purchase or construction of a new house must be within the prescribed period. The taxpayer must not own more than one residential house at the time of sale. Maximum deduction is 10 crore (effective April 1, 2024).
  • Tax Exemption Under Section 54EC: Long-term capital gains can be reinvested in specified bonds (NHAI/RECL/PFC/IRFC) within 6 months. If not invested, gains will be taxed as short-term capital gains.
  • Tax Exemption Under Section 54B: Applies to agricultural land outside rural areas. If reinvestment is delayed, funds must be deposited in a Capital Gains Account Scheme within Two years.

Summary of Capital Gains Tax Exemptions

Section Eligible Taxpayers Sold Asset Investment Made In Time of Purchase
54 Individual/HUF Residential House New Residential House (India) Within 1 year before/2 years after (3 years for construction)
54EC Any Taxpayer Land/Building (LTCG) NHAI/RECL/PFC/IRFC Bonds Within 6 months
54F Individual/HUF Any LTCG Asset (except residential property) New Residential House Within 1 year before/2 years after (3 years for construction)
54GB Individual/HUF Residential Property Equity Shares (50%+ ownership in a company) Before ITR due date

Capital Gains Account Scheme:

The Capital Gains Account Scheme of 1988 allows taxpayers to deposit their capital gains proceeds in authorized banks to defer tax liability. If the deposited amount is not utilized within Two years (for purchase) or three years (for construction), it will be taxed as capital gains in the financial year the time limit expires.

Carry Forward of Losses from House Property:

here is details of Set Off & Carry Forward of Losses & its treatment of losses from house property under the new bill is as follows: 

  • LTCG losses: Can be set off only against Long-Term Capital Gains and carried forward for 8 years.
  • No more indefinite loss carry-forward through mergers—losses must expire within 8 years of their original computation year. Companies engaging in mergers for tax benefits will need to reassess their strategies post-April 2025.
  • STCG losses: Can be set off against both Long-Term Capital Gains & short-Term Capital Gains and carried forward for 8 years. Losses can be carried forward only if ITR is filed before the due date.
  • Set-Off Against Other Income: A loss from house property can be set off against income from other heads (e.g., salary, business income) up to a maximum of two lakh in a tax year.
  • Carry Forward of Unabsorbed Losses: Any unabsorbed loss exceeding Two lakh can be carried forward for up to eight subsequent tax years. These carried-forward losses can only be set off against income from house property in the future years.

Example: How the Amendment Works

  • Before the Amendment: Company X had a business loss in FY 2015-16 (AY 2016-17). The loss was eligible for carry forward until AY 2025-26. Company X merged with Company Y in 2023. Company Y could restart the 8-year loss period, allowing the loss to be carried forward until AY 2031-32.

  • After the Amendment (Applicable from April 1, 2025): The loss from AY 2016-17 will expire in AY 2025-26, even if Company X merges with Company Y. The merger does not extend the carry-forward period beyond 8 years from the original computation year.

It’s important to note that the ability to carry forward these losses is contingent upon filing the income tax return within the prescribed due date. Failing to do so may result in the forfeiture of this benefit.

Impact of Budget 2025 on Section 87A Applicability on Capital Gains

  • Under the Old Tax Regime

    1. No Change in Scope of Rebate – The rebate under Section 87A remains unchanged for taxpayers opting for the old tax regime in FY 2025-26 (AY 2026-27). Old Regime Still Beneficial in Certain Cases –
      • Taxpayers whose income consists solely of capital gains taxed at special rates can still claim rebate under Section 87A if their taxable income does not exceed the prescribed limit.
      • Taxpayers with a mix of slab rate income and capital gains taxed at special rates can also assess whether the old regime remains beneficial based on their specific income composition.

  • Under the New Tax Regime

    • Budget 2025 Amendment: The rebate under Section 87A is now limited only to tax computed as per slab rates under Section 115BAC(1A). This change applies from FY 2025-26 (AY 2026-27)
    • FY 2024-25 (AY 2025-26): No Change in Scope – Until March 31, 2025, the rebate under the new tax regime applies to all income types, except LTCG from equity.
    • FY 2025-26 (AY 2026-27): Major Restriction on Rebate The rebate is only applicable on income taxed as per slab rates. No rebate is available for capital gains taxed at special rates.
    • Key Impacts on Capital Gains from FY 2025-26 Onward:
Type of Income Rebate Applicability (New Regime from FY 2025-26)
LTCG from Equity (Section 112A) ❌ Not Eligible
STCG from Equity (Section 111A) ❌ Not Eligible
LTCG from Debt Funds (Slab-based tax rate) ✅ Eligible
LTCG from Debt Funds (Special tax rate) ❌ Not Eligible
STCG from Debt Funds (Taxed at slab rates) ✅ Eligible

Old Tax tax regime remains attractive for certain taxpayers who can still claim a rebate u/s 87A despite having capital gains taxed at special rates. New Tax Regime is now more restrictive, as rebate under Section 87A will not be available on special rate capital gains from FY 2025-26. Taxpayers should evaluate whether the old regime or new regime is more beneficial based on their income mix and eligibility for deductions/exemptions.

/ ITR

Fact Check: Citizens above 75 years old are exempt from tax

senior citizens ITR

The viral claim that senior citizens above 75 years old are exempt from paying taxes is false.

Fact Check: What is the Truth?

  • No Tax Exemption for Senior Citizens Above 75 Years : The Government of India has not announced any such exemption for senior citizens.
  • Section 194P – Exemption from Filing ITR, Not Paying Tax : As per Section 194P of the Income Tax Act, 1961, senior citizens aged 75 years or older who have only pension and interest income from the same bank are exempt from filing Income Tax Returns (ITR), senior citizens aged 75 years and above with only pension and interest income from the same bank are exempt from filing ITR. But, this does not mean they are exempt from paying tax. The bank will compute taxable income, apply deductions, and deduct the required tax TDS before crediting the income.
  • TDS Deduction by Banks: The specified bank where the senior citizen receives their pension and interest income will compute their total taxable income, apply eligible deductions, and deduct the applicable taxes (TDS) before crediting the amount.
  • Taxable Income and Slabs: Senior citizens (60–79 years) get a basic exemption limit of ₹3 lakh. Super senior citizens (80+ years) get a basic exemption limit of ₹5 lakh. Income above these limits is taxable as per the applicable slabs.
  • PIB Fact Check Declares the Viral Claim Fake : The Press Information Bureau (PIB) debunked the viral claim, confirming that senior citizens above 75 years are only exempt from filing ITR, not from paying tax.

Conclusion:

  • False Claim: Senior citizens above 75 years are NOT automatically exempt from paying taxes. Senior citizens above 75 years are exempt from paying tax. Fact: They are only exempt from filing ITR under Section 194P, but taxes (if applicable) will still be deducted by the bank. Always verify tax-related claims through official sources like the Income Tax Department and PIB Fact Check before believing social media messages. They are only exempt from filing ITR if they meet the conditions u/s 194P. Taxes, if applicable, are deducted by the bank after considering deductions. Thus, the claim is misleading, and people should refer to official tax guidelines before believing such messages.

Income Tax Saving guidance for the AY 2025-26

/ Cryptocurrency

Taxation of cryptocurrencies in India

taxation of bitcoin

Cryptocurrencies Taxation in India

The income tax department reported that the taxation system for cryptocurrency in India has been established as follows:

  1. With effect from April 2022, income generated from cryptocurrency transactions is subject to a 30% tax. No income tax deductions against any expenses whatsoever is allowed.
  2. Moreover, crypto businesses are expected to pay GST.
  3. Furthermore, any transactions conducted by such businesses is also liable for a 1% tax deduction at source.

Tax Deducted at Source applicability – Indian Cryptocurrency Taxation

Taxation of cryptocurrencies: In India, The gains from trading cryptocurrencies are subject to tax at 30% (plus 4% cess) as per section 115BBH.  the Tax Deducted at Source rate for crypto is set at 1%. Starting from July 01, 2022, the buyer will be responsible for deducting TDS at the 1% rate while making payment to the seller for the transfer of Crypto/NFT. Any transfer of crypto assets on or after 1 July 2022 for an amount of INR 50,000 or INR 10,000 in some cases is subject to a Tax Deducted at Source at 1% U/s194S.

  • As of April 2022, income from cryptocurrency transactions is subject to a 30% tax rate; these businesses will likely also be required to pay the Goods and Services Tax at a rate of 28%;
  • Moreover, a 1% tax deduction at source will be available on any transaction carried out by such enterprises.
  • If the transaction takes place on an exchange, then the exchange may deduct the Tax Deducted at Source and pay the balance to the seller. Indian exchanges automatically deduct Tax Deducted at Source, while individuals trading on foreign exchanges must manually deduct Tax Deducted at Source & file their Tax Deducted at Source
  • P2P Transactions: In case of P2P transactions, buyer will be responsible for deducting Tax Deducted at Source & filing Form 26QE or 26Q, whichever is applicable.  Eg: Buying cryptocurrency using ₹(INR) over a P2P platform or international exchange.
  • Crypto-to-Crypto Transactions: Tax Deducted at Source will be applicable on both buyer and seller at 1% Eg: Buying crypto with stablecoins as per U/s194S.

Cryptocurrency Taxation on Airdrops

  • An airdrop refers to the process of distributing cryptocurrency tokens or coin directly to specific wallet addresses, generally for free. Airdrops are done to increase awareness about the token and increase liquidity in the early stages of a new currency. Airdrops are taxed at 30%.
  • Airdrops will be taxed on the value determined as per Rule 11UA, i.e. at the fair market value of the tokens as on the date of receipt on exchanges or DEXes. Tax will be levied at 30% on such value. Sell, swap, or spend them later: If you sell, swap or spend those tokens later, then 30% tax will be levied on the gains made.
  • Sell, swap, or spend them later: If you sell, swap or spend those assets later, 30% tax will be levied on the gains made.

Cryptocurrency Taxation on mining of cryptocurrency

  • The Cryptocurrency Mining income received will be taxed at flat 30%.
  • Mining income received from Cryptocurrency will be taxed at flat 30%. The cost of acquisition for the crypto mining will be considered as ‘Zero’ for computing the gains at the time of sale. No expenses such as electricity cost or infra cost can be included in the cost of acquisition.
  • Cryptocurrency assets received at the time of mining will be taxed on the value determined as per income tax Rule 11UA, i.e. at the fair market value of the tokens as on- if the consideration for the issue of Cryptocurrency exceeds the FMV of the Cryptocurrency, it shall be chargeable to income tax under the head’ Income from other sources’. Rule 11UA prescribes the manner to compute the FMV of such shares
  • The date of receipt on exchanges or DEXes. Tax will be levied at 30% on such value.

Cryptocurrency Taxation on Crypto Gifts

  • Cryptocurrency can be gifted either via gift cards, cryptocurrency tokens or a cryptocurrency paper wallet.
    Cryptocurrency received as gifts from relatives will be tax-exempt.
  • However, if the value of the cryptocurrency gift from a non-relative exceeds INR 50,000, it becomes taxable. Cryptocurrency Gifts received on special occasions, via will inheritance or in contemplation of death or marriage, are also exempt from income

How do you calculate 30% tax on cryptocurrency? 

  • 30% Cryptocurrency tax will be levied on the income you made from crypto, which can be calculated as:
    Sale Price – Cost Price = Income from Cryptocurrency

Is any exemptions / deduction Available for Crypto Transaction Profit?

  • No income tax deductions against the expenses are allowed except for the cost of acquiring digital assets.
  • This means that a taxpayer cannot claim deductions and exemptions on the profit earned from the purchase and sale of cryptocurrencies.

Conclusion of Income taxation on Crypto Transactions are liable to income tax in India

If you engage in any of the following transactions, you will be required to pay a 30% tax:

  • Receive crypto currency as payment for a service.
  • Spending cryptocurrencies to purchase goods or services.
  • Receiving Airdrops
  • Mining cryptocurrency
  • Drawing a salary in crypto
  • Receiving cryptocurrency as a gift
  • Staking crypto and earning stake benefits
  • Exchanging cryptocurrency for other cryptocurrency
  • Trading cryptocurrency using fiat currency such as ₹(INR

How to report cryptocurrency on tax return?

  • It’s important to keep detailed records of your cryptocurrency transactions, including dates of acquisition and sale, purchase prices, sale prices, and any expenses incurred in the process. This information will be crucial for accurately calculating your tax liability.
  • The new Income tax return forms include a specific section ‘Schedule Virtual Delivery Assets for reporting cryptocurrency gains or income.
  • As per the standard income tax rules, the gains on the crypto transactions would become taxable as  (i) Business income or (ii) Capital gains. This classification will depend on the investors’ intention and nature of these transactions.
    • Business income: If there are frequent trades and high volumes, gains from the cryptocurrency may be categorised as ‘business income’. In such a case, you may use ITR-3 for reporting the crypto gains.
    • Capital gains: On the other hand, if the primary reason for owning the cryptocurrency is to benefit from long-term appreciation in value, then the gains would be classified as ‘capital gains’. In this case, you may use ITR-2 for reporting the crypto gains.

Disclosure of Crypto Assets in Schedule of Assets and Liabilities 

  • Ministry of Corporate Affairs has made it mandatory to disclose gains and losses in virtual currencies. Also, the value of cryptocurrency as on the balance sheet date is to be reported. Accordingly, changes have been made in schedule III of the Companies Act starting from 1 April 2021.
  • This mandate is only for companies, and no such compliance is required from the individual taxpayers. However, reporting and paying taxes on the gains on cryptocurrency is a must for all.

Status of India’s Current Perspective On Cryptocurrency –

  • Although the Indian government has stated that crypto are not recognised as legal cash within the nation.
  • This does not imply that such operations are prohibited as there is currently no legislation covering this emerging industry. Holding assets like Bitcoin and other comparable virtual currencies is currently not against the law in India.
  • Crypto Exchanges, registered as FIU registration in India, shall be considered for dealing in crypto currency, and some of them are CoinX, Unocoin, Bitbns, Zebpay, WazirX, Coinswitch, CoinswitchX and Rario

Crypto Exchange

IFCCL 

Office: P-6/90 (2F) Connaught Circus, Connaught Place, New Delhi,-110001,  India, 

Indian Landline : + 011 43 52  0194, Contact: 91-9555 555 480

E-Mail: Singh@caindelhiindia.com

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Newly added High-Value Transactions threshold limits

Newly added High-Value Transactions threshold limits

Income Tax Cash Transaction Rules & Regulations

Section 269ST – Restriction on Cash Transactions

No person can receive ₹2 lakh or more in cash: In a single day from one person. and For a single transaction, even if received on different days. also For multiple transactions related to a single event or occasion. If violated, the recipient (not the payer) faces a penalty equal to the amount received under Section 271DA of the Income Tax Act.

Monitoring of High-Value Cash Transactions

The Income Tax Department tracks large cash transactions, and exceeding prescribed limits may lead to scrutiny or notices. Some key limits include Cash deposits of ₹10 lakh or more in savings accounts per financial year, Cash deposits/withdrawals of ₹50 lakh or more in a current account per FY and High-value transactions (₹2 lakh+) for property purchases, jewelry, medical expenses, etc.

S. No Transaction Type Min. Amount (Rs.)
1 Domestic class Air travel / Foreign travel any
2 Deposit / Credits in non-current Accounts 25 Lakhs
3 Health Insurance premium 20,000
4 Electricity Consumption per year 1 Lakh
5 Share transactions in DMAT Accounts / Bank Lockers any
6 LIC 50,000
7 Purchase of Jewelry, white goods, painting, marble, etc 1 Lakh
8 Payment of educational fee/donations 1 Lakh
9 Payment to Hotels 20,000
10 Deposit / Credits in Current Accounts 50 Lakhs
11 Payment of Property tax per annum 20,000

Additional threshold limits added to enforce the Income-tax

cash Tr limit

  1. Deduction/tax collection provision at a higher rate for no tax return filers.
  2. Compulsory returns for taxpayers Provision
    • All professionals with sales above Rs. 50 Lakh
    • All whose rental payment exceeds Rs. 40,000 a month
    • Which transactions are above Rs. 30 lakh

Exceptions to Section 269ST

  • Certain entities are exempt from this restriction, including: Govt entities, banks, post offices, and co-operative banks. & Transactions specified under other laws (e.g., agricultural produce sales).
  • Avoid high-value cash transactions to prevent penalties and scrutiny. use banking channels (cheques, demand drafts, or digital transfers) for large transactions. maintain proper records for cash receipts to justify them if questioned by tax authorities.

A few tips for avoiding high-value financial transactions with Income tax notices:

  • Stay up to date with your PAN details.
  • Reveal in your ITR all and correct revenue you have earned during the FY.
  • Before the deadline, you must always file your ITR.
  • Cross-check your From 26AS for all the TDS entries. This exercise can be repeated once a quarter.
  • If any AIR transactions are reported, check your Form 26AS.
  • Record all your valuable financial transactions, investments and expenditures

Comparison: Cash vs. Credit Transactions

Feature Cash Payment Credit Transaction
Timing Immediate Deferred
Intermediaries None May involve banks or payment systems.
Flexibility Limited by on-hand cash Provides flexibility to pay later.
Record Keeping Requires manual entry Automatically recorded in accounts.

Fake donations to parties

Recent concerns about fake political donations, tax loopholes, or money laundering through political funding?

Fake donations to parties

/ CFO Services

Economic landscape picture-shape by long & short-term factor

economic landscape in India

India economic landscape mixed picture-shaped by long-term & short-term factors

The economic landscape in India right now reflects a mixed picture, shaped by both long-term and short-term factors. Your points highlight several challenges that indicate stress across various economic layers, from consumption patterns to employment and global supply chains. Here’s a breakdown of where things stand and what might lie ahead for the younger generation.

  1. Pent-Up Demand and Post-Pandemic Slowdown

The initial surge in demand post-COVID was largely fueled by pent-up consumer enthusiasm, especially among high-income groups. But this boost was unsustainable and has started fading. The strain is more visible in lower-income households where inflation, particularly in food prices, has reduced disposable income and demand for basic goods. This poses a challenge for consumer-driven growth, which is usually a vital component for emerging economies like India’s.

  1. Inflation and Its Unequal Impact

Inflation, especially in essential goods, has hit those at the lower end of the economic spectrum hardest. Food, which constitutes the majority of spending for lower-income households, has been the most inflation-prone segment. Although central banks and policymakers have started responding, the delay has made recovery slow, and the damage to real incomes and savings will take time to repair.

  1. Job Market and Technological Shifts

Job creation has struggled to keep up with the workforce entering the market, partly due to technological shifts and partly due to profit-focused cost-cutting in corporate sectors. The trend toward automation and digital solutions is unlikely to reverse, which means that while certain sectors may thrive, there will be fewer opportunities in traditional roles. The younger workforce will need to pivot toward skills in technology, analytics, and sectors where demand is growing, but retraining for these roles is challenging given existing educational infrastructure constraints.

  1. Supply Chain Vulnerabilities and Geopolitical Shifts

Supply chain disruptions are a global issue, with many developed nations prioritizing self-sufficiency and bilateral trade agreements. India’s cautious stance on bilateral deals has slowed its adaptability in the current landscape. While the government is pivoting towards fostering “Atmanirbhar Bharat” (self-reliant India), the transition isn’t quick enough to plug supply chain gaps, and businesses reliant on imports still face delays and increased costs.

  1. Automobile Sector and Economic Health Indicators

Declines in sales of budget cars highlight that discretionary spending among the middle and lower-middle classes has diminished. This trend is worrying as these segments are vital to sustained economic growth, often driving demand for mass-market goods and services. Growth in luxury segments doesn’t fully offset this decline and may actually indicate further wealth polarization.

  1. Education and Workforce Realignment

The declining interest in core engineering degrees like mechanical and electrical engineering underscores a mismatch between educational offerings and market needs. Without a realignment in education and vocational training, there’s a risk of creating a “lost generation” of graduates whose skills don’t match available jobs. Rapidly shifting to courses that match industry needs is difficult due to bureaucratic and infrastructural delays, creating a gap that could leave many young people in jobs unrelated to their training, or worse, unemployed.

  1. Shifting Consumer Patterns

The Diwali spending patterns reflect an economic divide; premium goods are seeing sales, but mainstream, mid-priced products are lagging. This pattern speaks to a polarization in disposable incomes and consumption, which is unlikely to reverse soon unless there is widespread economic stabilization.

  1. Decline in Alcohol Demand

Alcohol demand’s slight decline could be an anomaly or indicate a broader tightening of discretionary spending due to increased taxes and rising costs. Despite alcohol’s general inelasticity, any fall in demand signals that economic pressures are causing shifts even in entrenched habits.

  1. Geopolitical Instability and Logistics Challenges

The global geopolitical landscape, including tensions in logistics-heavy regions, has further complicated supply chains. Import-reliant industries in India are facing higher costs and delays, impacting business profitability and consumer prices. For youth entering the workforce, these disruptions mean a tougher job market as companies navigate increased operational challenges.

 

Is the Indian economic Future Bright?

India’s economic future is bright, both in terms of growth and equity, argues the I&B Minister

Beyond the fifth place:

The young generation will need to navigate these headwinds with resilience and adaptability, focusing on skills that align with an evolving economy. Their success will largely depend on how quickly India can address its current challenges and foster a more inclusive, skill-oriented growth model.  The younger generation faces considerable headwinds, but the outlook is mixed. While India’s demographic dividend offers potential, the challenges require systemic adjustments to fully leverage it.

  • Reskilling and Adaptive Education: For youth, survival in the job market will increasingly depend on adapting to high-demand fields such as data science, renewable energy, fintech, and e-commerce logistics. The government’s recent initiatives to boost digital skilling and vocational training will need to accelerate to equip young people with relevant skills.
  • Public Policy and Economic Reforms: Policy support will be essential to manage inflation and stimulate job creation. Continued investment in infrastructure, healthcare, and education, along with efforts to stimulate small and medium enterprises, could provide avenues for new jobs and economic growth.
  • Social Safety Nets: To cushion the economic divide, more robust social safety nets (such as increased support for food security, healthcare, and affordable housing) could ease the immediate pressure on low-income households, allowing the younger generation to focus on long-term skill development.
  • Long-Term Growth Prospects: While the immediate future presents challenges, India’s long-term growth potential remains high due to its young population and entrepreneurial spirit. Strategic positioning in global supply chains, especially as companies seek to diversify away from certain countries, could present an opportunity for India if leveraged carefully.
/ Company Law Compliances

Income Tax, GST & Other Compliance Calendar November 2024

Income Tax, GST & Other Compliance Calendar November 2024

Income Tax, GST and Other Statutory Compliance Calendar November 2024

GSTR-1 Filings:

  • Taxpayers with Aggregate Turnover > Rs. 5 Crores
    • Frequency: Monthly
    • Tax Period: October 2024
    • Due Date: 11 November 2024
  • Taxpayers with Aggregate Turnover ≤ Rs. 5 Crores
    • Frequency: Monthly
    • Tax Period: October 2024
    • Due Date: 11 November 2024
  • QRMP Scheme Taxpayers (Quarterly Filers with ≤ Rs. 5 Crores Turnover)
    • Form: GSTR-1 (QRMP Scheme)
    • Tax Period: October – December 2024
    • Due Date: 11 November 2024

GSTR-3B Filings:

  • Turnover > Rs. 5 Crores (All States)
    • Frequency: Monthly
    • Tax Period: October 2024
    • Due Date: 20 November 2024
  • Turnover ≤ Rs. 5 Crores (All States)
    • Frequency: Monthly
    • Tax Period: October 2024
    • Due Date: 20 November 2024
  • QRMP Scheme Taxpayers (≤ Rs. 5 Crores Turnover)
    • Region 1: Chhattisgarh, Madhya Pradesh, Gujarat, Maharashtra, Karnataka, Goa, Kerala, Tamil Nadu, Telangana, Andhra Pradesh, and Union Territories (e.g., Daman & Diu)
    • Due Date: 22 November 2024
    • Region 2: Northern, Eastern, and North-Eastern states (e.g., Punjab, Uttar Pradesh, Bihar, Sikkim, Assam)
    • Due Date: 24 November 2024

Note: GSTR-3B for October 2024 can be filed by 30 November 2024, along with interest for cash liability, to allow reconciliation or amendments for FY 2023-24.

Other GST Returns and Forms:

  • GSTR-1A: Regular taxpayers (due with GSTR-3B filing)
  • GSTR-5: Non-Resident Taxpayers – Due: 13 November 2024
  • GSTR-5A: ODIAR Service Providers – Due: 20 November 2024
  • GSTR-6: Input Service Distributors – Due: 13 November 2024
  • GSTR-7: TDS Deductors – Due: 10 November 2024
  • GSTR-8: TCS Collectors (e-commerce operators) – Due: 10 November 2024
  • PMT-06: QRMP Taxpayers – Due: 25 November 2024
  • GSTR-11: UIN Holders – Due: 28 November 2024

Income Tax & TDS and other Compliance Dates in November 2024

  • 7 November: TDS Payment for October 2024
  • 10 November:
    • Professional Tax (PT) on Salaries for October 2024
    • (Note: PT due dates vary by state; consult a tax expert for specific state deadlines)
  • 11 November: GSTR-1 (Monthly) for October 2024
  • 13 November: GSTR-1 IFF (Optional) for QRMP scheme taxpayers for October 2024
  • 15 November:
    • Provident Fund (PF) & ESI Returns and Payment for October 2024
    • Issue of TDS Certificates in Form 16A for Q2 FY 2023-24 (July to September 2024)
    • Income Tax Return (ITR) filing for Non-Corporates needing audit and Corporates for FY 2023-24 (extended from 31 October 2024)
  • 20 November: GSTR-3B (Monthly) for October 2024
  • 25 November: GST Challan Payment for October 2024 if insufficient ITC for all Quarterly Filers
  • 29 November: MGT-7/7A Filing for Companies and One Person Companies (OPC) for FY 2023-24
  • 30 November:
    • Labour License Renewal for Calendar Year 2025 (Jan-Dec 2025)
    • TDS Payment in Form 26QB (Property transactions), 26QC (Rent), 26QD (Contractor Payments), and 26QE (Crypto Assets) for October 2024

Compliance NOv 2024

Compliance NOv 2024