Recent Official Tax (Income Tax + TDS) Updates from CBDT

Recent Official Tax Updates from CBDT India (Income Tax + TDS)

Introduce of Income Tax

Income tax is a form of direct tax levied by the government on the income of individuals and entities. It is a critical source of revenue for the government, enabling it to fund various public services and infrastructure projects, such as healthcare, education, transportation, and defense. The income tax system is governed by specific laws and regulations, which outline how the tax is calculated, collected, and administered.

The main motive of collecting income tax is to fund government expenditures on public services and infrastructure, such as buildings, roads, and other development projects. Income tax in India is collected by the central government and distributed to state governments to support various regional development activities.

Income tax is administered by the CBDT and governed by the Income Tax Act of 1961.

The Indian tax system categorizes income into six main sources:

• Income from Salary: Earnings from employment.
• Income from Business or Profession: Profits generated by businesses or professional services.
• Income from Capital Gains: Profits from the sale of assets or investments.
• Income from Other Sources: Any income that does not fall into the other categories, such as interest earned on savings.
• Income from House Property: Rental income or income from property ownership.
• Income from Lottery, Horse Race, etc.: Winnings from lotteries, betting, and gambling activities.

Different types of income are taxed at different rates, and the government provides various deductions that can reduce taxable income. After accounting for these deductions, the taxable income of an individual can be calculated.

Income tax in India is charged based on the income earned by the individual, using a slab system. There are two slab systems available:

• Old System: Includes various exemptions and deductions.
• New System: Introduced with an annual Budget, offering lower tax rates but with fewer exemptions and deductions.

Taxpayers have the option to choose between these two systems.

Individuals must file their income tax returns (ITRs) electronically using the appropriate form, depending on their source of income:

• ITR-1: For salaried individuals.
• ITR-2: For individuals and HUFs not having income from business or profession.
• ITR-3: For individuals and HUFs having income from business or profession.
• ITR-4: For presumptive income from business and profession.
• ITR-5: For partnership firms.
• ITR-7: For persons including companies required to furnish returns under sections 139(4A) to 139(4D).

Income Tax Notices 

Even those earning below the taxable threshold can file returns. Non-compliance with income tax provisions can result in severe penalties, including fines and imprisonment.

Income Tax Return Forms for Assessment Year 2024-25

Common Offline Income  Tax Utility for filing ITR return – ITR 1, ITR 2 and ITR 4 for the AY 2024-25.

How to Access Income Tax Notifications:

Income Tax Government Portal:

• Visit the official Income Tax Department website (https://www.incometaxindia.gov.in) for the latest notifications, circulars, and updates.
• The portal provides comprehensive resources, including downloadable forms, FAQs, and detailed guides on various tax provisions.

Central Board of Direct Taxes Announcements:

• Regularly check the “What’s New” section on the Income Tax Department website for the latest announcements and updates from the Central Board of Direct Taxes.

Income Tax Circulars and Amendments:

• Access the “Notifications” section for detailed circulars and amendments. This section is frequently updated to reflect the latest changes in tax laws and procedures.

By staying informed through these official channels, taxpayers can ensure compliance with the latest tax laws and take advantage of any new benefits or provisions introduced by the government.

TDS in India

Tax Deducted at Source (TDS) in India is a direct tax mechanism where the payer deducts a certain percentage of tax before making a payment to the payee. This system ensures that tax is collected at the source of income, thereby facilitating regular inflow of revenue to the government and reducing the burden of lump-sum tax payments for the taxpayer at the end of the financial year.

Key Features of Tax Deducted at Source:

Scope and Applicability:

• Tax Deducted at Source is applicable to various types of income, including salaries, interest payments by banks, dividends, rent, asset sales, and other specified payments.

TDS Rate: 

Management and Governance:

• Tax Deducted at Source is managed by the Central Board of Direct Taxes (CBDT) and is governed by the Income Tax Act of 1961.

Filing Requirements:

• Tax Deducted at Source returns must be filed quarterly by the deductors. These returns can be e-filed for convenience and efficiency.

Purpose:

• The main purpose of Tax Deducted at Source is to ensure that tax is collected in advance and to prevent tax evasion. It helps in spreading the tax payment liability over the year rather than a lump-sum payment at the end of the year.
• It provides a steady source of revenue to the government throughout the year.

Rates and Deductions:

• Different rates of Tax Deducted at Source apply to different types of payments and transactions. These rates are specified under various sections of the Income Tax Act.
• For example, sections 194IA, 194IB, and 194IC govern Tax Deducted at Source on the sale of assets, while section 302 governs Tax Deducted at Source on dividends.

Refunds:

• If the tax deducted is higher than the actual tax liability of the individual, a refund can be claimed. This is typically processed through the filing of an income tax return.

Compliance and Penalties:

• Non-compliance with Tax Deducted at Source provisions can attract significant penalties, including fines and imprisonment. This stringent measure ensures that tax evasion is minimized as the responsibility of tax deduction lies with the payer.

Form 26AS:

• The details of Tax Deducted at Source deducted are reflected in Form 26AS, which is an annual consolidated tax statement. Taxpayers can use this form to verify the tax deducted and claim credit for the same when filing their income tax returns.

Specific Sections related to TDS:

• Section 194IA: TDS on the sale of immovable property.
• Section 194IB: Tax Deducted at Source on rent paid by individuals or HUF not covered under tax audit.
• Section 194IC: TDS on consideration for joint development agreements.
• Section 302: Governs TDS on dividends.

By ensuring that tax is deducted at the source, the Tax Deducted at Source system helps streamline tax collection, improve compliance, and reduce the possibility of tax evasion. The periodic filing of Tax Deducted at Source returns and the reflection of these deductions in Form 26AS provide transparency and facilitate easier tax management for both the taxpayers and the tax authorities.

Income tax rate in case of capital Gain regulation in India

Data on Direct Tax (DT) collections and Advance Tax collections for FY 2024-25 as on 12.01.2025 has been released

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