Significant changes have recently been made in the income tax slabs of the new regime, making them more beneficial to the assessee. As per the budget 2025, Income earned up to Rs.12 lakhs (except special rate income) has been made practically tax-free by relaxing the slab rates and increasing the rebate. Despite significant slab relaxations, many tax-saving deductions do not apply to the new regime; they are only applicable to the old regime. Choosing the most beneficial regime becomes essential for every taxpayer at this juncture. The following article explains the tax-saving options and the most beneficial regime for a salary income of Rs.18 lakhs.Slab Rates Applicable For Financial Year 2025-2026The modified slab rates for the new tax regime applicable for FY 2025-2026 are as follows:Income Tax SlabsTax RateUp to Rs. 4 lakhsNILRs.

Section 115AD offers concessional tax rates for certain incomes of specified institutions. These institutions are Non-Residents that do not have any permanent establishment in India. This article explains the tax implications of different kinds of income earned by Foreign Institutional Investors in detail.What is Section 115AD?Section 115AD of the Income Tax Act,1961 deals with the taxation of Foreign Institutional Investors. It offers concessional tax rates to the aforesaid investors.From an Income tax perspective, Foreign Institutional Investors are those specified by the Central Government for this purpose in an official gazette.Usually, FII’s receive capital gains from the transfer of securities, other income from securities and miscellaneous income. Who are Foreign Institutional Investors?These institutions are regulated by SEBI in India. They are foreign institutions making investments in the economy. Ever heard of Black Rock and Deutsche Bank in India, investing their funds in the Indian economy? They are popular Foreign Institutional Investors in India. More often than not, FIIs are financial and banking institutions.Can FIIs be Residents Under the Income Tax Law?We need to diverge and look at SEBI  regulations slightly. As per SEBI regulations about Foreign Portfolio Investors, an FPI cannot be a resident. However, a resident can be a ‘constituent to the fund’ in fulfilment of certain conditions as prescribed, whether an individual or not.Therefore, though residents cannot be investors, they can contribute to the fund maintained by FIIs upon fulfilling conditions.What are Specified Funds?Before going into tax treatment, we must understand the meaning of specified funds.

The changes made in Budget 2025 by the government have been specifically beneficial for middle income earners who earn salary income. In recent times, there has been relaxation of slab rates, extension of deductions available to salary income, and other deductions made available to assessees which would help to save taxes. Check out the below article to know all the tax saving options available for the income range of Rs.13,00,000. Please note that this article applies only to tax implications pertaining to the financial year 2025-26 only. New Tax Regime Slab RatesThe salary income earned up to Rs.12.75 Lakhs will ultimately have Nil tax liability. Here's how!The revised slab rates for new tax regime applicable for FY 2025-2026 is as follows:As per the latest Finance Act 2025, changes have been made in the slab rate for the new tax regime applicable for FY 25-26 as follows - Income Tax SlabsTax RateUp to Rs. 4,00,000NILRs.

The Income Tax Act contains sections addressing particular deductions under the head income from business or profession. Broadly, specific deductions are discussed under sections 30-36 of the act. Section 37, however, is a residual provision that covers deductions not specified under any other sections of the Act. This article will explain the general rules for claiming deductions under section 37 with an interesting case law.Section 37 - General DeductionsSection 37 deals with general deductions. The assessee can claim a deduction under this section only when the particular deduction is not covered under other sections.

The new tax regime offers limited deductions, compared to old tax regime. Whereas, standard deduction of Rs.75,000, deduction under section 80CCD(2), and rebate of Rs.25,000 can be claimed under the new regime. Also, the taxpayers can benefit from relaxed slab rates under the new regime.Still, there are tax saving options available under the new regime. The following article explains the tax saving options under the new regime in detail. New Regime Exclusive BenefitsStandard DeductionUnder the new tax regime, salaried employees are allowed a standard deduction of Rs.75,000, compared to Rs.50,000 under the old regime.Exemption on Family Pension Pension received by the family of deceased employees other than ex-servicemen: One-third is exempt up to a maximum of Rs.25,000. The maximum limit is Rs.15,000 under the old regime.Benefits Under Both RegimesHome Loan Interest on Let-Out PropertyAs per section 24(b), interest paid for a home loan can be claimed as a deduction without limits for a let-out property. This deduction can be claimed irrespective of the regime chosen.The deduction for self-occupied property is capped at a maximum of Rs.2 lakhs and is available only under the old regime.Employer’s Contribution to Pension SchemeUnder section 80CCD(2), the employer’s contribution to the National Pension System is exempt up to 14% of basic pay under the new regime. This limit is 12% of basic pay under the old regime.Contribution to the Agniveer SchemeFor participants of the Agnipath Scheme, both the employer’s and employee’s contributions to the Agniveer Corpus Fund can be claimed as a deduction under section 80CCH.Deduction for Additional Employee Cost Running your own business? You can claim deduction on salaries paid to new employees.Under section 80JJAA, 30% of the cost incurred by newly hired employees could be deducted upon satisfaction of certain conditions.If the business is newly started, 30% of the total employee cost can be claimed as a deduction, as all employees are newly hired.Exemption on GiftsGifts received in cash or kind from relatives are always tax-exempt.Gifts received at special occasions like weddings and inheritances are also always tax-exempt.Gifts received in any other situation than specified above are totally exempt when they are up to Rs.50,000.

Carrying forward loss is one of the significant benefits of the Income Tax Act to assessees. The taxpayer can carry forward the current financial year's losses and subtract them from the profits of succeeding financial years. The act prescribes whether a particular loss is eligible to be carried forward, the period until which it can be carried forward, and the heads of income against which a specific loss can be set off. In this article, we will understand whether a successor can carry forward loss in particular situations through an interesting case law.Pramod Mittal v. CITThe High Court of Delhi passed the judgment on 11-10-2012.Facts of the CaseThe assessee and his brother were partners in a firm.

Capital Gains arise on the occasion of the ‘transfer’ of capital assets. Section 2(47) defines transfer for the purpose of the Income Tax Act. Any transfer of a capital asset falling under this definition will trigger capital gains implications, potentially leading to a tax liability. In this article, we will understand an interesting case law that throws light on the meaning of transfer in substance, providing a deeper perspective on the incidence of capital gains.Meaning of TransferTransfer under section 2(47) of the Income Tax Act means a sale, exchange, relinquishment, compulsory acquisition, etc., of a capital asset. We can broadly infer that transfer encapsulates any event or happening that makes the capital asset no longer controllable by the assessee in substance because someone else has taken control of the asset.Seshasayee Steels P.

The provisions of Income Tax allow businesses and professionals to claim the expenses they incur in the course of business as deductions. After claiming all deductions, the net profit is considered for income tax calculations.However, these provisions related to deductions can be misused, and businesses may claim more deductions than are rightfully claimable. Therefore, there are provisions incorporated in the law to restrict deduction claims upon satisfaction of certain conditions or completely forbid certain deductions in certain situations. In this article, we discuss disallowances given under section 40A of the Income Tax Act.What is the Intent Behind Section 40A?The purpose of this section is to Mandate proper documentation of expenses claimedRestrict the deductions only to the extent that it is reasonableEncourage non-cash payments - (Predominantly digital mode)Ensure transparency in related-party transactions.It is to be noted that the provisions in section 40A have an overriding effect on the remaining provisions of the act. This means that in case of any conflicting circumstances between section 40A and other provisions - the provisions in this section shall prevail over other sections.Summary to Section 40ABroadly, section 40A discusses deductions pertaining to Related Party TransactionsPayment made in modes other than prescribedOther disallowancesRelated Party Transactions This section gives discretion to assessing officer to disallow payments made to related parties, if the assessing officer opines that it is such deduction claim is excessive or unreasonable.Who are the Related Parties?Though people's perceptions of relatives vary, the term related party, as per the Income Tax Act, depends on the assessee's legal status.

The Income Tax Act 1961 has a mechanism for ensuring compliance by issuing notices to assessees the department considers non-compliant. These notices can be a request for information or demand tax payment/penalty for non-compliance. However, it should be noted that all the notices should be issued according to the provisions of the act. If the notice is not issued per the act, it is rendered void, invalidating the tax demand and penal procedures. Therefore, as taxpayers, it is essential for us to understand the notices that can be issued under different sections of the act, as well as the time limits and other compliance aspects.Section 142(1) - Inquiry Before AssessmentSection 142 deals with the procedures related to inquiries before the department assesses an assessee's income.

There are a few provisions in the Income Tax Act that allow deductions for setting aside a certain amount of money in funds earmarked for specified purposes. In this article, we explore section 33ABA, which allows a deduction in respect of a contribution made to a site restoration fund.What is Site Restoration Fund?Broadly speaking, this fund is generally maintained by entities who are involved in the business of mining, quarrying, waste treatment, oil and gas exploration, etc., These kinds of business necessarily involve contamination of the place in which the business activity is carried out. So, a fund is generally maintained by these business entities. At the end of business activity, the site is restored, and contaminations and damages are made good to the extent that it can be safely used and accessed for other purposes by the public at large. This is the reason behind the maintenance of the site restoration fund.What is Section 33ABA?Broadly speaking, Section 33ABA of the Income Tax Act provides deductions against the amount set aside for site restoration for petroleum and natural gas businesses.What is the Intent Behind Section 33ABA?These provisions in the act encourage setting aside money for restoring site damages so that businesses do not face a shortage of funds when reviving the site at the end of their business cycle. This would ensure seamless restoration of the site, thereby avoiding the potential hazards of leaving the site environmentally unsafe.Who is Eligible for Deduction u/s 33ABA?Deduction under this section is provided only for the following businesses related to petroleum and natural gasExtraction - Extraction from the fields Prospecting - Finding the potential petroleum and gas deposits underground Production - Refining the crude oil into petrol and other useful products In addition, the Central Government should have entered into an agreement with such business.Deduction Allowed u/s 33ABADeduction can be allowed for the amount deposited underSpecial bank account in the State Bank of India under the scheme specifically approved by the Ministry of Petroleum and Natural Gas, orSite Restoration Account specified in a scheme framed by the Ministry of Petroleum and Natural Gas,Quantum of Deduction AllowedThe eligible business can claim a deduction of - Amount deposited*It is to be noted that the maximum deduction allowed is restricted to 20% of its profits as calculated under the Income Tax Act.**Deposit of funds needs to be made before the end of the financial year.Note:*Interest credited to the aforesaid bank accounts can also be considered as deposit amount.