CA Meet Dhrangadhariya, Author at CSM & CO LLP

TDS on House Rent Payments: Know the Rates, Rules & Applicability

Posted on March 28, 2025March 29, 2025 by CA Meet Dhrangadhariya

TDS on House Rent Payments: Know the Rates, Rules & Applicability w.e.f April 1, 2025:

Tax Deducted at Source (TDS) is a mechanism in India where tax is deducted at the source of income, ensuring that the government collects tax on income as it is earned. When it comes to house rent, specific TDS rules apply under the Income Tax Act, particularly for individuals, Hindu Undivided Family (HUF), companies, and firms. In this blog, we’ll break down the TDS rates and criteria for house rent for Financial Year 2025-26, as outlined in the table below, helping you understand your obligations as a tenant or landlord.

TDS on House Rent: The Basics

The table outlines two key scenarios for TDS deduction on house rent, including the criteria, applicable rates, sections of the Income Tax Act, and who it applies to. Let’s dive into the details:

A. TDS on Rent Paid to a Resident Indians:

No.

House Rent Criteria

TDS Rate

Section

Tenant Applicability

Rent is more than ₹2.40 lacs per annum

10%

194-I

– Company

– Firm

– Individual/HUF with business turnover more than ₹1 crore

– Individual/HUF with professional gross receipts more than ₹50 lacs

Rent is more than ₹50,000 per month

194-IB

– Individual/HUF with business turnover less than ₹1 crore

– Individual/HUF with professional gross receipts less than ₹50 lacs

Scenario 1: Rent Exceeding ₹2.40 Lacs Per Annum

• Criteria: If the annual rent paid exceeds ₹2,40,000, TDS must be deducted.

• TDS Rate: The applicable TDS rate is 10%.

• Section: This falls under Section 194-I of the Income Tax Act, which deals with TDS on rent payments.

• Applicability: This rule applies to:

a) Companies and firms, regardless of their income.

b) Individuals or HUFs who have a business turnover exceeding ₹1 crore in a financial year.

c) Individuals or HUFs with professional gross receipts exceeding ₹50 lacs in a financial year.

• Example: Suppose a company rents office space and pays ₹3,00,000 annually. Since the rent exceeds ₹2.40 lacs, the company must deduct 10% TDS, which amounts to ₹30,000, and pay the remaining ₹2,70,000 to the landlord. The deducted TDS must be deposited to the government, and the landlord can claim credit for this amount while filing their income tax return.

Scenario 2: Rent Exceeding ₹50,000 Per Month

• Criteria: If the monthly rent exceeds ₹50,000, TDS is applicable.

• TDS Rate: The TDS rate in this case is 2%.

• Section: This is covered under Section 194-IB of the Income Tax Act.

• Applicability: This rule applies to:

a) Individuals or HUFs with business turnover less than ₹1 crore.

b) Individuals or HUFs with professional gross receipts less than ₹50 lacs.

• Example: An individual pays ₹60,000 per month as rent for their apartment, totaling ₹7,20,000 annually. Since the monthly rent exceeds ₹50,000, they must deduct 2% TDS, which is ₹1,200 per month (₹14,400 annually). The remaining ₹58,800 is paid to the landlord each month. The tenant must deposit the TDS to the government and issue a TDS certificate (Form 16C) to the landlord.

Key Points to Understand

1) Threshold Limits: The ₹2.40 lacs per annum threshold (Section 194-I) is an annual limit, while the ₹50,000 per month threshold (Section 194-IB) is a monthly limit. Ensure you calculate the rent correctly to determine which section applies.

2) Who Deducts TDS? Under Section 194-I, companies, firms, and high-income individuals/HUFs are responsible for deducting TDS. Under Section 194-IB, individuals/HUFs with lower incomes (below the specified thresholds) are responsible, making it easier for the government to track rent payments by smaller taxpayers.

3) TDS Deposit and Compliance: The deducted TDS must be deposited to the government by the 7th of the following month (or by April 30th for TDS deducted in March). Additionally, tenants must issue TDS certificates to landlords—Form 16A for Section 194-I and Form 16C for Section 194-IB.

4) No TAN Requirement for Section 194-IB: Unlike Section 194-I, where a Tax Deduction Account Number (TAN) is required to deduct and deposit TDS, individuals under Section 194-IB can use their PAN to deduct and deposit TDS, simplifying the process for smaller taxpayers.

B. TDS on Rent Paid to Non-Resident Indians (NRIs)

When remitting rental payments to a Non-Resident Indian (NRI), Tax Deducted at Source (TDS) must be withheld at a rate of 30%, in addition to the applicable surcharge and a 4% cess. This TDS deduction is mandatory regardless of the rental amount, as there is no prescribed threshold for rent payments to NRIs. However, an NRI may apply for a certificate of nil or reduced TDS deduction if their taxable income in India falls below the basic exemption limit, subject to the provisions of the Income Tax Act.

What Happens If You Miss TDS?

TDS on house rent ensures that rental income is taxed at the source, reducing tax evasion. For tenants, deducting TDS is a legal obligation, and non-compliance can lead to penalties. For landlords, the TDS deducted can be claimed as a credit when filing their income tax returns, ensuring they aren’t taxed twice on the same income.

• Penalties: Non-deduction or late deduction may attract interest (1% per month) and fines equal to the TDS amount.
• Disallowance of Expenses: The rent paid may not be deductible as a business expense for the tenant.

Practical Tips for Tenants and Landlords

Tenants: Always check the rent amount and your income status to determine if TDS applies. Use online tools or consult a tax professional to calculate and deposit TDS correctly. Keep records of rent payments and TDS certificates issued.
Landlords: Ensure your tenants are aware of their TDS obligations. Provide your PAN to the tenant for TDS deduction and verify that the TDS amount is credited to your account when filing your returns.

Conclusion

Understanding TDS on house rent is crucial for both tenants and landlords in India. Whether you’re a company paying high rent or an individual renting a modest apartment, knowing the applicable TDS rates and sections can help you stay compliant with tax laws. The table above provides a clear snapshot of the rules, but if you’re unsure about your specific situation, it’s always a good idea to consult a tax expert.

By staying informed and proactive, you can ensure smooth rent transactions while fulfilling your tax responsibilities. Have questions about TDS on rent? Drop them in the comments below, and let’s discuss!

Check out TDS Section 194-I & 194I-B of the Income Tax Act, 1961.

Disclaimer:

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.

The Role of Artificial Intelligence (AI) in Internal Auditing: Transforming Risk and Compliance

Posted on March 1, 2025March 30, 2025 by CA Meet Dhrangadhariya

The Role of Artificial Intelligence (AI) in Internal Auditing: Transforming Risk and Compliance

Introduction

The rapid advancements in Artificial Intelligence (AI) are reshaping industries, and internal auditing is no exception. AI-powered tools are revolutionizing the way audits are conducted by automating repetitive tasks, improving risk assessment, and enhancing fraud detection. For Chartered Accountants (CAs) and internal auditors, AI offers significant opportunities to increase efficiency, accuracy, and compliance in auditing processes.

In this blog, we will explore how AI is transforming internal audits, its key benefits, and practical examples of AI applications in real-world auditing scenarios.

How AI Enhances Internal Audits

1. Automating Routine Audit Tasks

AI helps in automating repetitive and time-consuming audit tasks such as:

• Data extraction from invoices, receipts, and contracts

• Checking financial statements for compliance

• Performing reconciliations

» Practical Example: A multinational company implemented an AI-powered tool to automate bank reconciliations. The tool scanned thousands of transactions in seconds, flagged discrepancies, and reduced reconciliation time by 80%.

2. Advanced Data Analytics for Risk Assessment

AI can analyze vast amounts of financial and operational data to identify patterns and anomalies. It helps in:

• Detecting unusual transactions

• Predicting high-risk areas

• Improving audit sampling techniques

» Practical Example: An internal auditor at a financial institution used AI-driven analytics to assess loan default risks. The AI system analyzed past loan repayment behavior and identified high-risk borrowers, leading to improved credit assessment policies.

3. Fraud Detection and Prevention

AI algorithms can detect fraud by:

• Identifying suspicious transactions in real-time

• Analyzing employee expense claims

• Flagging duplicate invoices

» Practical Example: A retail chain used AI-based fraud detection software to monitor purchase transactions. The system detected irregular refund requests from specific store locations, leading to an internal investigation that uncovered employee fraud.

4. Compliance and Regulatory Monitoring

AI assists in ensuring compliance with regulations like GST, IFRS, and corporate tax laws by:

• Automating regulatory reporting

• Monitoring changes in tax and compliance rules

• Alerting auditors about non-compliance risks

» Practical Example: A CA firm integrated AI-powered compliance monitoring tools to track tax regulation changes. The tool automatically updated compliance checklists and flagged discrepancies in tax filings, reducing compliance errors.

5. Natural Language Processing (NLP) for Document Analysis

NLP enables AI to read and interpret contracts, policies, and legal documents to:

• Identify key terms and clauses

• Detect contract non-compliance

• Automate document reviews

» Practical Example: An internal audit team used AI to analyze vendor contracts. The AI tool scanned thousands of contracts, identified missing clauses, and highlighted high-risk agreements, reducing manual review efforts by 70%.

Challenges in Implementing AI in Internal Audit

While AI offers numerous benefits, some challenges include:

• High initial investment in AI tools

• Need for skilled auditors with AI expertise

• Data security concerns

• Dependence on accurate historical data for AI models

Conclusion: The Future of AI in Internal Auditing

AI is set to become an integral part of internal auditing, making audits faster, more accurate, and insightful. Chartered Accountants and internal auditors who embrace AI will be better equipped to detect risks, ensure compliance, and drive efficiency in auditing processes.

Are you ready to integrate AI into your internal audits? Let’s discuss how AI can revolutionize your audit approach!

Disclaimer:

The Importance of Effective Audit Planning in Internal Audits

Posted on March 1, 2025March 30, 2025 by CA Meet Dhrangadhariya

The Importance of Effective Audit Planning in Internal Audits

Introduction

Audit planning is a fundamental aspect of the internal audit function. A well-structured audit plan ensures that the internal audit aligns with an organization’s objectives, assesses risks efficiently, and allocates resources optimally. A lack of planning can lead to incomplete audits, overlooked risks, and ineffective compliance measures.

This blog provides an in-depth look at the key components of an internal audit plan, based on the internal audit checklist, covering aspects such as risk assessment, resource allocation, and governance.

Key Components of an Internal Audit Plan

1. Internal Audit Charter and Terms of Engagement

An internal audit charter outlines the scope, objectives, and authority of the internal audit function. It serves as the foundation of the audit process.

• Risk: Without a well-defined audit charter, audits may not align with the organization’s overall objectives.

• Control Measures: A documented audit process should be established, listing step-by-step procedures to develop an annual audit plan.

• Testing Parameters: Ensure that the auditing plan covers all required areas and adheres to the annual audit planning process.

2. Business Knowledge Development

Understanding the business and regulatory environment is essential for auditors to identify key risks.

• Risk: Lack of business knowledge can lead to oversight of crucial risk elements.

• Control Measures: Internal audit teams should engage with internal and external stakeholders to stay updated on industry developments.

• Testing Parameters: Verify interactions and research conducted by the audit team to ensure business knowledge is current.

3. Defining the Audit Universe

An audit universe includes all auditable entities, such as business units, processes, and legal entities.

• Risk: Missing key risk areas in the internal audit plan can result in financial and operational setbacks.

• Control Measures: Organizations must maintain an up-to-date audit universe and review it periodically.

• Testing Parameters: Assess the availability, risk rating, and periodic updates of the audit universe.

4. Linkage with Enterprise Risk Management (ERM)

Integrating the audit plan with the ERM framework ensures that key business risks are effectively monitored.

• Risk: If the audit planning process is not aligned with ERM, critical risks may not be addressed.

• Control Measures: Input from the ERM team should be factored into the audit planning process.

• Testing Parameters: Verify whether ERM inputs are utilized in formulating the overall audit plan.

5. Independent Risk Assessment for Auditable Units

Each business unit or process should undergo an independent risk assessment to prioritize high-risk areas.

• Risk: Failure to conduct a risk assessment can result in inadequate audit coverage.

• Control Measures: Conduct independent risk assessments of each unit and allocate resources accordingly.

• Testing Parameters: Review methodologies used for risk assessments and verify coverage scope.

6. Resource and Time Allocation

Audit efficiency depends on proper allocation of skilled auditors and sufficient time for review.

• Risk: Inadequate resource allocation can lead to ineffective audits.

• Control Measures: Allocate resources based on the complexity and risk profile of each auditable unit.

• Testing Parameters: Assess the adequacy of time and resource allocation in covering all high-risk areas.

7. Audit Plan Approval Process

The audit plan should be approved by the Audit Committee and the Board to ensure alignment with organizational priorities.

• Risk: Lack of governance approval can lead to misalignment with business strategies.

• Control Measures: Audit plans should be reviewed and approved at multiple levels.

• Testing Parameters: Examine minutes of Audit Committee meetings to verify audit plan discussions and approvals.

8. Periodic Review of the Audit Plan

A periodic review of the audit plan ensures that it remains relevant and adaptable to emerging risks.

• Risk: An outdated audit plan can derail audit objectives.

• Control Measures: The Chief Audit Executive should conduct regular reviews to align the plan with business changes.

• Testing Parameters: Evaluate periodic reviews to confirm alignment with the company’s strategic objectives.

Conclusion

A comprehensive audit planning process is vital for ensuring effective risk management, regulatory compliance, and operational efficiency. By incorporating structured risk assessment, stakeholder engagement, and robust governance measures, organizations can enhance their internal audit effectiveness.

For Chartered Accountants, following a detailed audit checklist and ensuring periodic reviews of the audit plan can significantly improve the quality and reliability of internal audits. By implementing these best practices, businesses can strengthen their financial and operational resilience while maintaining transparency and accountability.

Would you like additional insights on implementing this checklist in your organization? Share your thoughts in the comments! 🚀

Disclaimer:

Internal Audit Decoded: Its Purpose & Vital Importance

Posted on February 25, 2025March 30, 2025 by CA Meet Dhrangadhariya

Unlocking Business Excellence: The Value of Internal Audits

As a business owner or manager, ensuring the efficiency and effectiveness of your organization’s operations is paramount. One of the key strategies to achieving this goal is through conducting internal audits. In this blog, we explore the significance, benefits, and best practices of internal audits and how they contribute to long-term business success.

What is an Internal Audit?

An internal audit is a thorough evaluation of an organization’s internal controls, risk management processes, and governance framework. It plays a critical role in identifying potential risks, improving operational efficiency, and ensuring compliance with relevant regulations. In essence, internal audits are an essential part of an organization’s risk management strategy.

Why Are Internal Audits Important?

Internal audits provide a wide array of benefits, including:

1. Risk Management: Helps identify and mitigate potential risks that could impact the business.
2. Compliance: Ensures compliance with legal, regulatory, and industry standards.
3. Operational Efficiency: Streamlines workflows, reduces inefficiencies, and boosts productivity.
4. Financial Management: Safeguards assets and ensures accurate financial reporting.
5. Stakeholder Confidence: Strengthens trust by demonstrating a commitment to transparency, accountability, and sound governance.

Best Practices for Effective Internal Audits

To maximize the impact of internal audits, consider the following best practices:

1. Establish an Independent Audit Committee: Ensure the audit committee is independent, well-qualified, and empowered to lead the audit process.
2. Develop a Comprehensive Audit Plan: Clearly define audit objectives, scope, and key risks to ensure thorough evaluation.
3. Leverage Technology: Use audit software and tools to enhance efficiency, improve accuracy, and streamline reporting.
4. Foster a Culture of Transparency: Promote open communication and collaboration, and encourage learning from audit results.
5. Regular Monitoring and Evaluation: Continuously assess the effectiveness of internal controls and risk management strategies to maintain governance standards.

Conclusion

Internal audits are a critical element of a well-managed and well-governed organization. By embracing the significance and benefits of internal audits, businesses can not only identify areas for improvement but also mitigate risks and foster sustainable growth.

Advisory on HSN Validations in Table 12 of GSTR-1

Posted on February 24, 2025March 30, 2025 by CA Meet Dhrangadhariya

Advisory on HSN Validations in Table 12 of GSTR-1

The Goods and Services Tax (GST) authorities have issued an advisory detailing the implementation of Phase-3 for reporting Harmonized System of Nomenclature (HSN) codes in Table 12 of GSTR-1 and GSTR-1A, effective from the February 2025 return period. This phase introduces significant changes to enhance the accuracy and consistency of HSN code reporting for taxpayers.

Key Changes in Phase-3:

1. Mandatory Selection from Dropdown:

• Taxpayers with Aggregate Annual Turnover (AATO) up to ₹5 crore: Required to report 4-digit HSN codes for goods and services.

• Taxpayers with AATO exceeding ₹5 crore: Required to report 6-digit HSN codes for goods and services.

Turnover	HSN Digits
Upto 5 crores	Mandatory 4-digit HSN codes
More than 5 crores	Mandatory 6-digit HSN codes

Manual entry of HSN codes is now restricted. Taxpayers must select the appropriate HSN code from a predefined dropdown list. Upon selection, a customized description from the HSN master will auto-populate in a new field labeled “Description as per HSN Code.”

2. Validation of Supply Values:

• The system will validate the values of Business-to-Business (B2B) and Business-to-Consumer (B2C) supplies reported in various tables against the values in Table 12.

• Initially, these validations will operate in a warning mode, allowing taxpayers to file GSTR-1 even if discrepancies are detected. However, if B2B supplies are reported in other tables, the B2B tab in Table 12 cannot be left empty.

In Table-12 validation with regards to value of the supplies have also been introduced.

1) These validations will validate the value of B2B supplies shown in different Tables viz: 4A, 4B, 6B, 6C, 8 (recipient registered), 9A, 9B (registered), 9C (registered), 15 (recipient registered), 15A (recipient registered) with the value of B2B supplies shown in table-12.

2) Similarly, validations will validate the value of B2C supplies shown in different tables viz: 5A, 6A, 7A, 7B, 8 (recipient unregistered), 9A (export), 9A (B2CL), 9B (unregistered), 9C (unregistered), 10, 15 (recipient unregistered), 15A (recipient unregistered) with the value of B2C supplies shown in Table-12.

3) In case of amendments, only the differential value will be taken for the purpose of validation.

3. Enhancements in Table 12:

• Segregation of Supplies: Table 12 is now divided into two tabs: “B2B Supplies” and “B2C Supplies.” Taxpayers must enter HSN summary details separately under each tab.

• Downloadable HSN Code List: A new “Download HSN Codes List” button allows taxpayers to download an Excel file containing the updated list of HSN and SAC codes along with their descriptions.

• Searchable “Product Name as in My Master”: This feature enables taxpayers to search and select descriptions from their HSN master. Upon selection, the corresponding HSN code, description, Unit Quantity Code (UQC), and quantity will auto-populate. This functionality is optional.

Conclusion:

These changes aim to streamline the HSN reporting process, reduce errors, and ensure compliance with GST regulations. Taxpayers are advised to familiarize themselves with these updates and adjust their reporting processes accordingly to ensure a smooth transition.

For a detailed understanding, refer to the official advisory issued by the GST authorities by clicking here.

Understanding Income Tax Deduction from Salaries for FY 2024-25: Key Updates for Employers and Employees

Posted on February 21, 2025February 21, 2025 by CA Meet Dhrangadhariya

Understanding Income Tax Deduction from Salaries for FY 2024-25: Key Updates for Employers and Employees

The Central Board of Direct Taxes (CBDT) has issued Circular No. 3/2025, dated February 20, 2025, outlining the guidelines for income tax deduction from salaries under Section 192 of the Income-tax Act, 1961, for the Financial Year 2024-25. This circular provides clarity on the latest amendments introduced through the Finance (No.2) Act, 2024, Finance (No.1) Act, 2024, and the Finance Act, 2023. Here’s a detailed breakdown of the key updates affecting salaried individuals and their employers.

Definition of Salary and Perquisites

Expanded Salary Definition: Salary now includes contributions made by the Central Government to the Agniveer Corpus Fund under the Agnipath Scheme (Section 80CCH).
Perquisites Inclusion: The definition of perquisites now encompasses rent-free accommodations and accommodations provided at a concessional rate by employers.

Revised Tax Rates Under the Old and New Regimes

Surcharge Rates (Old Tax Regime)

10% on income between ₹50 lakh – ₹1 crore
15% on income between ₹1 crore – ₹2 crore
25% on income between ₹2 crore – ₹5 crore (excluding dividend income and capital gains under Sections 111A, 112, 112A)
37% on income above ₹5 crore (excluding dividend income and capital gains under Sections 111A, 112, 112A)
15% on income above ₹2 crore (including dividend income and capital gains under Sections 111A, 112, 112A)

Tax Slabs Under the New Tax Regime (Section 115BAC)

₹0 – ₹3,00,000 – Nil
₹3,00,001 – ₹7,00,000 – 5%
₹7,00,001 – ₹10,00,000 – 10%
₹10,00,001 – ₹12,00,000 – 15%
₹12,00,001 – ₹15,00,000 – 20%
Above ₹15,00,000 – 30%

Additional Key Amendments

Form No. 16 & 24Q Updates:
- The Health and Education Cess has replaced the Education Cess.
- New provisions added to Form No. 24Q, including a dedicated field for other tax deducted or collected at source.
Leave Encashment Exemption Increased:
- The exemption limit for leave encashment for non-government employees has been raised to ₹25 lakh.
Agniveer Corpus Fund Tax Exemption:
- Payments from the Agniveer Corpus Fund under the Agnipath Scheme are fully tax-exempt.
Rebate Under Section 87A:
- For those opting for the new tax regime, total income up to ₹7 lakh qualifies for a rebate, ensuring zero tax liability.
Penalty & Prosecution for TDS Defaults:
- Penalty under Section 271C: Failure to deduct/pay TDS can result in a penalty equal to the tax not deducted.
- Prosecution under Section 276B: Non-payment of deducted TDS can attract imprisonment of 3 months to 7 years.

Employer Responsibilities

Employers must ensure:

Accurate TDS deductions based on employees’ selected tax regimes.
Compliance with the revised Form 16 & 24Q formats.
Prompt deposit of deducted taxes to avoid penalties.
Timely issuance of Form 16 to employees.

Conclusion

With these new amendments, employees should evaluate which tax regime suits them best. Employers, on the other hand, must align their payroll and tax deduction processes with these updates to ensure compliance and avoid penalties. For further details, refer to the official circular here.

For expert tax planning and compliance guidance, consult a Chartered Accountant today!

Disclaimer:

Provident Fund (PF) Registration in India: A Complete Guide

Posted on February 18, 2025February 28, 2025 by CA Meet Dhrangadhariya

Provident Fund (PF) Registration in India: A Complete Guide

The Employees’ Provident Fund (EPF) is a crucial social security scheme managed by the Employees’ Provident Fund Organisation (EPFO) in India. It ensures financial stability for employees post-retirement. If you are an employer, understanding PF registration is essential to comply with labor laws and offer benefits to your employees.

Who Needs to Register for PF?

PF registration is mandatory for:

✅ Companies with 20 or more employees

✅ Organizations covered under the EPF Act, 1952

✅ Voluntary registration for companies with less than 20 employees

Benefits of PF Registration

✔️ Retirement Savings – Employees and employers contribute to long-term savings

✔️ Tax Benefits – Contributions are eligible for deductions under Section 80C

✔️ Insurance Coverage – Linked to the Employee Deposit Linked Insurance (EDLI) Scheme

✔️ Pension Benefits – A portion of the employer’s contribution goes towards pension

Steps for PF Registration

1. Prepare Required Documents

📌 PAN card of the company

📌 Certificate of Incorporation (for Pvt Ltd, LLP, or OPC)

📌 Address proof (Utility bills, rental agreement)

📌 Aadhaar and PAN of the employer

📌 Canceled cheque of the business account

📌 Digital Signature of the employer

2. Register on the EPFO Portal

1️⃣ Go to the EPFO Unified Employer Portal https://unifiedportal-emp.epfindia.gov.in

2️⃣ Click on Establishment Registration

3️⃣ Read the User Manual and proceed to Sign Up

3. Submit the Employer’s Details

✔️ Enter Business Name, Type, Address, and Contact Details

✔️ Provide details of employees

✔️ Upload the required documents

4. Receive PF Registration Certificate

🔹 Once submitted, the EPFO will verify the details

🔹 On approval, you will receive a Universal Account Number (UAN) for employees

🔹 Your PF registration number will be generated

PF Contribution Rate

Contribution	Employee	Employer
PF Contribution	12% of Basic Salary	3.67% of Basic Salary
Pension Fund		8.33% (up to ₹15,000 salary)

How to Check PF Status?

Employees can check their PF balance using:

📲 UMANG App

📲 EPFO Website (via UAN)

📲 SMS Service (Type EPFOHO UAN and send to 7738299899)

Conclusion

PF registration is a legal requirement and a financial security net for employees. Employers must ensure timely registration and compliance to avoid penalties. If you haven’t registered yet, start the process today to safeguard your employees’ future!

Need help with PF Registration? Drop your queries in the comments! 👇

Disclaimer:

Understanding Notice under Section 142(1) of the Income Tax Act

Posted on February 18, 2025February 21, 2025 by CA Meet Dhrangadhariya

Understanding Notice under Section 142(1) of the Income Tax Act

The Income Tax Act, 1961, is a comprehensive legislation that governs the taxation of income in India. One of the key provisions of this Act is Section 142, which deals with the assessment of income tax. Specifically, Section 142(1) empowers the Assessing Officer to issue a notice to the taxpayer, requiring them to file their income tax return.

What is a Notice under Section 142(1)?

A notice under Section 142(1) is a formal communication issued by the Assessing Officer to the taxpayer, requiring them to file their income tax return. This notice is typically issued when the taxpayer has not filed their income tax return or has not furnished the required documents or information.

Why is a Notice under Section 142(1) issued?

A notice under Section 142(1) is issued for several reasons, including:

1. Non-filing of income tax return: If the taxpayer has not filed their income tax return, the Assessing Officer may issue a notice under Section 142(1) to require them to file their return.
2. Non-furnishing of documents or information: If the taxpayer has not furnished the required documents or information, the Assessing Officer may issue a notice under Section 142(1) to require them to furnish the same.
3. Discrepancies in income tax return: If there are discrepancies in the income tax return filed by the taxpayer, the Assessing Officer may issue a notice under Section 142(1) to require them to explain the discrepancies.

What to do if you receive a Notice under Section 142(1)?

If you receive a notice under Section 142(1), it is essential to take immediate action to avoid any penalties or consequences. Here are some steps you can take:

1. Respond to the notice: Respond to the notice within the specified time limit, typically 15 days from the date of receipt of the notice.
2. Furnish the required documents or information: Furnish the required documents or information, such as financial statements, tax audit reports, or other relevant documents.
3. File your income tax return: If you have not filed your income tax return, file it immediately, along with any necessary documents or information.
4. Seek professional help: If you are unsure about how to respond to the notice or need help with filing your income tax return, seek the advice of a tax professional or chartered accountant.

Conclusion

A notice under Section 142(1) is a formal communication issued by the Assessing Officer to the taxpayer, requiring them to file their income tax return or furnish the required documents or information. If you receive such a notice, it is essential to respond promptly and take necessary action to avoid any penalties or consequences. By understanding the purpose and implications of a notice under Section 142(1), you can ensure that you comply with the requirements of the Income Tax Act and avoid any unnecessary complications.

Disclaimer:

Understanding the Income Tax Slab Rates for AY 2025-26 in India

Posted on February 13, 2025February 21, 2025 by CA Meet Dhrangadhariya

Understanding the Income Tax Slab Rates for AY 2025-26 in India

Introduction The income tax slab rates are an essential component of the financial planning process for individuals and businesses alike. This blog aims to provide an overview of the income tax slabs and their significance.

What are Income Tax Slabs?

Income tax slabs represent the ranges of income that are taxed at different rates. In India, the progressive tax system ensures that higher income is taxed at a higher rate, thereby promoting equitable distribution of income.

Income Tax Slab Rates AY 2025-26:

New Tax Regime:

Tax Slab	Tax Rate
Up to Rs 3 lakh	Nil
Rs 3 lakh – Rs 7 lakh	5%
Rs 7 lakh – Rs 10 lakh	10%
Rs10 lakh – Rs 12 lakh	15%
Rs 12 lakh – Rs 15 lakh	20%
Above Rs 15 lakh	30%

Old Tax Regime:

Income Slabs	Age < 60 years & NRIs	Age of 60 to 80 years (Resident Individuals)	Age above 80 Years (Resident Individuals)
Up to ₹2,50,000	NIL	NIL	NIL
₹2,50,001 – ₹3,00,000	5%	NIL	NIL
₹3,00,001 – ₹5,00,000	5%	5%	NIL
₹5,00,001 – ₹10,00,000	20%	20%	20%
₹10,00,001 and above	30%	30%	30%
Up to ₹2,50,000	NIL	NIL	NIL
₹2,50,001 – ₹3,00,000	5%	NIL	NIL

Importance of Knowing Tax Slab Rates Staying updated with the latest tax slab rates helps in:

Effective financial planning.
Maximizing tax savings through available exemptions.
Avoiding last-minute tax filing hassles.

Conclusion

The income tax slab rates for AY 2025-26 will play a crucial role in shaping the financial decisions of millions of taxpayers in India. Keeping an eye on the Union Budget and related announcements is essential. Stay tuned for updates as we bring you the latest information once the slabs are officially declared.

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Landmark Tax Reform: Income Tax Bill 2025 Introduced in Parliament – 10 Crucial Takeaways

Posted on February 13, 2025February 21, 2025 by CA Meet Dhrangadhariya

The Indian government has introduced the Income Tax Bill, 2025, aiming to modernize and simplify the nation’s tax framework. This proposed legislation seeks to replace the six-decade-old Income Tax Act of 1961, which has become increasingly complex due to numerous amendments over the years.

10 Key Highlights of the Income Tax Bill, 2025:

1. Simplified Language and Structure:
- The bill emphasizes clarity by using straightforward language, eliminating complex legal jargon, and presenting provisions in a more organized manner. It comprises 536 sections and 23 chapters, condensed into 622 pages, compared to the 298 sections and 14 schedules in the existing Act.
2. Introduction of ‘Tax Year’:
- The traditional terms ‘previous year’ and ‘assessment year’ have been replaced with ‘tax year,’ defined as the 12-month period starting from April 1. This change aims to simplify the tax filing process by aligning the period of income earning and assessment.
3. Elimination of Redundant Provisions:
- Obsolete sections and redundant provisions have been removed to streamline the tax code, reducing ambiguities and potential legal disputes. This effort is expected to enhance compliance and foster voluntary tax adherence.
4. Inclusion of Taxpayer’s Charter:
- A new ‘Taxpayer’s Charter’ has been introduced, outlining the rights and obligations of taxpayers. This initiative aims to build trust between taxpayers and the administration, ensuring transparency and fairness in tax proceedings.
5. Simplified Tax Calculation:
- The bill presents tax rates and computations in tabular formats, making it easier for taxpayers to understand their liabilities. Complex terms like ‘notwithstanding’ have been replaced with simpler alternatives such as ‘irrespective,’ further enhancing readability.
6. Capital Gains Taxation:
- Specific provisions have been made for the computation of capital gains, particularly concerning market-linked debentures, to provide clarity and reduce litigation in such cases.
7. Digital Transactions and Virtual Assets:
- The definition of digital transactions has been broadened to encompass virtual digital assets, including cryptocurrencies and non-fungible tokens (NFTs). This inclusion aims to provide clear guidelines on the taxation of emerging digital assets.
8. Empowerment of the Central Board of Direct Taxes (CBDT):
- The CBDT has been granted authority to establish tax administration rules, implement compliance measures, and enforce digital tax monitoring systems without requiring frequent legislative amendments. This move is expected to make tax governance more dynamic and responsive.
9. No Changes to Tax Rates:
- The bill does not propose any alterations to existing tax brackets or rates. The focus remains on simplifying the law and improving compliance without impacting the current tax structure.
10. Implementation Timeline:
- Once enacted, the new Income Tax Bill is expected to come into effect from April 1, 2026, providing taxpayers and professionals ample time to familiarize themselves with the changes.

Conclusion:

The introduction of the Income Tax Bill, 2025, marks a significant step towards a more transparent, efficient, and taxpayer-friendly system. By focusing on simplification and clarity, the government aims to reduce legal disputes, encourage voluntary compliance, and align India’s tax framework with global best practices.

Refer related blog for Income Tax Bill 2025 by clicking here.

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