Under Section 40(b) of the Income Tax Act, a partnership firm can claim a deduction for remuneration paid to partners, but it must satisfy the following conditions: 1️⃣ Remuneration Must Be Paid to "Working Partners" Only Only working partners (actively engaged in business) are eligible for remuneraRead more
Under Section 40(b) of the Income Tax Act, a partnership firm can claim a deduction for remuneration paid to partners, but it must satisfy the following conditions:
1️⃣ Remuneration Must Be Paid to “Working Partners” Only
Only working partners (actively engaged in business) are eligible for remuneration.
Sleeping (non-working) partners are not entitled to remuneration deduction.
2️⃣ Must Be Authorized by the Partnership Deed
The partnership deed must specify the remuneration amount or the calculation method.
If the deed is silent on remuneration, the firm cannot claim a deduction.
3️⃣ Payment Should Be Within the Prescribed Limits
Remuneration should not exceed the maximum limits prescribed under Section 40(b): ✅ Book profit ≤ ₹3 lakh → 90% of book profit or ₹1.5 lakh (whichever is higher) ✅ Book profit > ₹3 lakh → 60% of book profit
4️⃣ Remuneration Must Be Paid to an Individual Partner
If a partner is a company or LLP, remuneration paid to them is not deductible.
5️⃣ The Partnership Deed Must Be in Effect
The partnership deed should be signed and in force before the end of the financial year.
If the deed is amended to change remuneration, the amendment must apply prospectively, not retrospectively.
6️⃣ Firm Must Be Assessed as a Partnership Firm
The firm must be assessed as a partnership firm under the Income Tax Act.
Firms taxed under presumptive taxation schemes (Section 44AD/44ADA) cannot claim this deduction.
✅ Conclusion: To claim a deduction for partner remuneration, ensure it is paid to a working partner, authorized in the deed, within Section 40(b) limits, and in a firm recognized as a partnership under the Income Tax Act.
The remuneration (salary, bonus, commission, etc.) paid to partners in a partnership firm is allowed as a deduction under Section 40(b) of the Income Tax Act, but only within prescribed limits based on the book profit of the firm. Maximum Allowable Remuneration (as per Section 40(b)) ✅ If Book ProfiRead more
The remuneration (salary, bonus, commission, etc.) paid to partners in a partnership firm is allowed as a deduction under Section 40(b) of the Income Tax Act, but only within prescribed limits based on the book profit of the firm.
Maximum Allowable Remuneration (as per Section 40(b))
✅ If Book Profit is ₹3 lakh or less → 90% of book profit or ₹1.5 lakh (whichever is higher)
✅ If Book Profit is above ₹3 lakh → 60% of book profit
🔹 Important Conditions:
The remuneration must be paid only to working partners.
It must be authorized in the partnership deed.
The remuneration should be within the prescribed limit; any excess is disallowed as an expense.
📌 Example Calculation:
If a firm’s book profit is ₹2 lakh, the max allowable partner remuneration = ₹1.5 lakh (since it’s higher than 90% of ₹2 lakh).
If a firm’s book profit is ₹10 lakh, the max allowable remuneration = (90% of ₹3 lakh) + (60% of ₹7 lakh) = ₹2.7 lakh + ₹4.2 lakh = ₹6.9 lakh.
✅ Conclusion: Partner remuneration is deductible only if it follows Section 40(b) rules. If it exceeds limits, the extra amount is disallowed for tax purposes.
Penalty codes 11C and N11C serve different purposes under the Income Tax Act: 11C is used for general penalties imposed by the Income Tax Department under various sections, such as under-reporting of income (Section 270A) or concealment of income (Section 271(1)(c)). If you have received a penalty dRead more
Penalty codes 11C and N11C serve different purposes under the Income Tax Act:
11C is used for general penalties imposed by the Income Tax Department under various sections, such as under-reporting of income (Section 270A) or concealment of income (Section 271(1)(c)). If you have received a penalty demand notice, you should use Code 11C when making the payment.
N11C is specifically for late filing fees under Section 234F. If you file your Income Tax Return (ITR) after the due date, you will need to pay a penalty of ₹1,000 (if total income < ₹5 lakh) or ₹5,000 (if total income > ₹5 lakh). For this, use Code N11C while making the payment through the Income Tax e-filing portal.
✅ Conclusion: If you’re paying a late filing fee for delayed ITR submission, use N11C. For other penalties issued by the tax department, use 11C. Always verify the payment details before proceeding.
Whether you need to deduct TDS on the reimbursement of expenditure to your consultant depends on the nature of the bill and the agreement with the consultant. Here’s how to determine it: 1️⃣ If the Reimbursement is Part of the Professional Fee: If the consultant has raised a single invoice coveringRead more
Whether you need to deduct TDS on the reimbursement of expenditure to your consultant depends on the nature of the bill and the agreement with the consultant. Here’s how to determine it:
1️⃣ If the Reimbursement is Part of the Professional Fee:
If the consultant has raised a single invoice covering both professional fees and expenses, then TDS must be deducted on the total amount as per Section 194J (for professional services @10%) or 194C (for contracts @1%/2%), depending on the nature of service.
2️⃣ If the Reimbursement is Separate & on Actuals:
If the consultant has provided original bills on the name of your entity (e.g., travel, hotel, or material expenses) and is merely getting reimbursed, then TDS is not applicable since these are not part of the consultant’s income.
If the bills are in the consultant’s name, then deduct the TDS u/s 194R with 10% if reimbursement is more than 20000.
3️⃣ Best Practices:
✅ Ask the consultant to bill separately for professional fees and reimbursement. ✅ Maintain proper documentation (supporting invoices) to justify the non-deduction of TDS in case of scrutiny. ✅ If unsure, consult a tax expert to ensure compliance.
The number of bank accounts an individual should open depends on their financial goals, income sources, and spending habits. Here’s a practical approach: 1️⃣ Primary Savings Account (Must-Have) Used for salary credits, savings, and daily transactions. Choose a bank with good digital banking servicesRead more
The number of bank accounts an individual should open depends on their financial goals, income sources, and spending habits. Here’s a practical approach:
1️⃣ Primary Savings Account (Must-Have)
Used for salary credits, savings, and daily transactions.
Choose a bank with good digital banking services and low fees.
Helps separate funds for specific purposes (e.g., travel, emergency fund, investments).
Can be in a different bank to avoid overspending.
3️⃣ Investment accounts (For Wealth Growth)
Linked to mutual funds, stock market, or fixed deposits.
Recommended if you actively invest.
4️⃣ Business or Freelance Accounts (If Self-Employed)
Keeps personal and business expenses separate.
Required for tax filing and accounting.
5️⃣ Joint Account (If Needed)
Useful for couples, aging parents, or dependents.
Ensures easy fund access for shared expenses.
💡 Best Practice: ✅ 2-3 accounts are sufficient for most individuals. ✅ Avoid multiple accounts unless necessary (to prevent maintenance fees and complexity).
What is a Subsidiary? A subsidiary company is defined under Section 2(87) of the Companies Act, 2013 as a company where another company (holding company) meets either of the following conditions: ✅ Owns more than 50% of its total share capital; or ✅ Controls the composition of its Board of DirectorsRead more
What is a Subsidiary?
A subsidiary company is defined under Section 2(87) of the Companies Act, 2013 as a company where another company (holding company) meets either of the following conditions:
✅ Owns more than 50% of its total share capital; or
✅ Controls the composition of its Board of Directors.
The parent (holding) company has significant control over the subsidiary’s operations, decision-making, and financial reporting.
What is a Joint Venture (JV)?
A joint venture is a business partnership where two or more companies collaborate for a common goal. Although the Companies Act, 2013 does not explicitly define a JV, it is generally understood as a strategic alliance where parties:
✔️ Contribute capital, resources, and expertise
✔️ Share risks and profits
✔️ Make joint decisions as per the JV agreement
A JV can be structured as a company, partnership, or contractual arrangement, depending on the agreement between the parties.
Key Differences Between a Subsidiary and a Joint Venture
Factor
Subsidiary
Joint Venture
Legal Definition
Defined under Section 2(87) of the Companies Act, 2013.
Not explicitly defined under the Companies Act but recognized under business laws.
Ownership & Control
Parent company holds >50% ownership and exercises control.
Ownership is shared as per the JV agreement.
Legal Structure
A separate legal entity from the holding company.
Can be a company, partnership, or contractual entity.
Financial Consolidation
Financial statements must be consolidated with the parent company as per Ind AS 110.
Usually accounted for using the equity method under Ind AS 28.
Liability
The subsidiary is legally separate, but the parent may be liable in certain cases.
Liability is shared based on the JV agreement.
Decision-Making
The holding company has full control over operations and management.
Decisions are made jointly as per the JV agreement.
Purpose
Formed for long-term expansion under the holding company.
Usually created for a specific project or business collaboration.
Dissolution
Exists indefinitely unless sold, merged, or wound up.
Can be terminated as per the agreement or after project completion.
Real-Life Examples
🚗 Subsidiary Example: Maruti Suzuki India Ltd. is a subsidiary of Suzuki Motor Corporation, Japan, where Suzuki holds a majority stake and controls its operations.
🔩 Joint Venture Example: Tata Steel and Nippon Steel formed a JV in India to manufacture high-quality steel, sharing expertise, investment, and control.
✅ LTCG up to ₹1 lakh – Tax-free (Section 112A)
✅ LTCG above ₹1 lakh – Taxed at 10% (without indexation)
✅ LTCG up to ₹1.25 lakh – Now tax-free
✅ LTCG above ₹1.25 lakh – Now taxed at 12.5% (without indexation)
❌ No Indexation Allowed
Unlisted Shares (Holding > 24 Months)
✅ LTCG taxed at 20% with indexation (Section 112)
✅ Non-residents taxed at 10% (without indexation)
✅ No change in tax for residents (still 20% with indexation)
✅ Non-residents now taxed at 12.5% (without indexation)
✅ Yes, for residents
Debt-Oriented Mutual Funds (Holding > 36 Months)
✅ LTCG taxed at 20% with indexation (before April 1, 2023)
🚨 After April 1, 2023 – No indexation, taxed as per slab rate
✅ No change – Gains taxed as per income tax slab rate (without indexation)
❌ No Indexation (since April 1, 2023)
Real Estate (Land & Building) (Holding > 24 Months)
✅ LTCG taxed at 20% with indexation
✅ Exemptions available under Sections 54 & 54F if reinvested in property
✅ No change – Still 20% with indexation
✅ Yes
Gold & Other Capital Assets (Holding > 36 Months)
✅ LTCG taxed at 20% with indexation
✅ No change – Still 20% with indexation
✅ Yes
Cryptocurrency (Virtual Digital Assets – VDAs)
✅ LTCG taxed at 30% (without indexation or deductions)
✅ No change – Still taxed at 30% without indexation
❌ No Indexation Allowed
🔹 Key Takeaways from Budget 2025
✅ Indexation rules remain unchanged – It is still available for unlisted shares, real estate, and gold, but not for listed shares, debt funds, or cryptocurrencies.
✅ LTCG tax on listed equity shares & mutual funds has increased from 10% to 12.5% (without indexation).
✅ Threshold for tax-free LTCG on listed shares has increased from ₹1 lakh to ₹1.25 lakh.
✅ Non-residents (including FIIs) now pay 12.5% instead of 10% on LTCG from unlisted shares.
✅ No impact on taxation of debt mutual funds (still taxed at slab rate without indexation).
The Union Budget 2025 has introduced key modifications to the taxation of equity shares and equity-oriented mutual funds. The following table summarizes the before and after impact of the changes: Comparison of Capital Gains Taxation Before and After Budget 2025 Type Earlier After Budget 2025 Short-Read more
The Union Budget 2025 has introduced key modifications to the taxation of equity shares and equity-oriented mutual funds. The following table summarizes the before and after impact of the changes:
Comparison of Capital Gains Taxation Before and After Budget 2025
Type
Earlier
After Budget 2025
Short-Term Capital Gains (STCG) – Holding Period ≤ 12 Months
· Listed Shares (STT Paid): Taxed at 15% under Section 111A.
· Unlisted Shares: Taxed as per the individual’s income tax slab rate.
No Change
Long-Term Capital Gains (LTCG) – Holding Period > 12 Months
· Listed Shares (STT Paid):
– Gains up to ₹1 lakh per financial year are tax-free under Section 112A.
– Gains exceeding ₹1 lakh are taxed at 10% (without indexation).
· Unlisted Shares:
– Taxed at 20% with indexation benefit under Section 112.
· For non-residents, LTCG on unlisted shares is taxed at 10% (without indexation).
· New Rate (Effective July 23, 2024): 12.5% on LTCG exceeding ₹1 lakh.
· This change applies to the sale of listed equity shares and equity-oriented mutual funds where Securities Transaction Tax (STT) is paid.
· The LTCG tax rate for non-residents, including FIIs, has also been increased from 10% to 12.5%, aligning with resident taxpayers.
Indexation Benefit
· Unlisted Shares: Indexation allowed under Section 112.
· No change announced for indexation benefits (confirmation awaited in the Finance Act).
Rebate Under Section 87A
· Taxpayers with net taxable income up to ₹7 lakh (under the new tax regime) could claim a full tax rebate under Section 87A.
· Rebate is no longer available for short-term and long-term capital gains from equity shares, making all gains fully taxable.
Exemption Under Section 112A
· LTCG up to ₹1 lakh per financial year is exempt from tax.
· Exemption limit increased to ₹1.25 lakh per financial year.
Additional Tax Considerations
· Surcharge: Applies if total income exceeds ₹50 lakh.
· Cess: 4% Health & Education Cess on total tax.
No Change
Grandfathering Rule for LTCG
· For shares purchased before 31st Jan 2018, the acquisition cost is adjusted to the highest market price on that date to limit taxable gains.
No Change
Key Takeaways from Budget 2025
✅ Higher LTCG Tax Rate: Increased from 10% to 12.5% for gains exceeding ₹1 lakh.
✅ Higher LTCG Exemption Limit: Increased from ₹1 lakh to ₹1.25 lakh per financial year.
✅ No More Rebate (87A) on Capital Gains: Investors can no longer claim this benefit.
✅ Impact on Foreign Investors: FIIs and non-residents now face 12.5% LTCG tax, up from 10%.
✅ Short-Term Capital Gains Tax (15%) Remains Unchanged.
The Finance Act, 2023, introduced a significant amendment to Section 115A of the Income Tax Act, impacting non-residents earning royalties and fees for technical services (FTS) in India. Key Changes: Increased Tax Rate: The withholding tax rate on royalties and FTS for non-residents has been raisedRead more
The Finance Act, 2023, introduced a significant amendment to Section 115A of the Income Tax Act, impacting non-residents earning royalties and fees for technical services (FTS) in India.
Key Changes:
Increased Tax Rate: The withholding tax rate on royalties and FTS for non-residents has been raised from 10% to 20%, effective April 1, 2023. This means payments made to non-residents for these services will now attract a higher tax burden, along with applicable cess and surcharge.
Impact on Non-Resident Taxpayers: Earlier, non-residents were not required to file tax returns in India if their income consisted only of dividends, royalties, FTS, or interest and if tax was withheld at the prescribed rate. However, due to the increased tax rate, many non-residents may now prefer to claim benefits under the Double Taxation Avoidance Agreement (DTAA) to reduce their tax liability.
Additional Compliance for DTAA Benefits: Non-residents seeking DTAA benefits must comply with additional tax filing requirements in India, including:
Obtaining a Permanent Account Number (PAN)
Furnishing a Tax Residency Certificate (TRC)
Submitting a No Permanent Establishment Declaration
Electronically filing Form 10F
Mandatory Tax Return Filing: Non-residents availing DTAA benefits are now required to file income tax returns in India.
Basic Documents ✅ PAN Card of the Partnership Firm – The firm must have a separate PAN card issued by the Income Tax Department. ✅ Partnership Deed – A notarized or registered partnership deed is required, mentioning the firm’s name, partners, and profit-sharing ratio. ✅ PAN Cards of All Partners –Read more
Basic Documents
✅ PAN Card of the Partnership Firm – The firm must have a separate PAN card issued by the Income Tax Department.
✅ Partnership Deed – A notarized or registered partnership deed is required, mentioning the firm’s name, partners, and profit-sharing ratio.
✅ PAN Cards of All Partners – Each partner must submit a copy of their PAN card.
Identity & Address Proof of Partners
Each partner must provide:
✅ Aadhaar Card (Mandatory)
✅ Passport / Voter ID / Driving License (Any one as additional proof)
✅ Latest Passport-Size Photograph
Business Address Proof (Any one of the following)
✅ Electricity Bill / Water Bill / Property Tax Receipt (Not older than 2 months)
✅ Rent Agreement (If Rented Property) – An agreement between the firm and the property owner.
✅ NOC from Property Owner – A No Objection Certificate (NOC) from the property owner (if rented/leased).
Bank Account Proof
✅ Cancelled Cheque or Bank Statement – A firm’s bank account statement or a cancelled cheque displaying the firm’s name, account number, and IFSC code.
Authorized Signatory Documents
✅ Authorization Letter – If a specific partner is appointed as the authorized signatory, an authorization letter is required.
Digital Signature Certificate (For LLPs & Large Firms)
✅ DSC (Digital Signature Certificate) – If the firm is an LLP (Limited Liability Partnership), a DSC of the authorized partner is required for GST filing.
Key Points to Remember:
📌 All documents should be clear and self-attested.
📌 Ensure the mobile number & email ID are active for OTP verification.
📌 Keep soft copies of the documents ready for online submission
What are the conditions of section 40b for getting deduction of remuneration in a firm?
Under Section 40(b) of the Income Tax Act, a partnership firm can claim a deduction for remuneration paid to partners, but it must satisfy the following conditions: 1️⃣ Remuneration Must Be Paid to "Working Partners" Only Only working partners (actively engaged in business) are eligible for remuneraRead more
Under Section 40(b) of the Income Tax Act, a partnership firm can claim a deduction for remuneration paid to partners, but it must satisfy the following conditions:
1️⃣ Remuneration Must Be Paid to “Working Partners” Only
2️⃣ Must Be Authorized by the Partnership Deed
3️⃣ Payment Should Be Within the Prescribed Limits
✅ Book profit ≤ ₹3 lakh → 90% of book profit or ₹1.5 lakh (whichever is higher)
✅ Book profit > ₹3 lakh → 60% of book profit
4️⃣ Remuneration Must Be Paid to an Individual Partner
5️⃣ The Partnership Deed Must Be in Effect
6️⃣ Firm Must Be Assessed as a Partnership Firm
✅ Conclusion:
See lessTo claim a deduction for partner remuneration, ensure it is paid to a working partner, authorized in the deed, within Section 40(b) limits, and in a firm recognized as a partnership under the Income Tax Act.
What is the limit of remuneration of partner as per Income Tax act?
The remuneration (salary, bonus, commission, etc.) paid to partners in a partnership firm is allowed as a deduction under Section 40(b) of the Income Tax Act, but only within prescribed limits based on the book profit of the firm. Maximum Allowable Remuneration (as per Section 40(b)) ✅ If Book ProfiRead more
The remuneration (salary, bonus, commission, etc.) paid to partners in a partnership firm is allowed as a deduction under Section 40(b) of the Income Tax Act, but only within prescribed limits based on the book profit of the firm.
Maximum Allowable Remuneration (as per Section 40(b))
✅ If Book Profit is ₹3 lakh or less → 90% of book profit or ₹1.5 lakh (whichever is higher)
✅ If Book Profit is above ₹3 lakh → 60% of book profit
🔹 Important Conditions:
📌 Example Calculation:
✅ Conclusion:
See lessPartner remuneration is deductible only if it follows Section 40(b) rules. If it exceeds limits, the extra amount is disallowed for tax purposes.
What is the penalty code no. 11C and N11C under Income Tax Act? Which code is used for payment of penalty on late filing of ITR?
Penalty codes 11C and N11C serve different purposes under the Income Tax Act: 11C is used for general penalties imposed by the Income Tax Department under various sections, such as under-reporting of income (Section 270A) or concealment of income (Section 271(1)(c)). If you have received a penalty dRead more
Penalty codes 11C and N11C serve different purposes under the Income Tax Act:
11C is used for general penalties imposed by the Income Tax Department under various sections, such as under-reporting of income (Section 270A) or concealment of income (Section 271(1)(c)). If you have received a penalty demand notice, you should use Code 11C when making the payment.
N11C is specifically for late filing fees under Section 234F. If you file your Income Tax Return (ITR) after the due date, you will need to pay a penalty of ₹1,000 (if total income < ₹5 lakh) or ₹5,000 (if total income > ₹5 lakh). For this, use Code N11C while making the payment through the Income Tax e-filing portal.
✅ Conclusion: If you’re paying a late filing fee for delayed ITR submission, use N11C. For other penalties issued by the tax department, use 11C. Always verify the payment details before proceeding.
See lessI have got a bill of for reimbursement of expenditure from my consultant, do I need to deduct TDS on the same?
Whether you need to deduct TDS on the reimbursement of expenditure to your consultant depends on the nature of the bill and the agreement with the consultant. Here’s how to determine it: 1️⃣ If the Reimbursement is Part of the Professional Fee: If the consultant has raised a single invoice coveringRead more
Whether you need to deduct TDS on the reimbursement of expenditure to your consultant depends on the nature of the bill and the agreement with the consultant. Here’s how to determine it:
1️⃣ If the Reimbursement is Part of the Professional Fee:
2️⃣ If the Reimbursement is Separate & on Actuals:
3️⃣ Best Practices:
✅ Ask the consultant to bill separately for professional fees and reimbursement.
See less✅ Maintain proper documentation (supporting invoices) to justify the non-deduction of TDS in case of scrutiny.
✅ If unsure, consult a tax expert to ensure compliance.
How much bank account should I open as an individual?
The number of bank accounts an individual should open depends on their financial goals, income sources, and spending habits. Here’s a practical approach: 1️⃣ Primary Savings Account (Must-Have) Used for salary credits, savings, and daily transactions. Choose a bank with good digital banking servicesRead more
The number of bank accounts an individual should open depends on their financial goals, income sources, and spending habits. Here’s a practical approach:
1️⃣ Primary Savings Account (Must-Have)
2️⃣ Secondary Savings Accounts (For Budgeting & Goals)
3️⃣ Investment accounts (For Wealth Growth)
4️⃣ Business or Freelance Accounts (If Self-Employed)
5️⃣ Joint Account (If Needed)
💡 Best Practice:
See less✅ 2-3 accounts are sufficient for most individuals.
✅ Avoid multiple accounts unless necessary (to prevent maintenance fees and complexity).
What is the difference between a subsidiary and joint venture?
What is a Subsidiary? A subsidiary company is defined under Section 2(87) of the Companies Act, 2013 as a company where another company (holding company) meets either of the following conditions: ✅ Owns more than 50% of its total share capital; or ✅ Controls the composition of its Board of DirectorsRead more
What is a Subsidiary?
A subsidiary company is defined under Section 2(87) of the Companies Act, 2013 as a company where another company (holding company) meets either of the following conditions:
✅ Owns more than 50% of its total share capital; or
✅ Controls the composition of its Board of Directors.
The parent (holding) company has significant control over the subsidiary’s operations, decision-making, and financial reporting.
What is a Joint Venture (JV)?
A joint venture is a business partnership where two or more companies collaborate for a common goal. Although the Companies Act, 2013 does not explicitly define a JV, it is generally understood as a strategic alliance where parties:
✔️ Contribute capital, resources, and expertise
✔️ Share risks and profits
✔️ Make joint decisions as per the JV agreement
A JV can be structured as a company, partnership, or contractual arrangement, depending on the agreement between the parties.
Key Differences Between a Subsidiary and a Joint Venture
Real-Life Examples
🚗 Subsidiary Example:
Maruti Suzuki India Ltd. is a subsidiary of Suzuki Motor Corporation, Japan, where Suzuki holds a majority stake and controls its operations.
🔩 Joint Venture Example:
See lessTata Steel and Nippon Steel formed a JV in India to manufacture high-quality steel, sharing expertise, investment, and control.
What is the change in capital gain tax as per finance budget 2025?
Capital Gains Taxation: Before & After Budget 2025 Asset Type Earlier (Before Budget 2025) After Budget 2025 Indexation Allowed? Listed Equity Shares & Equity-Oriented Mutual Funds (Holding > 12 Months) ✅ LTCG up to ₹1 lakh – Tax-free (Section 112A) ✅ LTCG above ₹1 lakh – Taxed at 10% (wiRead more
Capital Gains Taxation: Before & After Budget 2025
✅ LTCG above ₹1 lakh – Taxed at 10% (without indexation)
✅ LTCG above ₹1.25 lakh – Now taxed at 12.5% (without indexation)
✅ Non-residents taxed at 10% (without indexation)
✅ Non-residents now taxed at 12.5% (without indexation)
🚨 After April 1, 2023 – No indexation, taxed as per slab rate
✅ Exemptions available under Sections 54 & 54F if reinvested in property
🔹 Key Takeaways from Budget 2025
✅ Indexation rules remain unchanged – It is still available for unlisted shares, real estate, and gold, but not for listed shares, debt funds, or cryptocurrencies.
See less✅ LTCG tax on listed equity shares & mutual funds has increased from 10% to 12.5% (without indexation).
✅ Threshold for tax-free LTCG on listed shares has increased from ₹1 lakh to ₹1.25 lakh.
✅ Non-residents (including FIIs) now pay 12.5% instead of 10% on LTCG from unlisted shares.
✅ No impact on taxation of debt mutual funds (still taxed at slab rate without indexation).
How much tax is applicable on sale of equity shares?
The Union Budget 2025 has introduced key modifications to the taxation of equity shares and equity-oriented mutual funds. The following table summarizes the before and after impact of the changes: Comparison of Capital Gains Taxation Before and After Budget 2025 Type Earlier After Budget 2025 Short-Read more
The Union Budget 2025 has introduced key modifications to the taxation of equity shares and equity-oriented mutual funds. The following table summarizes the before and after impact of the changes:
Comparison of Capital Gains Taxation Before and After Budget 2025
· Unlisted Shares: Taxed as per the individual’s income tax slab rate.
– Gains up to ₹1 lakh per financial year are tax-free under Section 112A.
– Gains exceeding ₹1 lakh are taxed at 10% (without indexation).
· Unlisted Shares:
– Taxed at 20% with indexation benefit under Section 112.
· For non-residents, LTCG on unlisted shares is taxed at 10% (without indexation).
· This change applies to the sale of listed equity shares and equity-oriented mutual funds where Securities Transaction Tax (STT) is paid.
· The LTCG tax rate for non-residents, including FIIs, has also been increased from 10% to 12.5%, aligning with resident taxpayers.
· Cess: 4% Health & Education Cess on total tax.
Key Takeaways from Budget 2025
✅ Higher LTCG Tax Rate: Increased from 10% to 12.5% for gains exceeding ₹1 lakh.
See less✅ Higher LTCG Exemption Limit: Increased from ₹1 lakh to ₹1.25 lakh per financial year.
✅ No More Rebate (87A) on Capital Gains: Investors can no longer claim this benefit.
✅ Impact on Foreign Investors: FIIs and non-residents now face 12.5% LTCG tax, up from 10%.
✅ Short-Term Capital Gains Tax (15%) Remains Unchanged.
What are the new changes in Section 115a of Income Tax Act?
The Finance Act, 2023, introduced a significant amendment to Section 115A of the Income Tax Act, impacting non-residents earning royalties and fees for technical services (FTS) in India. Key Changes: Increased Tax Rate: The withholding tax rate on royalties and FTS for non-residents has been raisedRead more
The Finance Act, 2023, introduced a significant amendment to Section 115A of the Income Tax Act, impacting non-residents earning royalties and fees for technical services (FTS) in India.
Key Changes:
- Increased Tax Rate: The withholding tax rate on royalties and FTS for non-residents has been raised from 10% to 20%, effective April 1, 2023. This means payments made to non-residents for these services will now attract a higher tax burden, along with applicable cess and surcharge.
- Impact on Non-Resident Taxpayers: Earlier, non-residents were not required to file tax returns in India if their income consisted only of dividends, royalties, FTS, or interest and if tax was withheld at the prescribed rate. However, due to the increased tax rate, many non-residents may now prefer to claim benefits under the Double Taxation Avoidance Agreement (DTAA) to reduce their tax liability.
- Additional Compliance for DTAA Benefits: Non-residents seeking DTAA benefits must comply with additional tax filing requirements in India, including:
- Obtaining a Permanent Account Number (PAN)
- Furnishing a Tax Residency Certificate (TRC)
- Submitting a No Permanent Establishment Declaration
- Electronically filing Form 10F
- Mandatory Tax Return Filing: Non-residents availing DTAA benefits are now required to file income tax returns in India.
See lessWhat are the documents required to apply for GST documents registration for a partnership firm?
Basic Documents ✅ PAN Card of the Partnership Firm – The firm must have a separate PAN card issued by the Income Tax Department. ✅ Partnership Deed – A notarized or registered partnership deed is required, mentioning the firm’s name, partners, and profit-sharing ratio. ✅ PAN Cards of All Partners –Read more
✅ PAN Card of the Partnership Firm – The firm must have a separate PAN card issued by the Income Tax Department.
✅ Partnership Deed – A notarized or registered partnership deed is required, mentioning the firm’s name, partners, and profit-sharing ratio.
✅ PAN Cards of All Partners – Each partner must submit a copy of their PAN card.
Each partner must provide:
✅ Aadhaar Card (Mandatory)
✅ Passport / Voter ID / Driving License (Any one as additional proof)
✅ Latest Passport-Size Photograph
✅ Electricity Bill / Water Bill / Property Tax Receipt (Not older than 2 months)
✅ Rent Agreement (If Rented Property) – An agreement between the firm and the property owner.
✅ NOC from Property Owner – A No Objection Certificate (NOC) from the property owner (if rented/leased).
✅ Cancelled Cheque or Bank Statement – A firm’s bank account statement or a cancelled cheque displaying the firm’s name, account number, and IFSC code.
✅ Authorization Letter – If a specific partner is appointed as the authorized signatory, an authorization letter is required.
✅ DSC (Digital Signature Certificate) – If the firm is an LLP (Limited Liability Partnership), a DSC of the authorized partner is required for GST filing.
Key Points to Remember:
📌 All documents should be clear and self-attested.
See less📌 Ensure the mobile number & email ID are active for OTP verification.
📌 Keep soft copies of the documents ready for online submission