Direct taxes now account for 58.5% of total tax collections, with non-corporate taxes the dominant contributor. In indirect taxes, GST is now the most buoyant revenue source. This suggests an improvement in the progressivity of the tax system, explain Richa Sawhney & Manoj Mishra

l Direct tax collection trends
INDIA’S TAX COLLECTIONS have exhibited a sustained upward trajectory over the past decade, increasing from Rs 12.45 lakh crore in FY15 to around Rs 44 lakh crore by FY25. While indirect taxes accounted for a relatively higher share of total tax revenues in FY17 and FY21, this pattern has reversed in recent years, with direct taxes’ share of total tax revenues being nearly 58.5% in FY25.

From a distributional perspective, this shift is significant as direct taxes are inherently progressive, as they are linked to income and profitability, whereas indirect taxes are considered to be regressive, disproportionately affecting lower-income households through consumption. The rising share of direct taxes suggests an improvement in the progressivity of the tax system, with positive implications for equity and the overall incidence of taxation.

Many Indians working overseas and earning their salaries abroad have to pay due taxes in that foreign country, be it Singapore, or the United States of America (USA). In cases, where a salaried employee has already paid taxes there, India offers a foreign tax credit (FTC). To take advantage of this, you need to submit Form 67 as per Rule 128 of the Income Tax Rules, 1962.

Although you must file Form 67 before the income tax return (ITR) filing deadline to receive the FTC, missing this deadline can lead to tax disputes. Some taxpayers have successfully contested these disputes in ITAT, but it's best to file Form 67 within the due date to secure the FTC credit in India and avoid double taxation.
However, under the draft Income Tax Rules, 2026, the rules have changed for Form 67 (re-numbered to Form 44 now). The draft income tax rules have not yet been approved by the Parliament.

Here comes a hitch for the taxman. Deported fugitives, truant bottowers slapped with lookout notices, extradited accused or even approvers singing like a canary before law enforcement agencies the long cast of characters who are unable to fly out of the country-cannot be readily forced to disclose their foreign bank accounts, companies, and properties.

This stems from a Delhi High Court order that has stayed the tax office's demand that Rajiv Saxena, the Dubaibased businessman who was extradited to India in January 2019 in connection Forced Stay? No BMA, says Court I-T Dept can't blindly impose law on involuntary residents' in India to get foreign asset info with the AgustaWestland case, must share the details of his foreign assets.
With this, the income tax authorities cannot blindly invoke the Black Money Act (BMA) simply because a person has unwillingly become a 'resident'-following his involuntary stay in India beyond 181 days. Under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, which came into effect on July 1, 2015, all residents must declare their overseas assets in the annual tax return.

The Income Tax Department has released the Draft Income Tax Rules, 2026 under the proposed new Income Tax framework, outlining changes to how Permanent Account Number (PAN) requirements apply to property transactions.

One of the key proposals is to raise the reporting threshold for mandatory PAN disclosure in immovable property deals.

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If notified, the changes are expected to take effect from April 1.

What is changing?

Currently, PAN must be furnished for the purchase or sale of immovable property—such as a house or plot—if the transaction value exceeds Rs 10 lakh.

The draft rules propose increasing this limit to Rs 20 lakh. If adopted, property transactions below Rs 20 lakh would not require mandatory PAN disclosure, while transactions at or above Rs 20 lakh would continue to fall within the reporting requirement.

A Dubai-based NRI invested Rs 2 crore in a Mumbai property but did not file an Income Tax Return (ITR) in India for that year, as he had no taxable income here. The Income Tax Department treated the investment as “unexplained money” and reopened his case.

However, the Income Tax Appellate Tribunal (ITAT), Mumbai, ruled in his favour, making it an important case study for NRIs investing in India.

This case highlights a simple but critical principle: foreign salary savings remitted through proper banking channels cannot be treated as unexplained income in India merely because no ITR was filed.

On February 4, 2026, the Income Tax Appellate Tribunal (ITAT) Delhi ruled that a gift of property made under a Hindu family settlement does not fall under the definition of transfer and, therefore, is not subject to taxation under Section 56(2)(vii)(b) as deemed income

ITAT delivered this judgement in a case filed by Smt Aggarwal, who has challenged a tax notice issued by the Income Tax (1-T) department. The tax department had flagged her case after reviewing her file and ITR (Income Tax Return), in which she had declared an income of Rs 3,40,540. The review disclosed that she had received a property valued at Rs 33,43,440 by way of a gift deed. The tax department issued a notice stating that the donor did not qualify as "specified relatives" under Section 56(2) of the Income-tax Act, 1961. thereby making the gift taxable.
She argued that since she received the property as part of a family settlement deal, its value is not taxable. However, the income tax assessing officer (AO) rejected her argument and added the value of the property to her income and made her liable to pay tax on this additional income.

The proposed changes to the Minimum Alternate Tax (MAT) regime, announced in the Union Budget for FY27, will significantly impact companies in capital-intensive sectors such as infrastructure, Special Economic Zone (SEZ) units and tax-holiday startups, analysts said. Electronics manufacturing units, power and renewables and automobile firms will also require to modify their tax planning.

The government proposed a major overhaul of MAT to simplify the corporate tax structure and encourage companies to shift to the concessional 22% corporate tax regime.

The key changes include reducing the MAT rate from 15% to 14% on book profits, treating MAT as a final tax under the old regime with no new credit accumulation from April 1, 2026, and restricting set-off of existing MAT credits (accumulated up to March 31, 2026) to 25% of tax liability per year only for companies transitioning to the new regime.

Cash gifts from relatives are generally tax-free under the Income Tax Act. But a recent case discussed by tax advisory platform TaxBuddy in a social media thread shows how exemption can fail without proper documentation. In this matter, Rs 10.43 lakh received as cash gifts on a marriage anniversary was ultimately taxed after the taxpayer failed to provide basic details of the donors.

According to the thread shared by TaxBuddy, the taxpayer had celebrated his 10th marriage anniversary and received multiple cash gifts from family members and relatives. Individual amounts ranged from Rs 2,100 to Rs 11,000, and the total cash deposited in his bank account came to Rs 10,43,998.

Since gifts from specified relatives are exempt under income tax law, the taxpayer claimed the amount was not taxable and described them as customary gifts received during a social function.

During the recent visit of the France President to India, the Indian Government and the Government of the French Republic have signed a Protocol amending the India-France Double Taxation Avoidance Convention, signed on 29 September 1992 ('India-France DTAC').

The Amending Protocol was signed by Ravi Agrawal, Chairperson, Central Board of Direct Taxes, Government of India, and Thierry Mathou, Ambassador of France to India, on behalf of their respective Governments.

The Ministry of Finance released a statement regarding that. It stated, "The Amending Protocol provides full taxing rights in respect of capital gains arising from sale of shares of a company, to the jurisdiction where such company is a resident."

If you are paying rent to your spouse, parents or any other family member to claim house rent allowance (HRA) under the old tax regime, you may have to soon disclose your relationship with your landlord under the changes proposed to new tax laws to verify the legitimacy of the claim.

The draft income-tax rules, 2026 requires salaried individuals to disclose their “relationship with the landlord” in Form 124, where the aggregate rent paid during the tax year exceeds Rs 1 lakh.

Tax experts clarify that draft rule does not bar tenants from paying rent to family members. Salaried individuals can continue to claim HRA for rent paid to parents, spouses or other relatives, provided the arrangement is genuine.

A routine inspection of biryani restaurants in Hyderabad has unexpectedly exposed what officials now describe as one of the largest suspected tax evasion rackets in the country, with concealed sales estimated at nearly Rs 70,000 crore. What began as a local compliance check has expanded into a nationwide investigation spanning thousands of eateries and multiple states.

The probe was initiated after officers of the Income Tax Department noticed inconsistencies in the reported revenues of several popular biryani outlets in Hyderabad. Initial surveys revealed significant gaps between actual customer footfall and the turnover declared in tax filings. These discrepancies prompted a deeper forensic examination of billing practices used by the restaurants, reports said.

Investigators soon identified a commonly used restaurant billing software as a key link. The platform, which services over one and a half lakh restaurants across India, was found to allow post-transaction manipulation of billing data. Tax officials accessed backend records and began analysing nearly 60 terabytes of data covering six financial years. The exercise revealed a systematic pattern of deleting or altering bills after payments were received, effectively erasing large volumes of sales from official records before tax returns were filed.

Many salaried employees with hefty salaries are getting income tax Nudge intimations, prompting them to correct errors like undisclosed property income, crypto gains, ESOP, and more.
The Income Tax Department is giving a last chance to these employees to fix their mistakes voluntarily before they take strict action against those with undisclosed incomes.

Also the Income Tax Department has identified a pattern where the same chartered accountant is being used by several taxpayers to make donations to a single political party, and various charitable institutions. As a result, the tax department has said they will initiate separate actions against those CAs as well.
As reported by ET (Anuradha Shukla), tax authorities have issued notices to these individuals, including CEOs and managing directors of multinational companies, urging them to rectify the anomalies before penalties are imposed, according to officials.

Leave Travel Concession (LTC) is one of the most popular tax benefits available to salaried employees. With the new Income Tax Act, 2025 set to come into force from April 1, 2026, many employees are wondering whether LTC rules will change. The draft Income-tax Rules, 2026 have now clarified how LTC exemption will operate under the new framework — and the good news is that the core structure remains largely the same. What LTC means under existing law (Income Tax Act, 1961) Under Section 10(5) of the Income Tax Act, 1961, salaried employees can claim tax exemption on Leave Travel Concession (LTC/LTA) for domestic travel within India. Here are the current key rules: -Two journeys in a block of four years (current block: 2022–2025) -Exemption available only for travel fare, not hotel, food or sightseeing -Eligible family includes spouse, children, and dependent parents/siblings -Exemption is restricted to actual travel cost, or LTA provided by employer — whichever is lower.

After weeks of delays that triggered widespread taxpayer complaints, income tax refund processing has gathered pace. According to a Moneycontrol report, professionals have indicated a sharp rise in payouts over the past 24 hours, particularly in high-value cases. The development comes after concerns over slow processing timelines. Minister of State for Finance Pankaj Chaudhary told the Parliament recently that around 8.8 crore income tax returns had been filed up to February 4, with nearly 24.64 lakh returns pending processing for more than three months. Experts on I-T refunds Chartered accountants said many individuals and businesses received refunds overnight and on Friday morning. CA Himank Singla, Partner at SBHS & Associates, told Moneycontrol, “There has been a noticeable acceleration in refund issuance, with several clients receiving substantial amounts, including refunds in the range of Rs 15-17 lakh.”

Starting April 1, 2026, several income tax forms like Form 26AS, Form 16, Form 13 and others will be renamed as the new Income Tax Act, 2025 will be effective from this date. Over time, names like Form 26AS, Form 16, and others became quite familiar to salaried employees, pensioners, senior citizens and others. So, switching to the new form numbers under the Income-tax Act, 2025 might cause some initial hiccups, especially in the early days of the rollout. Some new names of tax forms The Income-tax Act, 2025 read with the Draft Income Tax Rules 2026 has updated the numbering of several statutory forms, with the corresponding changes notified under the Draft Income-tax Rules, 2026. Based on the notified form matrix, the references mentioned above are corrected and summarised below:

Draft Income Tax Rules 2026: The Income Tax Department has released a new set of draft income tax rules, which once finalised, will be applicable for financial year 2026-27. There are several changes in the draft income tax rules that impact the way you pay income tax, withdraw cash, pay in cash etc. and the need to quote your PAN card number for a variety of transactions. Following the release of the draft rules, the government has invited comments and suggestions from stakeholders, with February 22, 2026 set as the deadline for submitting feedback. After reviewing the responses received, the revised rules will be finalised, formally notified, and are expected to take effect from April 1, 2026. Under the proposed framework, the threshold limits for several transactions requiring PAN Card details to be disclosed have undergone a change.

Net direct tax collections for the current financial year rose 9.4% year-on-year to Rs 19.43 lakh crore as of February 10, reflecting steady growth in revenue mobilisation compared with the same period last year. The increase signals continued momentum in tax compliance and economic activity during the ongoing fiscal. Data released by the Income Tax Department on Wednesday showed that net corporate tax collection grew 14.51 per cent to Rs 8.90 lakh crore, while taxes from non-corporates, including individuals and Hindu Undivided Families (HUFs), rose 5.91 per cent to about Rs 10.03 lakh crore. Securities Transaction Tax collection stood at Rs 50,279 crore between April 1 and February 10, almost flat as compared to the same period last year.

Nearly 24 lakh income tax returns (ITRs) for AY 2025-26 have remained pending for processing for over 90 days till 4th February 2026, the government told Parliament, triggering concerns among taxpayers — especially senior citizens — who have been waiting for their tax refunds for months. In a written reply in the Rajya Sabha, the Finance Ministry clarified that these delays are largely linked to technology-driven risk analysis and compliance campaigns run by the Income Tax Department, and not due to any blanket action against honest taxpayers. What was asked in Parliament The issue was raised by Rajya Sabha MP Deepak Prakash, who questioned the government on whether the Income Tax Department had sent large-scale messages in late December 2025 asking taxpayers to revise their returns within a short window of three to four days.

To get relief from TDS deduction, you need to submit an application to the Income Tax Department using a specific form, and then you can get a nil or lower TDS certificate for a particular period of time. For instance, if you are planning to sell your property and expect it to be sold between April and October, you can apply for a lower or nil TDS certificate covering that period. The form used to apply for lower or nil TDS certificate has been renamed under the Income Tax Act, 2025. Earlier, taxpayers used Form 13 (under the 1961 law) to request the department to allow lower or nil TDS. However, with the new 2025 Act, the form number and section have changed and so now you'll need to apply using Form 128. What is changed with new Form 128 for nil/lower TDS deduction? Chartered Accountant Gopal Bohra, partner- direct tax, N. A. Shah Associates LLP, says that the content and purpose of Form 128 of 2025 Act and Form 13 of 1961 Act are largely similar. However, a comparison between Form 128 with Form 13 throw up some changes.

The income tax (I-T) department has set a target to dispose of over 2 lakh Commissioner of Income Tax (Appeals), or CIT(A), cases this financial year (FY26), building on last year's disposal of 1.72 lakh cases, with a significant number already cleared by January, a senior finance ministry official said in a post-Budget interaction with Business Standard. As of January 20, the department has already disposed of 1.65 lakh CIT(A) cases, the official added. In FY25, nearly 5.4 lakh appeal cases were pending, involving a disputed tax demand of about Rs 16.75 trillion.