The Centre’s direct tax collections, after refunds, grew 15.9% year-on-year to Rs 16.9 lakh crore till January 12 in the current financial year, data released by the finance ministry showed on Monday.

The growth in mop-up so far surpassed the direct tax collection growth pegged in the Budget, at 12.8%, mainly due to sharper net non-corporate tax (mainly personal income tax) collections.

As on January 12, the mop-up from net non-corporate taxes stood at over Rs 8.74 lakh crore, up 21.6% year-on-year, and net corporate tax collections were around Rs 7.68 lakh crore, up 8.2% on year.

The Budget had presumed personal income tax collections to grow 14% on year, and corporate tax to grow by 12%.

The Income Tax Department has recently released a brochure emphasising the importance of avoiding cash transactions to mitigate tax penalties. This initiative aims to educate taxpayers about the potential financial repercussions of cash dealings, which can lead to severe penalties under the Income Tax Act.

“Say No To Cash Transactions. Individuals prefer to receive, pay, and transfer cash when the amounts of transactional value (money) involved are marginal to small,” the Income Tax Department in a brochure released on January 2, 2025 said.

The brochure advises taxpayers to refrain from using cash for daily transactions, particularly those involving significant amounts. The department noted that many individuals often resort to cash payments for convenience, but this practice can lead to unintentional violations of tax regulations.

In her budget speech 2024, finance minister, Nirmala Sitharaman said, “To dispose of the backlog of first appeals, I plan to deploy more officers to hear and decide such appeals, especially those with large tax effect.”

As per the Central Action Plan (Financial year 2024-25), the approximate pendency as of April 1, 2024 was 3.01 lakh appeals (that were filed before April 1, 2022) at the level of CIT (Appeals). The aggregate number of appeals to be disposed of as of March 31, 2024 were 5.49 lakh.

The government has taken several steps to ease litigation. Budget 2024, announced an increase in the threshold limits for filing of appeals by the Income-tax (I-T) department, plan for increasing the strength of Appellate Commissioners to reduce the backlog of appeals, and introduction of Vivad Se Vishwas Scheme to settle pending appeals. But a lot more could be done, especially to improve the Faceless Appeals Scheme and suggestions are pouring in from various trade associations and tax experts.

Finally good news is there for those taxpayers who are eligible to claim section 87A tax rebate but were prevented from claiming it post July 5, 2024. The Income Tax Department has now updated the excel utilities for ITR Forms 2 and 3 to exercise the option to update tax rebate under section 87A for FY 2023-24 (AY 2024-25). The department also said the HTML utilities will be made available shortly. This information was mentioned by the Income Tax Department in the late hours of yesterday.

The only catch is you have to manually edit the tax rebate column in the ITR excel utility and then validate it in order to claim section 87A tax rebate. If you leave the tax rebate column to be auto filled then you won’t get 87A tax rebate, say experts who tried all possible permutations and combinations. However, this manual editing option although seems to work for the time being needs more clarity, says experts.

The Indian government and its law enforcement agencies get detailed information about financial accounts held by Indian residents in foreign countries through two sources. The information includes: (i) Account holder's name, address, and tax identification number (TIN); (ii) Account number and balance; (iii) Details of foreign income such as interest, dividends, and other financial proceeds.

FATCA and CRS are the two sources of information that help the Indian income tax department to know the global income of its resident taxpayers. This also helps the department identify taxpayers who may not have disclosed their foreign assets and income.
CRS stands for the Common Reporting Standard and FATCA stands for the Foreign Account Tax Compliance Act.

Family trusts, often used to ring-fence wealth and enable smoother succession planning by ageing patriarchs of Indian households, will not have the freedom to add cousins, nephews, niece, or other `non-relatives’ as ‘beneficiaries’ in future.

If a trust deed gives trustees the liberty to include such persons even years later, the trust could be taxed today on all properties, securities and funds that have been transferred to it, according to a judicial pronouncement this week.

A discretionary trust is formed by the settlor (often the head of the family who transfers the assets). Immediate family members are named as beneficiaries, and independent professionals or a trusteeship company serve as trustees responsible for distributing a trust's earnings from like interest, rent, and capital gains to the beneficiaries in proportions that are not predetermined.

The Central Board of Direct Taxes (CBDT) is set to enhance its operations in 2025 by adopting a so-called 'PRUDENT' approach, as highlighted by chairman Ravi Agrawal in his end-of-year address to the Income Tax Department.

"Let the PRUDENT approach, with all its seven elements, continue to guide us as we navigate the complexities of our work. This ensures that we not only compete with ourselves but also continually set new standards in public service. Let us recognise our strengths, identify areas for improvement, and remain adaptable to meet the challenges of this ever-changing landscape," Agrawal said in his address.

According to Agrawal, the acronym PRUDENT stands for specific traits: 'P' for professionalism, 'R' for being responsible and responsive, 'U' means understanding transactions and businesses, 'D' represents dedication and due diligence, 'E' represents effective enforcement, 'N' stands for for non-intrusive administration and 'T' reflects technology-based tax administration.

Income Tax Return Filing: The normal income tax return filing deadline for AY 2024-25 ended on July 31, 2024. The deadline to file a belated ITR with a penalty amount of Rs 5,000 will end on December 31, 2024. Even after the July 31 deadline, the Income Tax Department gave different categories of taxpayers specific deadlines to furnish ITRs. For example, the tax department extended the ITR filing date for those requiring audit of their accounts from 31st October, 2024 to 15th November, 2024.

Here, we will talk about five key changes in income tax rules with respect to filing of tax returns by taxpayers.

Enhanced tax transparency with new Form 26AS
The introduction of the new Form 26AS provides comprehensive information to taxpayers, including details of tax deductions or collections at source, specified financial transactions (SFTs), payment of taxes, demands, and refunds.

The Income Tax Department has extended the deadline of Vivad Se Vishwas Scheme 2024 from December 31, 2024 to January 31, 2025. This scheme helps taxpayers to settle an ongoing dispute by paying a lower amount of income tax. Had the deadline been not extended the taxpayers would have been required to pay 10% extra tax for applying for the scheme. Deadline extension comes as a big relief for taxpayers who are yet to apply for Vivad Se Vishwas Scheme 2024.

“The Central Board of Direct Taxes (CBDT), in exercise of its powers under sub-section (2) of section 97 of the Direct Tax Vivad Se Vishwas Scheme, 2024 (‘the Scheme’) extends the due date for determining amount payable as per column (3) of the Table specified in section 90 Of the Scheme from 31 December, 2024 to 31 January, 2025,” The Income Tax Department said in a circular dated December 30, 2024.

Sometimes the income tax department makes mistakes while processing the ITR and these are the mistakes which can be seen in plain sight like in AIS, TDS certificates, etc. To rectify these minor mistakes, which are apparent from the records, the taxpayer has to file a rectification application with either the CPC or AO depending on who has access right to the ITR.

However, if the ITR’s access rights remained with the centralised processing centre (CPC) only then you could file an online rectification application for correcting such mistakes. However, if the ITR’s access rights were transferred to the AO then an rectification request could not be filed online and taxpayer needed to do it in paper form.

The Income Tax Department has extended the revised and belated income tax return (ITR) filing deadline to January 15, 2025 for Indian resident individuals. Individuals who have already filed an ITR on or before the deadline, they can file a revised ITR if required. Belated ITR is filed when the individual has not filed any ITR on or before the deadline and wants to file an ITR after the original deadline has passed. The original deadline to file an ITR for individuals was July 31, 2024.

"The Central Board of Direct Taxes (CBDT), in exercise of its powers under section 119 of the Income-tax Act,1961 ('the Act'), extends the last date for furnishing belated return of income under sub-section (4) of section 139 of the Act or for furnishing revised return of income under sub-section (5) of section 139 of the Act for the Assessment Year 2024-25 in the case of resident individuals from 31 st December, 2024 to 15th January, 2025," said CBDT in a circular dated December 31, 2024.

"Many tax payers received intimation for mismatch of transactions appearing in AIS and income/transactions reported in ITR.

PAN 2.0 fraud alert! Have you received an email for downloading your e-PAN Card? Be cautious of suspicious emails claiming to help you download e-PAN cards! Fraudsters continuously devise new methods to deceive and manipulate their targets. These deceptive emails should be disregarded as they are fraudulent.

The PIB Fact Check has identified a deceptive scheme where fake emails, claiming to be from the Income Tax Department, attempt to mislead users about e-PAN card downloads.

Scammers are exploiting the interest surrounding the government's new PAN 2.0 initiative by sending fraudulent emails to mislead people. PIB Fact Check issued a warning on X about this deceptive scheme, stating: "Have you also received an email asking you to download e-PAN Card. PIBFactCheck: This is a Fake email. Never reply to calls, texts, emails, or links requesting sensitive or financial information."

From October 1, 2024 the government has made it mandatory for employers to give benefits of TDS/TCS deducted on non-salary income while computing TDS to be deducted from salary. Adjustment of tax already paid through TDS/TCS on non salaried income while deducting TDS against salary can bring down TDS liability for a salaried employee. This amendment was introduced to reduce the incidence of extra TDS being deducted from salary income. While the law was already implemented, the necessary back end technical infra updation took time.
Protean (formerly NSDL e-Governance) has informed that the necessary changes have been made in the TDS software from December 27, 2024 and now the TDS certificate will start reflecting the updated changes for Q4 of 2024-25 TDS statement onwards.

A PIL filed in the Supreme Court on Thursday sought to scrap the TDS system calling it "arbitrary and irrational" and violative of various fundamental rights, including equality.

The PIL challenged the tax deducted at source or TDS framework under the Income Tax Act, which mandates the deduction of tax at the time of payment by the payer and its deposit with the income tax department. The deducted amount is adjusted against the payee's tax liability.

The plea filed by lawyer Ashwini Upadhyay through advocate Ashwani Dubey, made the Centre, ministry of law and justice, law commission, and NITI Aayog as parties.

The year 2024 saw income tax changes in the middle of the year. This happened because the government presented the Union Budget 2024 in July due to General elections held between April and June, 2024. As the budget was presented in the middle of the year, many taxpayers may have forgotten the income tax law changes that were announced in July 2024. Most of the income tax changes announced in July 2024 are effective from the current financial year 2024-25. These changes will also impact the tax deductions and exemptions that can be claimed while filing an income tax return (ITR) in July 2025.

Has someone recently sent you an email promising to assist you in downloading your e-PAN card? Scammers are always changing ways to entice and trick their victims. Do not fall for such emails as they are fraudulent. The Press Information Bureau (PIB) Fact Check has identified a phishing scam in which phony emails purporting to be from the Income Tax Department trick users into downloading their e-PAN cards.

Phishers are using phony emails to deceive consumers by capitalizing on the excitement around the government’s new PAN 2.0 project.

PIB Fact Check recently alerted people about this phishing fraud in a post published on X, "Have you also received an email asking you to download e-PAN Card. PIBFactCheck: This is a Fake email. Never reply to calls, texts, emails, or links requesting sensitive or financial information.”

The government has been actively conducting surveys to identify tax evaders under Section 133A of the Income-tax Act, 1961. In response to a question raised in the Lok Sabha by Arun Kumar Sagar, the Minister of State in the Ministry of Finance, Pankaj Chaudhary, shared details about the surveys conducted over the last three years.

Arun Kumar Sagar, a Member of Parliament, raised a set of questions in the Lok Sabha seeking information from the Ministry of Finance.

He inquired whether the government had conducted any surveys to identify tax evaders and improve taxpayer services over the past three years.

He also requested details of such surveys, a state-wise summary of taxes collected during the current year, and a comparison of the tax collection figures for the current financial year with those of the last three years.

ESOPs, or Employee Stock Ownership Plans, are equity-based compensation plans that allow employees to purchase company shares at a predetermined price. The predetermined price is generally lower than the market price. These plans are designed to align employee interests with the company's success by giving them a stake in its ownership.

What are the different types of ESOPs?
ESOPs can take several forms, including:
1. Restricted Stock Units (RSUs): RSUs are a type of equity compensation where employees are granted company shares, but they don't actually receive them until certain conditions are met. For instance, some companies offer ESOPs after a vesting period where shares are received by an employee after waiting for a certain period.

The State Secretariat for International Financial Matters, which represents Switzerland's interests in financial, monetary and tax matters, has officially decided to suspend the most favoured nation (MFN) clause between Switzerland and India with respect to taxes on dividend income with effect from January 1, 2025. This means dividend income will be taxed at 10% rate instead of 5% in Switzerland for Indians in the new year 2025.

This decision by Switzerland comes against the backdrop of a recent Supreme Court of India (Case - Nestle SA [2023] 458 ITR 756 (SC)) ruling, which rejected the interpretation of the most favored nation (MFN) clause in India's Double Taxation Avoidance Agreement (DTAA) with Switzerland, Netherlands and France.

Scores of taxpayers, including the salaried, who were unable to claim an income-tax rebate in their tax returns for the assessment year 2024-25 (financial year ended March 31, 2024), owing to software changes in the filing platform (filing utility) made by the Income-Tax (I-T) department, stand to benefit by an interim order passed by the Bombay High Court. Additional time has been granted to these taxpayers to file a revised return and claim a tax refund.

A Public Interest Litigation (PIL) filed by The Chamber of Tax Consultants challenged disabling of Section 87A rebate claims through the filing utility. The PIL, contended that changes made to the tax filing utility after July 5, 2024, arbitrarily prevented taxpayers from claiming the rebate under Section 87A. This rebate, introduced to provide tax relief to individuals with an income below a specified threshold, has long been considered a cornerstone of equitable taxation.