Income tax news: Personal income tax collections have surpassed corporate taxes for the first time in India’s history. According to a report by JM Financial Institutional Securities, this is because of formalisation, digitisation and stronger compliance mechanisms.

Personal Tax Share up
The share of personal income tax in total direct taxes has gone up sharply from 38.1% in FY14 to 53.4% in FY24. Corporate tax collections have come down from 61.9% to 46.6% over the same period.

India’s direct tax compliance has undergone a huge change in the last decade. Number of individual income tax return filers has gone up 2.3 times, from 30.5 million in FY14 to 69.7 million in FY23. When including those who pay tax through TDS without filing returns, the taxpayer base has nearly doubled from 53.8 million to 99.2 million.

Mauritian Minister of Financial Services and Economic Planning, Jyoti Jeetun, is in India and had an interview with TOI, talking on several issues from trade to the tax treaty between the two countries.

On being asked about India and Mauritius signing CEPA during global tensions, Jeetun said trade of goods is an important part of the CEPA, while trade in services is still being fine tuned.

"Mauritius is a small country, a small island, but with huge potential in terms of our connections with Africa. We see Mauritius to be a bridge between India and Africa and it gives wider access to the continent of Africa," she said, adding that they hope to work together and tap into opportunities, given India's growing economy.

About the tax treaty, Jeetun said the DTAA (double taxation avoidance agreement) was amended and there is a protocol in place, which has not been ratified yet. However, she remained confident that it will be closed in a short time. "I am very hopeful that we will conclude small fine tunings with the Indian govt in the very short period."

Income Tax Return (ITR) Filing Due Date AY 2025-26 Latest Updates (August 25): With only 21 more days to go before the income tax return (ITR) deadline comes to an end, the total number of ITRs filed for AY 2025-26 (FY2024-25) has not even reached 50% of the overall returns filed last financial year. Taxpayers in AY 2025-26 will file returns for the income earned in the financial year 204-25. Over 9 crore income tax returns were filed last year (for financial year 2023-24), according to official data.

Total ITRs filed and processed so far this year
According to the Income Tax Department’s website, as of August 25, 2025, a total of 3,67,94,801 income tax returns (ITRs) have been filed. Of them, 3,54,25,015 returns are verified and 2,29,72,011 ITRs processed by the department.

What is the ITR filing due date this year?
The central government in May this year announced an extension in the ITR filing deadline for the AY 2025-26. Taxpayers whose accounts do not require any audit can now file their ITR till 15 September 2025. In this category, most of them are salaried people. The earlier due date to file ITR was July 31. Those whose accounts need an audit have time till October 31 to meet their tax-filing obligation.

Receiving gifts at weddings is pretty standard in India. However, getting Rs 4.31 lakh in cash as son's wedding gifts a month before the wedding date led to tax issues for Manubhai, father of a recently married son. The income tax assessing officer said that these cash gifts were allegedly received almost a month before the actual wedding, which goes against the norm of receiving such gifts on or after the wedding day. The tax department accused him of not fully disclosing his full and true income.

Manubhai tried to prove that his son’s marriage was real and even submitted the entire list of guests who gave cash gifts. He also submitted the wedding invitation card and marriage certificate, but the tax officer remained unconvinced, leading to the rejection of his claims and the addition of unexplained income amounts. The tax department said that he had Rs 18.51 lakh in unexplained income, which included Rs 14.2 lakh from contract work and Rs 4.31 lakh from unexplained marriage gifts of his son.

Initially, he filed an appeal against this order of the tax officer with the commissioner of appeals (CIT Appeals), but lost the case. Subsequently, he filed an appeal in ITAT Ahmedabad. On August 12, 2025, the Income Tax Appellate Tribunal (ITAT) Ahmedabad bench granted relief to Manubhai. Thus, his appeal was allowed by ITAT Ahmedabad and he won the case.

The Income Tax department is working on simplified I-T forms and aims to notify new rules by December-end to give effect to the new I-T Act, which will come into force from April 1 next year, a senior tax official said on Monday.

Talking to PTI, Central Board of Direct Taxes (CBDT) member (Legislation) RN Parbat also said the department will come out with a fresh set of FAQs on the new Income Tax Act and come out with SoPs and guidance notes.

President Droupadi Murmu, on August 21, gave her assent to the Income-tax Act, 2025, which will replace the archaic Income Tax Act, 1961. The law was passed by Parliament on August 12.

Explaning the next set of processes before the income tax department, Parbat said CBDT is already working on formulating new rules and educating taxpayers, as well as capacity building of its officers, so that they are in a position to understand and enforce the new Act.

The Central Board of Direct Taxes (CBDT) is gearing up to ensure a seamless rollout of the new Income-tax Act from April 1, 2026, with Member (Legislation) RN Parbat emphasising that simplified rules, detailed FAQs, and upgraded IT systems will be in place well before the law comes into effect.

In an interview to Moneycontrol, Parbat said the new Act consolidates scattered provisions, removes redundancies, and uses tabular forms and formulae to make computation of income and taxes easier for taxpayers. He added that while the legal powers for search and seizure already existed, the new law makes them more explicit, including access to digital lockers and virtual digital assets to track tax evasion.

On the transitional roadmap, Parbat revealed that a drafting committee has already prepared draft rules and forms after public consultation, FAQs and mapping guides linking old provisions to the new ones will be released “at the earliest”, and capacity building of officers through the National Academy of Direct Taxes is already underway.

Income Tax: The last date to file income tax return (ITR) of September 15 is drawing closer. This is the time to hurry through your return filing process but carefully. While filing your income tax return, in case you noticed that the TDS details in form 26AS and Form 16 do not match - then it is important to cross verify the information.

There could be instances when TDS detail is given in one form and missing in other. Then it is vital to reconcile these forms before filing your return.

Those who are not aware, these are the details of these forms:

Form 16: It is a TDS (tax deducted at source) certificate issued by the employer to employees detailing information pertaining to tax deducted at source (TDS).

Form 26AS: It is a statement which provides details of any amount deducted as TDS or TCS from various sources of income of a taxpayer. It also shows details of advance tax/self-assessment tax paid, and high-value transactions entered into by the taxpayer.

Annual Information Statement (AIS): It is a statement which provides complete information about the prepaid taxes and prescribed financial transactions entered into by taxpayer for a particular financial year

As Income Tax Act 2025 aims to widen the definition of computer system to ensure better access to digital data for tax evaders, government will follow protocols as per the Digital Data Protection Act, to maintain privacy, confirmed RN Parbat, member (Legislation) of Central Board Direct Taxes (CBDT).

“Select Committee did a detailed discussion on issues around digital data handling and Data Protection Act. We will work in tandem with the Data Protection Act. Even as a part of Standard Operating Procedure (SoP) issued, it will be clarified to the officials on how to handle digital data,” said Parbat.

Finance minister Nirmala Sithraman while presenting the Bill in Rajya Sabha had stated that there would be provisions in this Bill to deal with those tax evaders who don’t let the officials from the Income Tax department access their devices, claiming that the respective device doesn’t come under the definition of ‘computer system’. She also assured that for better understanding of the concept of Computer System, CBDT will bring out detailed SoP for handling digital data.

The government on Friday formally notified the Income-tax Act, 2025. The legislation was passed in the Parliament last week and is aimed at consolidating and updating India’s income tax framework. The Act received the President’s assent on Thursday (August 21) and was notified by the Ministry of Law and Justice through a gazette order.

According to the notification, the law will come into effect next year on April 1, unless specified otherwise.

Announcing the notification on X, Income Tax India posted, “The Income-tax Act, 2025 has received the Hon’ble President’s assent on 21st Aug 2025. A landmark reform replacing the 1961 Act, it ushers in a simpler, transparent & compliance-friendly direct tax regime.”

On August 18, 2025, the Central Board of Direct Taxes (CBDT) issued a notification which effectively increased the income threshold limits for calculating tax-free perquisites (perks) in salary income. These new limits were introduced in the Finance Act, 2025, via a notification in the India e-Gazette, and will take effect from April 1, 2025 (AY 2026-27).

Previously, the salary income limit for tax free perquisite were Rs 50,000 for specified employees and Rs 2 lakh for overseas medical treatment. Now, these limits have been significantly raised to Rs 4 lakh for specified employees and Rs 8 lakh for overseas medical treatment, thanks to the insertion of new Rules 3C and 3D into the Income-tax Rules, 1962.

The Rs 4 lakh and Rs 8 lakh mentioned above refers to the threshold limit of salary or gross total income of the employee,which allows certain benefits/amenities to be excluded from perquisite taxation; they do not represent the value of benefit/ amenities themselves.

What is perquisite taxation?
Chartered Accountant Rahul Singh, senior manager, advisory & research, Taxmann explains:

Section 17(2)(iii) [specified employees]
"When an employer provides the following benefits or amenities to its employees, the value of such benefits or amenities is taxable as perquisite only in the hands of specified employees as per Section 17(2)(iii) of the ITA read with Rule 3 of the Income-tax Rules:

Use of a car or any other automotive conveyance [Rule 3(2)]
Services of a sweeper, a gardener, a watchman or a personal attendant [Rule 3(3)]

Chartered Accountant Aditi Bhardwaj has pointed out a glitch in the computer system which processes filed and verified income tax returns (ITRs). The problem is that the tax refund amounts aren’t being rounded off, resulting in small amounts being overlooked.

On August 16, 2025, Bhardwaj said on X (formerly Twitter): “As per Section 288B of the Income-tax Act, 1961, the amount of refund should be rounded off to the nearest multiple of ten rupees. However, it is observed that for ITR refunds of AY 2025-26, the final refund is not rounded off. For example, Rs 35,807 is not rounded to Rs 35,810. This appears to be happening across all cases. Request to clarify @IncomeTaxIndia. Example acknowledgment attached.”

While CAs have varying opinions, they all agree that Bhardwaj is correct.

Sanjoli Maheshwari, Executive Director, Nangia & Co LLP, says: In reference to the query, yes, the understanding is correct that while filing the tax returns for AY 2025-26 , the final refund is not getting rounded off. However, given the quantum involved being very negligible, the same would hardly have any impact on the Taxpayers.

The Central Board of Direct Taxes (CBDT) has enabled updated income tax return (ITR-U) filing via ITR-3 and ITR-4 forms on the e-filing ITR portal for AY 2021-22 and 2022-23. This ITR-U return via ITR-3 and ITR-4 forms can also be filed using the respective ITR form’s offline Excel utilities.

As per Finance Act, 2025, taxpayers now have up to 48 months from the end of the applicable assessment year to file an updated return under Section 139 (8A) of the Income Tax Act, according to the Union Budget 2025. Even if they did not file a return or filed it incorrectly, the extended period will enable people to repair mistakes or omissions in their prior filings by paying more taxes.

What is an Updated Income Tax Return (ITR-U)?
With an objective to reduce litigation, ITR-U provides an opportunity for voluntary compliance to taxpayers to rectify errors/ omissions.

The September 15 deadline to file your Income Tax Returns (ITR) for FY 2024-25 is approaching and as per media reports, the Income Tax Department has already flagged around 1.65 lakh cases for detailed scrutiny under Section 143(2), which is a sharp rise in such cases compared to previous years. This clearly means that filing returns does not mean the process or the due diligence of the process is over, as notices can still be issued if the tax department finds mistakes in your ITRs. But what sort of mistakes can flag your returns to the incomes tax officials? Let’s find out.

ITR Filing Mistake No.1 : Mismatch between TDS details and declared income
If the tax deducted at source (TDS) shown in Form 26AS or in your Annual Information Statement (AIS) does not match the income you report in your return, the tax department may select your ITR for scrutiny.

The latest version of the Income Tax Bill, 2025 has corrected several drafting mistakes. It is set to take effect on April 1, 2026 for FY2026-27. The corrections include issues related to nil TDS certificates, standard deductions for house property income, tax deductions for commuted pension for non-employee category, among others.

In this article, we have summarized some of the key errors that the finance minister addressed in the updated Income Tax Bill, 2025.

On Monday, the Lok Sabha approved a revised Income Tax Bill 2025, correcting drafting oversights from the previous version that might have led to refund issues for taxpayers, made TDS rules more complicated, and limited property income deductions. Experts indicate these modifications restore clarity, align the law with long-standing provisions, and will help avoid unnecessary litigations.

Chartered accountants' apex body ICAI on Wednesday said the new Income Tax Bill provides a simple and clear framework that will enhance the ease of doing business and support India's goal of becoming the favoured investment destination.

On Tuesday, Parliament passed a new income tax bill to replace the six-decade-old Income Tax Act, 1961, that will come into force from April 1, 2026.

The Institute of Chartered Accountants of India (ICAI) said the bill incorporates a significant number of suggestions from the Parliamentary Select Committee, which consulted ICAI and other stakeholders.

Around 90 suggestions of the institute have been considered in the bill, ICAI said in a statement on Wednesday.

The suggestions included the applicability of Alternative Minimum Tax (AMT) to only those persons who have claimed deductions in respect of certain income or investment-linked tax deduction, and removal of requirement to file return on or before due date for claiming refund.

India’s gross direct tax collection fell to Rs 7,98,822 crore in the current financial year up to August 11, from Rs 8,14,048 crore in the same period last financial year, registering a contraction of 1.87% because of higher refunds to corporate assesses and lower collections from individual taxpayers, according to government data.

Overall refunds to taxpayers (both corporate and individual assesses) jumped by nearly 10% to Rs 1,34,948 crore in 2025-26 (from April 1 to August 11) as compared to Rs 1,22,895 crore in the same period of financial year 2024-25, contributing to a year-on-year fall in net direct tax revenue.

Net direct tax collections after refunds in FY26 (as on August 11) fell by 3.95% to Rs 6,63,874 crore as compared to Rs 6,91,153 net revenue up to August 11 of FY25, the data showed.

The Income Tax Bill 2025 passed in the Lok Sabha on Monday has brought great relief to government pensioners and many other taxpayers. The new bill clearly provides that the entire amount of commuted pension will be exempted from tax, provided this pension is received from an approved pension fund.

Earlier this exemption was available only to certain categories of employees, while there are many who are not government employees, but voluntarily invest in recognised pension funds. So, the new bill has eliminated this difference and cleared the way to give equal tax relief to all eligible pensioners.

What is commuted pension?
Commuted pension means taking a lump sum amount instead of monthly installments of pension. For example, if a pensioner wants to take his future pension of 10 years in one go, then it is called commuted pension.

The finance ministry on Tuesday notified a corrigendum to the Income Tax Bill with regard to interest to be charged on short payment of advance tax by a taxpayer.

The corrigendum, which provides for 3 per cent interest on short payment of advance tax, aligns the clause with the existing provisions in the Income Tax Act, 1961.

Taxpayers having a tax liability of Rs 10,000 or more have to pay advance tax in 4 instalments -- June 15, September 15, December 15 and March 15.

Nangia Andersen LLP, Partner, Sandeep Jhunjhunwala said that as per the corrigendum to Clause 425 of the Income-tax (No 2) Bill, 2025, the interest provision for shortfall in advance tax payment has now been aligned with that under the Income-tax Act, 1961.

The Ministry of Finance has said in a written reply to Lok Sabha that the government has implemented various measures about income tax and GST laws that aim to make the process simpler for small taxpayers. Some of the simplification measures undertaken in income tax laws include availability of income tax return (ITR) filing through online, offline and excel utilities, updated Form 26AS, AIS, others. With regard to GST, the ministry said that an auto-generated return with editing facility is being provided to the taxpayers on the portal based on details of the outward supplies furnished by the taxpayers and their suppliers.

Pankaj Chaudhary, Minister of State, Finance, provided this information in Lok Sabha on Monday (August 11, 2025) in reply to a starred question No 3651 from Dharambir Singh, member of Parliament (MP) from the Bhiwani-Mahendragarh Lok Sabha constituency in Haryana.

ET Wealth Online tells you about the 10 prominent moves that the government claims to have taken in the interest of the small taxpayers

India’s net direct tax collections declined 3.95% year-on-year to Rs 6.64 trillion in the period from April 1 to August 11, data from the Income Tax Department showed on Tuesday.

This decline was largely due to a rise in tax refunds issued during the period.

Meanwhile, on a gross basis, before accounting for refunds, direct tax collections stood at Rs 7.99 lakh crore—a 1.87% drop from Rs 8.14 lakh crore collected during the same period last year.

"The tepid performance of advance tax collections seems to have been dampened by high refunds of corporation tax collections and a later deadline for personal income tax filings. The available data on advance tax collections suggests that the GoI’s personal income tax and corporation tax collections are required to record a high double-digit growth in the remaining part of FY2026, to meet their respective FY2026 targets," said Aditi Nayar, Chief Economist, ICRA Ltd.

"While this may seem challenging, the growth rates in net PIT and CT collections are likely to improve as the year progresses, and the base normalises," she added.