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Mint
3 days ago
- Business
- Mint
Calculating tax on LTCG this season may be a bit complex. Here's your guide
NEW DELHI : If capital gains from stocks or equity-oriented mutual funds are your only source of income in 2024-25, calculating your tax liability may be a bit complex. That's because tax rates on long-term capital gains (LTCG)—investments held for more than a year before being sold—from equity are taxed at 12.5% for assets sold after 23 July 2024 and 10% for those sold before this date. Deducting the permissible exemptions is crucial to calculating net taxable income. For capital gains from equities, an exemption of ₹1 lakh and ₹1.25 lakh is allowed on equity sold before and after 23 July 2024, respectively. Also Read: New regime narrows LTCG-regular income tax gap. Are equities still worth it? Also, under the old tax regime, individuals are eligible for a basic exemption limit of ₹2.5 lakh. Under the new tax regime, this limit is ₹3 lakh. These deductions are used to compute the net capital gains that are subject to tax. 'Assuming an assessee has made LTCG on equity mutual funds that were sold after 23 July 2024, the net gains will be computed after first allowing ₹1.25 lakh as an enhanced exemption, followed by a reduction of the basic exemption limit applicable under both the regimes. The remaining amount, if any, will be taxable at the applicable rate of 12.5%," explained Vishwas Panjiar, partner, Nangia Andersen LLP. For example, Mr A earned ₹5 lakh LTCG. First, after deducting the ₹1.25 lakh exemption under Section 112A of the Income Tax Act, the gains stand at ₹3.75 lakh. Since this is above the basic exemption limit (under both tax regimes), the gains are taxable. However, next, Mr A can deduct the basic exemption amount of the tax regime he picks. Since the new tax regime has a higher exemption limit of ₹3 lakh, Mr A's net capital gains stand at ₹75,000 and his tax liability at ₹9,375 (12.5% rate). Also Read: Capital gains on equities: Here's all you need to know when filing tax returns this year If, after the deduction under 112A ( ₹1.25 lakh or ₹1 lakh), the total capital gains are below the applicable exemption limit, no income tax is to be paid. Moreover, the individual may not even be required to file an ITR in such a case. 'The obligation to file ITR will also depend on that he is a resident individual, without any foreign asset or signing authority in a foreign bank account, does not fulfil other prescribed conditions where filing of tax return is mandatory or where the individual does not have any refund of tax or carried forward loss to claim," said Sonu Iyer, partner and national leader, people advisory services-tax, EY India. 'If these criteria are met and net capital gains are below the basic exemption limit, an ITR need not be filed," she added. FY26 onwards, the standard LTCG tax rate of 12.5% is applicable on equity assets. Why rebate benefit not allowed Both the tax regimes offer a rebate up to a certain income limit under Section 87A, meaning incomes up to the rebate limit are tax-free. The old regime allows a tax rebate on incomes up to ₹5 lakh. In the new regime, the rebate limit until 2024-25 was ₹7 lakh, which has been increased to ₹12 lakh from FY26 onwards. However, equity capital gains do not qualify for this rebate. 'Rebate of income tax is not available on LTCG and STCG (short-term capital gains) made on equity assets. This means if a taxpayer only has capital gains income in 2024-25 and it is below the rebate limit of ₹7 lakh, they would still pay tax on it at 12.5% tax rate, after deducting the applicable exemptions," said Manohar Goenka, a chartered accountant (CA) and chief manager, REC Ltd. In contrast, Panjiar said the rebate under Section 87A is available for all other cases of capital gains, provided the total income remains within the threshold. Advance tax obligation When the total tax liability in a fiscal year exceeds ₹10,000, the taxpayer is obliged to pay advance tax. If capital gains are your only income, the advance tax still needs to be paid. Also Read: For some NRIs, capital gains from Indian mutual funds are tax-free Advance tax is paid in four specified instalments throughout the year on or before the prescribed due dates. Defaulting on due dates attracts penal interest. Considering the nature of capital gains that are often non-recurring and sudden, the law provides certain relief on advance tax payments, said Panjiar. 'If the capital gains have arisen after one of the specified instalment dates, the taxpayer can pay the amount of advance tax in the subsequent instalments, and the taxpayer is not liable to pay interest on the missed instalments." While computing advance tax on capital gains, taxpayers should consider both the exemption of ₹1.25 lakh as well as the basic slab exemption applicable under the respective tax regime. 'Additionally, it is important to consider TDS/TCS while computing your net tax liability," said Panjiar.
Time of India
05-06-2025
- Business
- Time of India
Company board report to have details of sexual harassment complaints, compliance with maternity benefit rule
Live Events (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel The corporate affairs ministry on Thursday amended rules to stipulate that from next month, a listed company's board report will have to include details of the number of complaints of sexual harassment received and disposed of in a year, and its compliance with legal provisions relating to maternity move, experts said, will foster gender equality and justice at the workplace and help female a notification, the ministry said the board report will also have to flag the number of sexual harassment cases pending within the company for more than 90 on the issue of sexual harassment, the board report includes only a statement on the company's compliance with provisions of constituting an internal complaints committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, changes, part of the Companies (Accounts) Second Amendment Rules, 2025, will be effective from July 14, it board report is a comprehensive document that captures both financial and non-financial information, and aims to inform stakeholders about the overall financial position of the company and its operation and scope of business. This is usually prepared at the end of a fiscal board report contains details such as the company's steps for energy conservation, tech adoption and foreign exchange earnings and outgo. among other things. Sandeep Jhunjhunwala , partner at Nangia Andersen LLP, said the amendments 'demonstrate the importance laid by the regulators on safety, dignity and welfare of women at the workplace'.Such disclosures would 'foster a culture of increased compliance, thus compelling organisations to proactively uphold the ethical standards', he said, adding that it would 'reinforce the principle of substantive equality'.
New Indian Express
11-05-2025
- Business
- New Indian Express
Key changes in new ITR forms individual taxpayers should know about
The tax department has recently notified the Income Tax Return (ITR) forms for the Assessment Year 2025–26, which corresponds to the financial year 2024–25. While the forms largely retain their previous structure, some notable changes have been introduced, particularly concerning the reporting of long-term capital gains (LTCG) and the threshold for disclosing assets and liabilities. Individual taxpayers should familiarise themselves with these updates to ensure accurate and timely filing. ITR-1 (Sahaj): For salaried individuals The ITR-1, also known as 'Sahaj', is for resident individuals (other than not ordinarily resident) with a total income not exceeding Rs 50 lakh from salary or pension, one house property (excluding cases with brought-forward losses), and other sources such as interest. The new ITR-1 now also applies to individuals who earned up to Rs 1.25 lakh in the previous financial year from long-term capital gains (LTCG) through the sale of listed equity shares or equity-oriented mutual funds. Neeraj Agarwala, Partner at Nangia Andersen LLP, points out a significant relief for taxpayers with LTCG under Section 112A below Rs 1.25 lakh. Previously, they might have been required to file the more complex ITR-2. "This inconvenience is reduced with the new Form ITR-1 for AY 2025–26 incorporating a small section for reporting income in the nature of long-term capital gains on which tax is not payable by virtue of the exemption limit provided in Section 112A." However, he clarifies that if LTCG under Section 112A exceeds Rs 1.25 lakh, or if there are other types of capital gains (long-term or short-term), or carried forward/brought forward capital losses, individuals will still need to file ITR-2. ITR-4 (Sugam): For presumptive income ITR-4, or 'Sugam', is applicable to resident individuals, Hindu Undivided Families (HUFs), and firms (excluding LLPs) with total income up to Rs 50 lakh. They must have income from business or profession computed under the presumptive taxation schemes. Similar to ITR-1, Sandeep Jhunjhunwala, Tax Partner at Nangia Andersen LLP, notes that the new ITR-4 also allows for reporting of LTCG under Section 112A up to Rs 1.25 lakh. ITR-2: Detailed reporting for wider income sources ITR Form 2 is for individuals (both residents and non-residents) and HUFs with total income excluding income from business or profession, but including income from salary, multiple house properties, capital gains, and other sources. Sanjoli Maheshwari, Executive Director at Nangia Andersen India, highlights several key changes in ITR-2 for AY 2025–26: Separate reporting of capital gains : Taxpayers must now report capital gains separately for periods before and after 23 July 2024, aligning with amendments in the Finance Act, 2024, including revised tax rates and indexation rules. Reporting of unlisted bonds and debentures : Gains from these are to be reported as short-term or long-term capital gains based on the holding period. Buy-back proceeds as dividend income : Buy-back proceeds received on or after 1 October 2024 are to be reported as dividend income under 'Income from Other Sources'. However, a separate disclosure as 'Nil' consideration with the cost of acquisition is also required under 'Capital Gains' for potential set-off and carry forward of capital loss. Revised threshold for assets and liabilities disclosure: Individuals with total income exceeding Rs 1 crore (up from Rs 50 lakh previously) are now required to furnish details of their assets and liabilities. ITR-3: For business and profession income ITR-3 is applicable to individuals and HUFs earning income from business or profession. Deepak Kumar Jain, Founder and CEO of TaxManager, outlines key changes in ITR-3 for AY 2025–26:
Time of India
01-05-2025
- Business
- Time of India
April GST defies headwinds to post record-shattering mop-up
Gross goods and services tax (GST) collection surged 12.6% year-on-year in April to a record ₹2.37 lakh crore, in a buoyant start to this financial year. The surge reflects strong domestic consumption, greater formalisation of the economy and improved compliance. #Pahalgam Terrorist Attack Nuclear Power! How India and Pakistan's arsenals stack up Does America have a plan to capture Pakistan's nuclear weapons? Airspace blockade: India plots a flight path to skip Pakistan Net GST receipts, which factor in refunds, also scaled a fresh peak of ₹2.09 lakh crore last month, up 9.1% from a year before, showed official data released Thursday. "The figures showcase the resilience of the Indian economy and the effectiveness of cooperative federalism," Finance minister Nirmala Sitharaman wrote on X. The robust growth came on an unfavourable base-gross collection had hit the previous high of ₹2.10 lakh crore in April 2024-and despite external headwinds. It also marked the continuation of strong collections in recent months, after a 9.9% year-on-year increase in March to ₹1.96 lakh crore and 9.1% improvement in February to ₹1.84 lakh crore. Live Events GST Ecosystem Deepening Across Geographies GST collection from domestic transactions went up 10.7% to almost Rs 1.90 lakh crore, while that from imported goods jumped 20.8% to ₹46,913 crore, suggesting a broad-based increase. Refunds jumped 48.3% to ₹27,341 crore last month, with experts indicating that the online refund processes had stabilised. Pratik Jain, partner at PwC India, termed "encouraging" the strong GST mop-up growth despite geopolitical headwinds. "Also, it's good to see that most of the manufacturing states have witnessed double-digit growth," he said. MS Mani, partner at Deloitte India, said, "The GST collections (in April) have been uniformly high in all the major producing/consuming states and have been in the range 11% to 16%, unlike in previous months when there were some large states having lower growth." He said at least five states-UP, Gujarat, Maharashtra, Karnataka and Tamil Nadu-have now recorded more than a million GST registrations each, out of the pan-India total of 15 million. "Congratulations and sincere regards to the dedicated efforts (of) Finance Ministers of all states and state GST authorities, who remain equal partners in India's GST framework," said the FM. UP accounts for the largest number of registrations, while the highest GST revenue flows from Maharashtra. Some of the north-eastern states have recorded solid growth in collection in April. Arunachal Pradesh recorded a 66% increase, followed by Meghalaya (50%), Nagaland (42%) and Sikkim (17%). "This signifies that India's GST ecosystem is not just expanding-it's deepening across geographies," said Sivakumar Ramjee, executive director (indirect tax) at Nangia Andersen LLP. Some experts expect the strong momentum to continue in the coming months, underpinned by a pickup in consumer sentiment. The RBI's latest Consumer Confidence Survey indicates a broad-based improvement in sentiment around current conditions and expectations for the year ahead. It is backed by more positive assessments of both income and spending. The data showed gross central GST mop-up in April was to the tune of ₹48,634 crore, while state GST collection hit ₹59,372 crore.
The Hindu
30-04-2025
- Business
- The Hindu
Govt notifies ITR forms; individuals with LTCG up to ₹1.25 lakh can file ITR 1, 4
The government has notified Income Tax Return (ITR) forms 1 and 4 for Assessment Year (AY) 2025-26, simplifying the filing process for individuals earning salary or presumptive income who have long-term capital gains (LTCG) up to ₹1.25 lakh from listed equities. Previously required to file the more complex ITR-2, these taxpayers can now use the simpler ITR-1 (Sahaj) and ITR-4 (Sugam) forms, respectively. This change addresses a specific inconvenience highlighted by tax experts. Sandeep Jhunjhunwala, Tax Partner at Nangia Andersen LLP, explained that previously, 'salaried individuals having income under the head capital gains were required to file form ITR-2 even where the capital gains were exempt by virtue of the threshold limit prescribed under Section 112A, resulting in elaborate disclosure requirements.' The new ITR-1 and ITR-4 forms for AY 2025-26 incorporate a section for reporting LTCG exempt under Section 112A up to the ₹1.25 lakh limit. According to the Income Tax law referenced in the notification context, LTCG up to ₹1.25 lakh per annum from the sale of listed shares and mutual funds are exempt, with gains exceeding this threshold subject to a 12.5 per cent tax. However, Mr. Jhunjhunwala clarified that salaried individuals must still use Form ITR-2 if their LTCG under Section 112A exceeds ₹1.25 lakh, if they have other types of LTCG or short-term capital gains, or if they have capital losses to carry forward or bring forward. A similar simplification for reporting exempt LTCG (up to ₹1.25 lakh under Section 112A) has been incorporated into the new ITR-4 form for taxpayers using the presumptive taxation scheme. Experts lauded the simplification. EY India Tax Partner Samir Kanabar stated that allowing those with minimal LTCG to use ITR-1 or ITR-4 'reduces the burden of navigating more complex forms.' He added, 'This move reflects a clear shift towards enhancing taxpayer services... [it] is expected to encourage greater voluntary compliance, reduce filing-related stress, and make the system more user-friendly for small taxpayers.' AKM Global Partner-Tax Sandeep Sehgal echoed this, noting the change 'streamlines the tax filing process, making it more accessible and less burdensome... thereby encouraging timely and accurate compliance'. ITR Form 1 (Sahaj) and ITR Form 4 (Sugam) cater to small and medium taxpayers with total annual income up to ₹50 lakh. Sahaj is for resident individuals with income from salary, one house property, other sources (like interest), and agricultural income up to ₹5,000. Sugam is for individuals, Hindu Undivided Families (HUFs), and firms (excluding LLPs) with income from business and profession under the presumptive scheme. ITR-2 is filed by individuals and HUFs without business or profession income. Beyond the LTCG change, the government has introduced other modifications. The forms now feature a drop-down menu in the utility for selecting deductions claimed under sections like 80C and 80GG. Additionally, assessees must furnish section-wise details regarding Tax Deducted at Source (TDS) deductions within the ITR. Consistent with last year, ITR-1 continues to seek details on expenditures exceeding ₹2 lakh on foreign travel and over ₹1 lakh on electricity consumption during the previous year. Regarding the timeline, the ITR forms are typically notified earlier, around February or March. The delay this year was attributed to Revenue Department officials being preoccupied with the new Income Tax Bill introduced in Parliament in February. Taxpayers can begin filing their returns for income earned in the 2024-25 financial year once the I-T department makes the filing utility available. The deadline for individuals not requiring an audit remains July 31.
