Archives May 2026

In terms of Indian law and taxation, a Hindu Undivided Family (HUF) is a distinct entity. An HUF is regarded as a person for tax purposes and is acknowledged as a distinct taxable entity under the Income Tax Act, 2025. It is governed by Hindu law and consists of people who share a common ancestor. Members of the family, referred to as coparceners, have a birthright in the joint family property, which is administered by the Karta. An HUF is subject to taxation at the same slab rates as an individual. The simplified tax structure under Section 202 is the default option for Tax Year 2025. Particular legal issues pertaining to the ownership and taxability of the divided property come up during a partition.

Meaning of Partition

‘Partition’ refers to the division of HUF property among its coparceners. It ends the joint status of the family concerning the property being divided. For a valid partition, there must be an actual and physical division of the property. Each coparcener must receive a specific and definite share. A mere division of income without dividing the underlying asset does not constitute a partition under the law.

The right to demand partition lies with all coparceners. In certain circumstances, a mother or wife also becomes entitled to an equal share along with the sons when a partition occurs among male members after the death of the father.

Types of Partition

A partition under Hindu law may be either total or partial.

• Partial Partition: A partial partition occurs either among some members of the family or concerning specific properties. The remaining coparceners continue as an HUF with the remaining assets. For example, if only one coparcener separates while others remain joint, it is a partial partition.

• Total Partition: In a total partition, the entire property of the HUF is divided among all coparceners. The joint family ceases to exist. Once such a partition is completed, the HUF is dissolved for taxation purposes. Each coparcener becomes an independent taxpayer for their respective share of property and income. The tax authorities must verify the genuineness of the partition and record a formal finding under Section 268 of the Income Tax Act, 2025.

Assessment of HUF Partition under Section 268

Section 268 of the Income Tax Act, 2025, governs the assessment of an HUF after a partition claim is made.

• Total Partition: When a total partition is claimed, the tax department conducts an inquiry to verify the claim. If satisfied, they record a finding that the family has been partitioned. They specify the date of partition and assess the total income of the HUF up to that date. For instance, if an HUF earns rental income up to September 2025 and the property is divided on October 1, 2025, the income up to September will be taxed in the hands of the HUF. Income generated thereafter will be taxed in the hands of each individual coparcener.
• Partial Partition: Partial partitions taking place after December 31, 1978, are generally not recognized for tax purposes if the HUF was previously assessed as a separate unit. This rule is maintained under the 2025 Act. Where a partial partition is ignored, the family continues to be assessed as if no partition occurred. The income or property is deemed to continue to belong to the HUF for tax purposes. However, if the family was never previously assessed as an HUF, this restriction does not apply.

Conclusion

The partition of a Hindu Undivided Family is a significant legal and tax event. While total partitions are recognized and lead to separate assessments for each member, partial partitions are often disregarded for tax purposes to ensure administrative simplicity. With the Income Tax Act, 2025 now in force, taxpayers must ensure that physical divisions of property are clearly documented. Maintaining transparent records is essential to validate a genuine partition and successfully transition from an HUF assessment to individual tax filing.

The Indian tax system can be complex because of the strict rules that taxpayers must follow. Genuine difficulties, however, may arise and cause the filing of tax returns or refund claims to be delayed. The Central Board of Direct Taxes (CBDT) has the authority to grant relief and direct income tax officers to handle such situations fairly under Section 422 of the Income Tax Act, 2025.

Section 422 of the Income Tax Act, 2025: Power to Instruct and Condone

The CBDT has the authority to issue directives and orders under Section 422 (previously Section 119) to guarantee the consistent and efficient application of tax laws throughout India. Most importantly, it permits the board to loosen strict procedural guidelines when “genuine hardship” occurs.

In order to guarantee equitable and uniform application of the law across the country, Section 422(1) gives the CBDT the authority to provide tax officers legally enforceable directions.

In particular, Section 422(2) permits the Board to provide tax authorities permission to accept late applications or returns for refunds, deductions, or exemptions if the taxpayer was unable to fulfil the deadline due to a legitimate reason.

Who Can Approve or Reject Late Filings?

The CBDT delegates the power to condone delays based on the monetary value of the claim:

Claim Amount	Competent Authority
Up to ₹1 crore	Principal Commissioner or Commissioner of Income Tax
Between ₹1 crore and ₹3 crore	Chief Commissioner of Income Tax
Above ₹3 crore	Principal Chief Commissioner of Income Tax or the CBDT

Time Limit

Taxpayers must apply for condonation within five years from the end of the relevant tax year. If a refund claim arises from a court order, the time the case was under court consideration is excluded, provided the application is filed within six months from the date of the court’s order.

How to Apply for Late Filing or Refund in 2026?

1. Digital Application: Log in to the e-filing portal and select the “Condonation Request” under the Service tab.
2. State the Reason: Provide a clear explanation for the delay (e.g., medical emergency, technical failure of the portal, or legal disputes).
3. Documentation: Upload supporting evidence like medical certificates or digital error logs.
4. Adjudication: The authority must ideally dispose of the application within six months from the end of the month in which it was received.
5. Filing: Once approval is granted, the “e-File” link for that specific Tax Year will be enabled for your account.

Note: As per established policy, refunds claimed through this condonation route are not eligible for interest on the delayed payment.

Benefits of Section 422

• Fairness: Gives sincere taxpayers a “second chance” when circumstances beyond of their control make compliance impossible.
• Uniformity: Because police are required to comply to CBDT-issued criteria, they are prevented from making arbitrary decisions.
• Efficiency: Makes it possible to correct genuine mistakes without requiring taxpayers to file costly and time-consuming High Court writ petitions.

Conclusion

Section 422 maintains a balance between strict enforcement and administrative understanding. It ensures that procedural technicalities do not lead to an excessive financial loss for a taxpayer facing genuine difficulties. In this new era of the Income Tax Act, 2025, the process is more transparent and digitally integrated, but the requirement for “genuine hardship” remains the basis of any successful application. If you miss a deadline, act immediately and use the digital portal to seek relief under this provision.

India are developing their GST system into more of a technology-based framework within compliance. The government has implemented numerous ways to lessen tax evasion, use of false invoices, and taking advantage of input tax credit through digital means. The use of a track and trace mechanism would fall under this category of new technology as introduced in Section 148A of the CGST Act. The intent of this system is to keep track of goods that are subject to tax evasion without being solely reliant on the physical documentation and inspection of the goods but, instead, through digitally linking the movement of goods with the tax records that are produced for those goods.

As of 2026, the framework is active in certain sectors and has become an important part of GST enforcement.

Purpose of the Track and Trace System

The government introduced this mechanism mainly to control tax evasion in industries where underreporting and fake transactions are common. Certain products move through long supply chains, making it difficult to track whether the correct amount of tax has been paid.

Under this system, notified goods are required to carry a unique identification marking, commonly known as a UIM. This mark may appear in the form of a QR code, RFID tag, or another secure digital marking placed on the product or packaging.

The marking helps authorities verify the following:

• Whether the goods are genuine
• Whether tax has been correctly reported
• Whether the movement of goods matches GST records
• Whether fake Input Tax Credit claims are being made

This system creates better transparency because every stage of movement can be digitally traced.

Legal Framework

The legal foundation of the mechanism comes from Section 148A of the CGST Act. This provision was introduced through the Finance Act, 2025 and became effective from 1 October 2025 through Notification No. 16/2025 Central Tax.

The section gives power to the government to notify the following:

• Specific goods
• Certain classes of persons
• The manner in which goods must be marked and tracked

Another important provision is Section 2(116A), which defines the Unique Identification Marking. The law states that the marking should be secure and difficult to remove or alter.

The penalty provision has also become stricter. Under Section 122B, failure to comply with the track and trace requirements may result in the following:

• A penalty of ₹100,000
• Or 10 per cent of the tax payable on such goods
• Whichever amount is higher

This shows that the government considers non-compliance a serious offence rather than a small procedural error.

Current Position as of April 2026

The system has now moved beyond the planning stage. The government has already notified certain high-risk sectors, including tobacco product, pan masala, and selected pharmaceutical items. Manufacturers dealing in these sectors are required to follow additional compliance measures. They must submit declarations regarding production capacity, packaging machinery, and operational details through prescribed forms such as Form CE DEC 01.

Another major development is the integration of the UIM system with existing GST tools. The track-and-trace mechanism now works together with the following:

• E-invoicing
• E-waybill systems
• GST portal verification systems

For notified goods, businesses cannot generate a valid e way bill unless the Unique Identification Marking is verified through the GST portal. This has enhanced real-time monitoring of goods movement across the supply chain.

Impact on Businesses

The mechanism has changed the compliance responsibilities of manufacturers and dealers operating in notified sectors. Businesses now need stronger internal systems and accurate digital records.

Companies are expected to maintain manufacturing batch records, packaging details, transport records linked with digital markings, and proper reconciliation between stock and GST filings. Many businesses have also invested in digital printing and scanning technologies to ensure that their products comply with legal requirements.

The system has improved supply chain authenticity because authorities can now identify suspicious consignments more quickly. It has also reduced the chances of fake invoices and fraudulent transactions.

Conclusion

GST’s Track and Trace Mechanism marks a significant change in India’s indirect tax system, as it will now provide not only a digital identification for goods but also ‘real-time’ tracking for determining if goods are being produced and if they comply with rules, thereby moving away from being reliant mostly upon physical inspections and manual verifications to improve compliance via the use of these technical means.

As of 2026, the Track and Trace Mechanism has begun operations across multiple high-risk industries and is expected to continue to be implemented over time. Businesses that handle notified goods should take compliance very seriously because of the serious penalties associated with non-compliance.