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Income tax Department is actively cracking down those who claim refund or avoid tax liability by showing bogus and fake claimes and deductions. Check the Press release issued on 14th July 2025

Here, we will discuss how “Effective tax planning for small businesses in India ensures legal compliance and company sustainability in addition to cost savings”. There are several legal ways for small businesses to lower their tax liability under the Indian tax system.

Small business owners can reduce their tax liabilities without breaking any laws by taking advantage of deductions, schemes, and exemptions provided under the Income Tax Act of 1961 and other relevant laws.

1. Presumptive Taxation Scheme for Small Businesses (Section 44AD)

Section 44AD of the Income Tax Act governs the Presumptive Taxation Scheme, which is intended to make tax compliance easier for small business entities.

Who Is Allowed to Choose:

• Hindu Undivided Families (HUFs), partnership firms (except from LLPs), and resident persons
• Up to ₹3 crore in revenue annually (for companies that use digital transactions for at least 95% of total revenues) or Up to ₹2 crore in other cases

Benefits:

• Profits will be calculated at a turnover rate of 6% for digital receipts and 8% for cash receipts.
• No requirement to keep thorough books of accounts
• exemption from audits until you want to leave the scheme
• For qualified small firms, this lowers compliance expenses and offers predictable taxation.

2. Deductions Under Chapter VI-A of the Income Tax Act

By taking advantage of the deductions provided by Chapter VI-A, small businesses can drastically lower their taxable income. Eligible contributions, costs, and investments made throughout the financial year are eligible for these deductions.

Common deductions include:

Section	Eligible Deduction	Maximum Limit
80C	Investments in PPF, Life Insurance, ELSS, etc.	Up to ₹1.5 lakh
80D	Health insurance premium for self, family, parents	₹25,000 (₹50,000 for senior citizens)
80E	Interest paid on education loans	No upper limit (for eligible period)
80G	Donations to eligible charitable organisations	50% or 100% of donation, subject to conditions
80TTA/80TTB	Interest income from savings accounts/deposits	₹10,000 (₹50,000 for senior citizens)

Note: These deductions are available to eligible individuals, HUFs, and certain small business owners based on their nature and income.

Proper utilisation of Chapter VI-A deductions can help lower the overall taxable income in a legal and transparent manner.

3. Depreciation on Business Assets (Section 32)

Section 32 of the Income Tax Act allows small enterprises that purchase computers, automobiles, machinery, or other equipment for commercial purposes to claim depreciation.

Why It Is Relevant:

• Depreciation accounts for asset wear and tear to lower taxable profits.
• Certain assets, such as computers, energy-saving devices, and pollution control equipment, have higher depreciation rates.
• Proper depreciation claims lower tax liability and reflect actual business expenses.

4. GST Composition Scheme for Small Taxpayers

Companies with annual revenue up to ₹1.5 crore may choose to participate in the GST Composition Scheme, which reduces tax rates and simplifies tax reporting.

Benefits: 1% tax reduction for manufacturers and retailers and 5% tax reduction for restaurants.

• Simplified quarterly returns
• Exemption from issuing detailed tax invoices

The scheme makes compliance easier and lowers administrative costs for small businesses, even though ITC cannot be claimed with it.

Reference: CGST Act, 2017, Section 10

5. Start-up Tax Benefits for Eligible Businesses

Tax holidays and exemptions are available to recognised start-ups under the Department for Promotion of Industry and Internal Trade (DPIIT):

• 100% profit exemption for three consecutive years out of the first ten years since incorporation
• Annual turnover must not exceed ₹100 crore

These benefits help new small businesses reinvest profits and grow faster.

6. Claiming Business Expenses

As long as accurate records are kept, legitimate business-related expenses can be deducted from income:

• Rent for office or shop premises
• Utility bills (electricity, internet, telephone)
• Employee salaries and wages
• Repairs, maintenance, and consumables
• Professional fees and consultancy charges

Recording and reporting actual expenses is an effective legal way to reduce taxable profits.

7. Avoid Cash Transactions Above Allowed Limits

Section 269ST of the Income Tax Act limits cash receipts of ₹2 lakh or more from a single person in a single day. Encouraging digital transactions improves transparency and enables companies to:

• Take advantage from lower presumed profit rates under presumptive taxation (6% for digital receipts)
• Avoid charges for cash transaction violations

Conclusion

Small businesses can legally reduce their tax liabilities by taking benefit from the Income Tax Act’s provisions, including the Chapter VI-A deductions, choosing presumptive taxation, deducting depreciation, and taking benefit of simplified GST schemes.

Owners of businesses must keep correct records and consult experts when necessary, as well as stay updated with legislative changes. Legal tax planning promotes improved financial management and long-term company growth in addition to lowering tax costs.

What is Form 16?

Form 16 is a certificate that an employer issues to an employee in accordance with Section 203 of the Income Tax Act of 1961. It offers a comprehensive record of:

• Salary paid to the employee
• Tax deducted at source (TDS) from the employer
• Exemptions, deductions, and overall tax liabilities

According to the law, employers must provide Form 16 by June 15 of the following year. For example, Form 16 must be submitted by June 15, 2025, for income received during the financial year 2024–2025. An employee must get a separate Form 16 from each employer for the relevant time period if they have changed jobs during the year.

Parts of Form 16

There are two main parts of Form 16:

Included in Part A are:

• Employee and employer information, including name, address, and PAN
• TAN (Tax Deduction Account Number) of the employer
• Duration of employment
• Information on TDS collected and submitted to the government
• To guarantee authenticity and correctness, Part A is created using the government’s TRACES portal.

Part B offers:

• Salary breakdown with taxable income, benefits, and allowances
• Section 10 exemptions, including Leave Travel Allowance (LTA) and House Rent Allowance (HRA)
• Sections 80C, 80D, 80E, and other deductions under Chapter VI-A.
• Calculation of tax liability and taxable income
• Employees can simply file an accurate tax return by using Part B.

Who Can Apply for Form 16?

Form 16 is issued to salaried employees whose TDS has been deducted. No TDS is necessary, and the employer is not required to provide Form 16 if the total income is less than the basic exemption limit, which in FY 2024–2025 is ₹2.5 lakh for people under 60. Even though no TDS is deducted, many firms voluntarily give salary certificates to every employee.

How to Download Form 16

Form 16 cannot be downloaded by employees directly from the government website. The employer is responsible for creating it via the TRACES portal and giving the employee Part A and Part B in hard copy or digitally.

Before submitting their income tax return, employees should get Form 16 from their employer and confirm the accuracy of the information.

Difference Between Form 16, Form 16A, and Form 16B

A clear comparison of Forms 16, 16A, and 16B is shown in the table below:

Particulars	Form 16	Form 16A	Form 16B
Description	TDS certificate for income from salaries	TDS certificate for non-salary income, including professional fees, rent, and interest	TDS certificate for real estate purchases
Who Issues It	Employer	Deductor (banks, businesses, etc.)	The property’s buyer
Income Covered	Salary income	Other income (interest, rent, etc.)	Sale of immovable property
Regularity of Issue	Every year	Every three months	For each transaction
Limit for Issuance	When income exceeds basic exemption limit	When income exceeds applicable TDS threshold	When the sale price of a property exceeds ₹50 lakh
Purpose	Evidence of TDS and salary income for tax purposes	Evidence of TDS on non-salary income	Evidence of TDS on property purchase

What Makes Form 16 Important?

Form 16 is one of the most important documents for income tax compliance for salaried employees in India. It offers a thorough overview of salary income, tax exemptions, deductions, and taxes paid during the financial year and acts as documentation of the employer’s tax deducted at source (TDS). Form 16 serves as valid proof of income for credit card applications, loans, and other financial needs in addition to making income tax return (ITR) filing easier.

Things to Verify on Form 16

After receiving Form 16, employees should check:

• Correct personal details (name, PAN, address)
• Salary details and exemptions
• Deductions under Sections 80C, 80D, etc.
• Total TDS deducted matches Form 26AS records.

If there are any discrepancies, the employer should be contacted and asked to make the necessary corrections by filing a revised TDS return.

Conclusion

For salaried employees, Form 16 is an important document. It guarantees clarity in tax deductions, serves as valid proof of income, and makes filing tax returns easy. Every year, employees should collect and verify Form 16 and use it efficiently for financial transactions and tax compliance.

Filing your Income Tax Return (ITR) is a responsibility every taxpayer must fulfil. Filing correctly and on time saves you from fines, delays, and unnecessary issues. However, many people, especially first-time taxpayers, make common mistakes that can lead to problems like notices from the Income Tax Department, delayed refunds, or rejection of the return.

Here are some important mistakes to avoid while filing your ITR to make the process smooth and hassle-free.

1. Selecting the Wrong ITR Form

Choosing the correct ITR form is the first and most important step. The Income Tax Department has different forms for different types of taxpayers and income sources.

For example:

• ITR-1 (Sahaj)
• ITR-2
• ITR-3
• ITR-4 (Sugam)
• ITR-5
• ITR-6
• ITR-7

What to do: Check your income sources carefully and select the right form. Filing the wrong form can lead to rejection or notices from the department.

2. Failing to Include All Income

Many people only report their salary and forget other income, like:

• Bank interest (savings account, fixed deposits)
• Rental income
• Dividend from shares or mutual funds
• Freelance or part-time earnings
• Capital gains from shares, mutual funds, or property

What to do: Download your Form 26AS and AIS (Annual Information Statement) from the Income Tax portal to check all income reported to the government. Missing out on these details may result in notices or penalties.

3. Giving Incorrect Personal Details

Simple errors like wrong bank account details, PAN, Aadhaar, or email can delay your refund or lead to authorisation issues.

What to do: double-check your PAN, Aadhaar number, bank account number, and IFSC code before submitting your return.

4. Not Matching Your ITR with Form 26AS and AIS

Form 26AS: Shows the tax deducted by your employer, banks, or others.

AIS: Contains details of your income and financial transactions.

What to do: Compare the tax deducted, income earned, and other details in your Form 26AS and AIS before filing your return to avoid mismatches.

5. Ignoring Allowable Deductions

Many taxpayers forget to claim deductions under Chapter VI-A, which can help reduce their tax burden.

The most common deductions include:

• Section 80C – Investments in PPF, LIC, ELSS, etc. (up to ₹1.5 lakh)
• Section 80D – Health insurance premium
• Section 80G – Donations to eligible charities
• Section 80TTA/80TTB – Interest from savings accounts (₹10,000 or ₹50,000 for senior citizens)

What to do: Keep records of all eligible investments and expenses and claim them properly while filing ITR.

6. Forgetting to Verify Your ITR

Filing the return is not enough. You must verify your ITR within 30 days; otherwise, your return will be considered invalid.

You can verify by:

• Aadhaar OTP
• Net banking
• Demat account
• Sending a signed physical ITR-V to CPC, Bengaluru

What to do: Complete the verification process immediately after filing to avoid any issues.

7. Missing the Filing Deadline

For FY 2024-25 (AY 2025-26), the last date to file your ITR is 15th September 2025 for salaried individuals and small taxpayers.

Consequences of late filing:

• In case of late filing, Section 234F imposes a late fee of ₹5,000 if your total income exceeds Rs. 5 lakh and ₹1,000 if your total income is within Rs. 5 lakh.
• Interest on unpaid taxes
• Loss of some deductions and carry forward of losses

What to do: File your return well before the due date to avoid penalties and last-minute website glitches.

8. Wrong Calculation of Capital Gains

If you sold shares, mutual funds, property, or gold, you need to calculate capital gains carefully. Applying incorrect tax rates or ignoring indexation benefits can lead to mistakes.

What to do: Use reliable tools or consult a tax expert to calculate capital gains correctly.

Conclusion

Filing your ITR correctly is as important as filing it on time. Small errors like wrong details, missing income, or incorrect deductions can lead to notices, penalties, or refund delays. Always cross-check your documents, like Form 26AS, AIS, and investment proofs, before submitting your return.

Understanding the Input Tax Credit (ITC) under the Goods and Services Tax (GST) is important for businesses in order to reduce the tax burden. In order to prevent a cascade of taxes and cash flow restrictions, ITC makes sure that taxes are only applied to the value produced by goods at each level of the supply chain, rather than the combined value. Although claiming input tax credits is a straightforward idea, it does need timely return submission, documented verification, and compliance with and awareness of GST requirements.

What is Input Tax Credit (ITC)?

Input Tax Credit means that the GST paid on purchases or expenditures in the course of one’s business can be deducted against the GST expected to be collected on sales. ITC ensures that tax is payable only on the final value and prevents double taxation of the tax and value addition given to the services or products offered.

Example:

• You purchase raw materials worth ₹1,00,000 and pay ₹10,000 as GST.
• You sell finished goods worth ₹1,50,000 and collect ₹15,000 as GST.
• You can claim ITC of ₹10,000, which means you only pay ₹5,000 GST payable net.

So, ITC reduces tax liability and improves working capital efficiency.

Conditions to Claim ITC

A registered person under GST can claim ITC only when the following conditions are satisfied:

• The claimant must be registered under GST.
• Possession of a valid tax invoice or a debit note from a registered supplier.
• Goods or services are received.
• The supplier must pay GST to the government.
• The recipient must file a monthly GST return (GSTR-3B).
• Payment to the supplier must be made within 180 days from the invoice date.
• If the goods are received in instalments, ITC can be claimed only after the last lot is received.
• ITC can only be claimed for a business purpose; personal purchases are not covered.
• No ITC is permitted if depreciation has been claimed on the GST portion of capital assets.

ITC must also be claimed before:

• 30th November of the next financial year, or
• the date of filing the annual return, whichever is earlier.

Provisional ITC (i.e., claiming ITC without the supply having been reported in GSTR-1) was not required to be reported from January 2022.

How to Claim ITC?

The steps of claiming ITC under GST are as follows:

1. Reconciliation of Purchases Data

Match the purchase register with the GSTR-2B containing the invoice details as claimed by the supplier.

2. Verification of documents

Make sure that the tax invoices are valid and the supplier has complied with the GSTR-1 return filing.

3. GSTR-3B filing

In Table 4 of GSTR-3B returns, the eligible ITC, ineligible ITC, reversals and reclaims should all be declared.

4. Reverse Ineligible ITC

If the ITC is no longer available under Section 17(5) of the CGST Act or not claimed through GSTR-2B, then reverse the ITC when filing the GSTR-3B to avoid penalties down the line.

5. Proper Documentation

Keep all relevant invoices, debit notes, bills of entry and documentation if there was an ISD arrangement, all organised properly according to which audit/inspection that you might be facing.

Nowadays, companies use electronic tools that help them match GSTR-2B with purchase registers more accurately, increasing their chances of claiming ITC with minimal manual error or tax department enquiries.

When ITC Cannot Be Claimed

Under Section 17(5) of the CGST Act, businesses can find restrictions on ITC in the following circumstances:

• Goods or services that are used for personal consumption.
• Exempt supplies (i.e., supplies that are not taxable under GST).

The items specifically:

• A motor vehicle when used for personal purposes.
• Food, beverages, and club memberships (except if required by law).
• Health or life insurance (except if required by law).
• Construction of immovable property (i.e., building or office).
• Goods that have been lost, stolen, destroyed, or gifted.

Conclusion

Businesses that claim ITC under the GST have lower tax liabilities and better cash flow. However, if you wish to claim ITC, you must properly comply with ITC requirements and record and verify purchase data linked to GSTR-2B.

Companies are required to pay their suppliers on schedule and in accordance with GST regulations. In order to comply, businesses must also reverse ineligible ITC. Businesses may prevent errors, receive the full advantages of the ITC, and avoid penalties from tax authorities by using technology and automation to assist them in claiming the credit.

Capital Gains Tax is a tax imposed on the profits made when a capital asset (capital asset, i.e., property, stock, mutual funds, gold, etc.) is disposed of. Capital gains tax is a significant component of taxation and the tax system in India, affecting both investors and property owners.

The calculation, tax rates and exemptions for capital gains are based on how long the asset is held prior to its disposal. It is important for taxpayers to remain aware of their legal obligations because the budgets presented in Budget 2024 altered a number of capital gains tax rates, indexation, and asset types.

Types of Capital Gains

The types of capital gains are based on how long the asset is held before disposal. Typically, these are classified as 2 types:

Short-Term Capital Gains (STCG)

Short-Term Capital gains apply when the asset is sold in a short amount of time. The holding period depends on how the asset is held:

• For listed shares and equity mutual funds, where sold in 12 months
• For unlisted shares and properties, where sold in 24 months
• For other assets, such as gold, bonds, etc., which were sold in 36 months

Compared to long-term gains, the tax rate on profits from such sales is higher. Recent changes have raised the STCG tax rates for mutual fund redemptions and listed equity shares in an attempt to prevent speculation and short-term trading.

Long-Term Capital Gains (LTCG)

If the asset is held over and beyond the short-term thresholds discussed above, any profit on the sale of the asset would be treated as a long-term capital gain. The holding periods are:

• Over 12 months for listed equity shares and mutual funds
• Over 24 months for unlisted shares and immovable property
• Over 36 months for all other assets

LTCG will generally be taxed at lower rates than STCG. The only disadvantage is that for the sale of most assets, indexation will be eliminated for sales after July 23, 2024.

Capital Gains Tax Rates (FY 2025–26)

The tax rates that apply are shown below:

Asset Type	Holding Period	Tax Rate
Listed Equity Shares & Equity Mutual Funds	Short-Term (≤ 12 months)	20% (previously 15%)
	Long-Term (> 12 months)	12.5% on amounts above ₹1.25 lakh
Unlisted Shares & Real Estate	Short-Term (≤ 24 months)	Taxed as per slab
	Long-Term (> 24 months)	12.5% without indexation
Gold, Bonds, Debentures, Other Assets	Short-Term (≤ 36 months)	Taxed as per slab
	Long-Term (> 36 months)	12.5% without indexation

Note: Because most long-term assets were sold after July 23, 2024, indexation has been removed.

Exemptions on Capital Gains Tax

The Income Tax Act has exemptions for reinvestment of capital gains in certain sections:

Section 54: Exemption on the sale of residential property if reinvested in another house.

Section 54F: Exemption on the sale of any long-term capital asset if the sale profits are reinvested in a house.

Section 54EC: Exemption allowed if the profits are invested in specified bonds within 6 months of sale.

The Capital Gains Account Scheme (CGAS) can be used to temporarily store the sale profits in case immediate reinvestment is not possible.

Conclusion

Capital Gains Tax (CGT) plays a vital role in wealth management and decision-making in investing. It is critical to understand the difference between short-term capital gains and long-term capital gains so tax liabilities can be planned accordingly.

With the recent tax changes, some careful investment planning and holding periods beyond short-term assets and all the exemptions as per the new laws may reduce tax liability.

Income Tax Return is referred to as ITR. Different Income Tax Return (ITR) forms have been provided by the Indian Income Tax Department for different taxpayer categories. Every form is made according to the taxpayer’s category and the type of income. For compliance, accurate tax assessment, and penalty avoidance, it is essential to file the correct ITR form.

An Income Tax Return (ITR) is a form that taxpayers submit to the income tax department stating their earnings and any necessary taxes.

Till now, the department has issued seven forms. It is essential that all taxpayers submit their ITRs before the due date. ITR forms are applicable in many ways depending on the taxpayer’s income sources, income amount, and taxpayer category (individuals, HUF, firm, etc.).

ITR – 1 (SAHAJ)

The ITR-1 has been designed for residents with annual incomes up to ₹50 lakh. It can be applied if sources of income consist of:

• Pension or salary
• Income from a single property (unless there is a carried loss)
• Other sources of income (not include prizes from horse racing or the lottery)
• Income from agriculture up to ₹5,000
• Section 112A allows for long-term capital gains of up to ₹1.25 lakh without carrying forward losses

However, anyone with business or professional income, multiple home properties, capital gains that exceed certain restrictions, overseas assets or income, directorship in a corporation, or investments in unlisted equity shares are not permitted to use ITR-1.

ITR – 2

Individuals and HUFs without business or professional income are subject to ITR-2. It works well if your earnings include of:

• Pension or salary
• Revenue from residential real estate, including multiple properties
• Capital gains
• Foreign assets and income
• Agricultural earnings that exceed ₹5,000
• Other sources of income, such as winners from horse racing and the lottery

If you have unlisted equity shares, are a Resident Not Ordinarily Resident (RNOR), are a non-resident, or are a director of the company, you must file an ITR-2. This form is not intended for people who make a living through their profession or company.

ITR – 3

Individuals and HUFs with business or professional income are required to file ITR-3. It includes the following:

• Private businesses or occupations (where an audit is required or books of accounts are maintained)
• Income from partnerships (as a partner in a firm)
• earnings from capital gains, real estate, salaries, and other sources

ITR-3 is the appropriate form to use if your income comes from a proprietary business or occupation that is not subject to presumed taxes.

ITR – 4 (SUGAM)

Individuals, HUFs, and businesses (except from limited liability partnerships) that choose presumptive taxes under Sections 44AD, 44ADA, or 44AE and are residents are subject to ITR-4. It can be applied if:

• Up to ₹50 lakh is the total income
• Sections 44AD or 44AE are used to declare business income
• Section 44ADA’s definition of professional income
• income from a job, a single residence, or other sources (not including prizes from horse racing or the lottery)

This form is also available to freelancers with gross incomes up to ₹50 lakh. However, if you have income beyond ₹50 lakh, own foreign assets, or are a director of a corporation, you cannot use ITR-4.

ITR – 5

ITR-5 is meant for:

• Firms
• LLPs
• AOPs (Association of Persons)
• BOIs (Body of Individuals)
• Artificial Juridical Persons
• Estate of deceased or insolvent persons
• Business trusts and investment funds

ITR-5 should be filed by entities that must report income, excluding corporations and trusts.

ITR – 6

Companies are regulated by ITR-6, with the exception of those that assert an exemption under Section 11 (charitable/religious reasons). This return must be submitted electronically by businesses using a digital signature.

ITR – 7

ITR-7 is used by institutions, political parties, trusts, and other organisations that must file returns under:

• Section 139(4A): Trusts and legal obligations for charitable/religious purposes
• Section 139(4B): Political parties
• Section 139(4C): News agencies, scientific research associations, educational and medical institutions
• Section 139(4D): Universities and colleges
• Section 139(4E) & (4F): Business trusts and investment funds

WHY SHOULD YOU FILE ITR?

In addition to being required by law, submitting an ITR offers the following benefits:

• helps in obtaining income tax refunds
• Necessary for loan and visa applications
• allows capital or commercial losses to be carried forward
• serves as evidence of income
• required for businesses, including those with little profit

CONCLUSION

The type of income, the taxpayer category, and the income level all affect which ITR form is appropriate. Rejection or penalties may follow the submission of an inaccurate form.

Here, this is just a brief about how to know which ITR Form is applicable to you based on your income structure. Consult your Tax consultant before opting for ITR Form or connect with us through

91-9267970588 or taxacumen.consultancy@gmail.com

Goods and Services Tax (GST) is a form of indirect tax levied on the supply of goods and services in India. This multi-stage tax is at every stage of the supply chain, with the advantage of Input Tax Credit (ITC) at every stage. The current structure is transparent and uniform in taxation across states and avoids the cascading effect of taxes.

The central aim of GST is to support the concept of “One Nation, One Tax” through simplification and streamlining of India’s indirect taxation system.

Central Goods and Services Tax (CGST)

Central Goods and Services Tax (CGST) is imposed by the central government through the CGST Act, 2017. It is payable on all intrastate supplies of goods and services—i.e., where both the supplier and recipient are within the same state or union territory.

CGST is levied with SGST or UTGST on the very same taxable supply. The overall GST rate is divided evenly between the State and the Centre. For instance, if a commodity is taxed at 18%, then 9% is CGST and 9% is SGST. The CGST amount goes into the account of the central government and is utilised for national-level spending such as infrastructure, defence, and centrally sponsored schemes.

The central government allows input tax credits of CGST on acquisitions, which can be utilised to offset CGST or IGST liability but not SGST.

State Goods and Services Tax (SGST)

State Goods and Services Tax (SGST) is charged by the state governments under their respective SGST Acts, which have been enacted in line with the central GST structure. SGST is also charged in intra-state transactions and is levied by the state on which consumption takes place.

The state government involved receives the revenue from SGST. Similar to CGST, the SGST share of a transaction typically accounts for 50% of the overall GST. These revenues are utilised to fund state-level development like education, healthcare, infrastructure, and welfare schemes.

SGST paid as input tax can be utilised to set off SGST or IGST (in certain situations), but not CGST, which assists in keeping the revenues of states and the centre free from mutual dependence.

Illustration: A restaurant business in West Bengal offers services amounting to ₹10,000. If GST is 18%, ₹900 is CGST and ₹900 is SGST.

Union Territory Goods and Services Tax (UTGST)

Union Territory Goods and Services Tax (UTGST) is charged on intra-state supplies made within Union Territories (UTs) that lack legislatures. It is administered under the UTGST Act, 2017, and is payable in the following UTs:

• Andaman and Nicobar Islands
• Lakshadweep
• Chandigarh
• Dadra and Nagar Haveli and Daman and Diu
• Ladakh

In such regions, UTGST substitutes for SGST and is charged together with CGST. Both might be collected by the central government, but UTGST is separately credited to an account from CGST.

Similar to what occurs in SGST, the total GST is divided equally—e.g., CGST 9% and UTGST 9% for an 18% GST rate.

Note: UTs having their own legislature, i.e., Delhi, Jammu & Kashmir, and Puducherry, are not covered under UTGST. In such cases, SGST is charged in lieu.

Integrated Goods and Services Tax (IGST)

Integrated Goods and Services Tax (IGST) is charged by the Central Government under the IGST Act, 2017, and is levied on:

• Inter-state transactions (from one state or UT to another state or UT)
• Import of goods or services into India
• Export of Indian goods or services
• Supply to or by Special Economic Zones (SEZs)

IGST replaces the previous Central Sales Tax (CST) and follows a destination-based taxation system. That is, tax is levied and paid in the state where the goods or services are consumed, rather than where they are manufactured.

In interstate transactions, the seller levies IGST, which is paid to the central government. The Centre then remits the due share to the destination state where the services or goods are ultimately consumed.

Illustration:

A supplier in Maharashtra supplies goods to a customer in Haryana for ₹1,00,000 at 18% GST. The supplier collects ₹18,000 as IGST and remits the same to the Centre. The Centre subsequently adjusts Haryana’s share accordingly.

Yet another advantage of IGST is the cross-utilisation of the credit of input tax. IGST credit may be utilised to discharge IGST, CGST, or SGST, hence being extremely flexible and important for the free flow of credit and to avoid tax cascading.

The new tax regime under Section 115BAC(1A) and the old tax regime with deductions and exclusions are the two tax regimes that the Indian government permits salaried individuals and specific taxpayers to select between. The taxpayer must submit Form 10-IEA in order to keep the old regime.

What is Form 10-IEA?

The Income Tax Department introduced Form 10-IEA, a statutory declaration form. If a taxpayer wants to take advantage of deductions like the HRA, Section 80C benefits, standard deduction, etc., they can choose to stay under the old tax regime and avoid the default new one. This is particularly relevant for taxpayers who make money from their business or profession.

Who Should File Form 10-IEA?

Some taxpayers do not need to file Form 10-IEA. It is only required for Hindu Undivided Families (HUFs) and persons who:

• Having earnings that are classified as “Profits and Gains of Business or Profession”, choose to stick with the old tax regime rather than the new tax regime that was implemented in AY 2024–2025.
• It is not required for salaried individuals without company or professional income to file Form 10-IEA. When submitting their ITR, they have the option to select the previous regime directly. Nevertheless, the regime is only effective for that financial year after it is chosen.

Form 10-IEA: Why Was It Introduced?

Taxpayers previously opted for the new regime using Form 10-IE. However, the new tax regime is now the default choice starting in AY 2024–2025. Therefore, Form 10-IEA must be submitted by those who want to stay under the old regime.

By switching to a low-rate, no-exemption system, the government is attempting to simplify taxes while still providing flexibility to individuals who like common deductions.

The Procedure to File Form 10-IEA (Step-by-Step Guide)

Follow these simple steps to file Form 10-IEA online through the Income Tax e-filing portal:

Step 1: Log in on the e-Filing Portal

• Visit: https://www.incometax.gov.in
• Click on ‘Login’.
• Enter your PAN, password, and captcha code.

Step 2: Go to Income Tax Forms

• On the dashboard, click:
• ‘e-File’ > ‘Income Tax Forms’ > ‘File Income Tax Forms’

Step 3: Search and Select Form 10-IEA

• Scroll down or enter ‘Form 10-IEA’ in the search box.
• Click ‘File Now’ next to the form.

Step 4: Select the Correct Assessment Year

• Choose the assessment year for which you’re filing the return.
• Example: For FY 2024–25, select AY 2025–26.

Step 5: Check Required Documents & Click ‘Let’s Get Started’

• You’ll be shown a list of details needed to file the form.
• Once ready, click ‘Let’s Get Started’.

Step 6: Declare Business/Profession Income Status

• If you have income under “Profits and Gains from Business or Profession”, select ‘Yes’.
• Select the applicable due date for filing the return, then click ‘Continue’.
• Click the “Help Document” link for support with due dates.

Step 7: Confirm Your Regime Selection

• Click ‘Yes’ to confirm you are opting for the old tax regime.

Step 8: Fill Out All 3 Sections of the Form

i. Basic Information

• Your name, PAN, assessment year, and status will be auto-filled.
• If this is your first time opting out, the “Opting Out” option will be selected by default.
• If you have previously filed Form 10-IEA, the “Re-entering” option will be auto-filled.
• Click ‘Save’.

ii. Other Information

• This section requires you to declare whether you have any IFSC unit (under Section 80LA).
• If applicable, enter IFSC details and click ‘Save’.
• If you’re opting out of the new regime, this panel may be blacked out.

iii. Declaration & Verification

• Review the declaration section carefully.
• Tick the confirmation boxes and verify the details.
• Click ‘Preview’ to check the entire form before submission.

Step 9: e-Verify the Form

Choose one of the methods below to e-verify:

• Aadhaar OTP
• Digital Signature Certificate (DSC) – required if under audit
• Electronic Verification Code (EVC) via net banking or pre-validated bank account

Step 10: Submit the Form

• After successful verification, click ‘Yes’ to submit the form.

Step 11: Acknowledgement

Once submitted, a success message appears on screen with:

• Transaction ID
• Acknowledgement Receipt Number
• Keep these details for reference.

To download the submitted form, go to:

• ‘e-File’ → ‘Income Tax Forms’ → ‘View Filed Forms’

Due date: According to Section 139(1) of the Income Tax Act, you must file Form 10-IEA prior to the deadline for filing your Income Tax Return (ITR). For the majority of people, this is July 31st after the financial year ends.

Absence of Compliance: If you do not submit Form 10-IEA by the ITR deadline, the system will presume that you are selecting the default new choice, and you will not be able to claim exemptions or deductions permitted under the previous regime.

Conclusion

Form 10-IEA is a crucial document for taxpayers who want to take advantage of common deductions and exemptions while maintaining the old tax regime. The government’s objective to provide flexibility while promoting a simpler system is reflected in it. ITR processing runs smoothly and eliminates unnecessary tax charges when it is filed accurately and on time. At filing time, knowing when and how to utilise this form can help you avoid problems and save money.

Every individual tax payer always looking for the way to legally minimize their liability. Here, there are several deductions available under Chapter VI-A of the Income Tax Act that can lower your income tax. The amount of tax you have to pay can be reduced by lowering your gross total income through investments in certain plans or expenditure on qualified expenses.

One must know that, many sections for deductions are not available for those who opt for New Tax Regime tax payers.

Section	Feature
80C	Tax-saving investments and expenses
80CCC	Pension fund payments
80CCD(1), 80CCD(1B), 80CCD(2)	NPS contributions (self and employer)
80D	Medical insurance premium
80DD	Medical care of disabled dependents
80DDB	Treatment of specified diseases
80E	Interest on education loan
80EE	Interest on home loan (first home, FY 2016-17)
80EEA	Interest on housing loan
80EEB	Interest on electric vehicle loan
80TTA	Savings account interest
80TTB	Senior citizens’ deposits interest
80GG	Rent (without HRA)
80U	Deduction for disabled individuals
80G	Donations to charities
80GGB / 80GGC	Donations to political parties
80RRB	Royalty on patents
80QQB	Royalty income for authors

Section 80C – Deductions on Investments and Expenses

For tax savings, Section 80C is the most popular choice. Up to ₹1.5 lakh can be claimed annually for investments and payments, including Sukanya Samriddhi Yojana, EPF contributions, PPF deposits, life insurance premiums, ELSS mutual fund investments, NSC, tax-saving FDs, and Senior Citizens Savings Scheme.

Deductions are also available for principal repayments on home loans, stamp duty/registration costs, and tuition for two children.

Section 80CCC and 80CCD – Pension Schemes

A deduction for pension fund payments is permitted under Section 80CCC, up to a total of ₹1.5 lakh when paired with Section 80C.

The National Pension System (NPS) or Atal Pension Yojana contributions are deductible under Section 80CCD(1). Up to 10% of their salary may be claimed by salaried workers, and up to 20% of their gross total income may be claimed by independent contractors.

Additional payments to NPS are eligible for an additional ₹50,000 deduction under Section 80CCD(1B).

Employers are permitted to contribute to NPS under Section 80CCD(2); these contributions are not included in the ₹1.5 lakh limit.

Section 80D – Medical Insurance Premium

Premiums for health insurance are deductible under Section 80D. You and your family are eligible to receive up to ₹25,000 (or ₹50,000 if you are an elderly person), and your parents are eligible for an additional ₹25,000 or ₹50,000. Preventive health examinations are also eligible for up to ₹5,000 in reimbursement. You can receive up to ₹1 lakh in combined benefits if you and your parents are both elderly.

Medical Care for Dependents with Disabilities Under Section 80DD, deductions are permitted under Section 80DD if you spend money on a disabled dependant’s medical care, education, or rehabilitation. For a standard disability, you can get ₹75,000, and for a severe disability, ₹1.25 lakh.

Section 80DDB – Medical Treatment of Specified Diseases

The costs of treating some serious illnesses, such as cancer or kidney failure, can be deducted under Section 80DDB. If you are under 60, you can claim up to ₹40,000, and if you or your dependant are an elderly person, you can claim up to ₹1 lakh.

Section 80E – Education Loan Interest

For yourself, your spouse, your children, or a student for whom you are a legal guardian, Section 80E permits you to deduct interest paid on an education loan taken out for further education. From the year you begin loan repayment, you can take use of this benefit for eight years.

Section 80EE / 80EEA – Interest on Home Loan

Only homeowners (individuals) who owned a single home on the loan approval date are eligible for the deduction under section 80EE.

Only if the loan was taken out during FY 2016–17 can this deduction be claimed starting in FY 2016–17.

An extra ₹1.5 lakh can be deducted from interest paid on loans taken out for affordable housing under Section 80EEA.

Section 80EEB – Interest on Electric Vehicle Loan

A deduction of up to ₹1.5 lakh can be made under Section 80EEB for interest paid on loans for the purchase of electric vehicles. This encourages people to take eco-friendly transportation.

Section 80TTA / 80TTB – Interest on Deposits

Individuals and HUFs may deduct up to ₹10,000 in interest from savings accounts under Section 80TTA.

Senior adults are eligible for a higher deduction limit of ₹50,000 on interest generated from bank and post office accounts under Section 80TTB.

Section 80GG – Rent Paid

If you do not receive House Rent Allowance (HRA) from your employer, you can deduct the amount of your rent under Section 80GG. There are limitations on the deduction depending on your income and rent amount.

Section 80U – Deduction for Disabled Individuals

According to Section 80U, individuals with disabilities are eligible to receive ₹75,000 for a normal disability and ₹1.25 lakh for a severe disability.

Section 80G – Donations to Charitable Institutions

Donations made to authorised charitable organisations and funds are deductible under Section 80G. Depending on the fund’s eligibility, you can claim either 100% or 50% of the donation amount. You must use banking channels to make donations beyond ₹2,000.

Section 80GGB / 80GGC – Political Contributions

Companies that donate to political parties or electoral trusts may deduct their expenses under Section 80GGB.

The same advantage is offered to individual taxpayers under Section 80GGC.

Section 80RRB – Royalty on Patents

Section 80RRB permits you to claim up to ₹3 lakh or the actual income, whichever is less, if you get royalties from a registered patent.

Authors of books (excluding textbooks) can claim a deduction of up to ₹3 lakh under Section 80QQB on their royalty income.

An indirect tax is one that is levied on the consumption of goods and services. It is not applied immediately to a person’s earnings. Instead, the seller must pay the tax in addition to the price of the goods or services they bought. An indirect tax is collected and paid to the government by an individual in the supply chain, such as a manufacturer or retailer.

However, when a customer buys a good or service, the producer or retailer incorporates the tax in the price. The buyer ultimately pays the tax by increasing the product’s price.

The indirect tax structure in India can be better understood by looking at the following list of indirect taxes:

Goods and Services Tax (GST)

One of the most significant reforms in India’s tax structure, GST, or Goods and Services Tax, has replaced many older levies that once fell under different types of indirect taxes. Introduced on July 1, 2017, GST consolidated multiple state and central taxes into a single tax applied to the supply of goods and services across the country.

GST is structured to promote transparency and remove the cascading effect of tax-on-tax. It is applicable at every stage of the supply chain, right from the manufacturer to the end consumer. The tax you pay is divided among different authorities based on the nature of the transaction:

• Central Goods and Services Tax (CGST): Collected by the central government on intra-state sales (within the same state).
• State Goods and Services Tax (SGST): Collected by the state government on intra-state sales.
• Integrated Goods and Services Tax (IGST): Collected by the central government on inter-state transactions (between different states).
• Union Territory Goods and Services Tax (UTGST): Applied in Union Territories where SGST does not apply.

Different slabs of GST rates—0%, 5%, 12%, 18%, and 28%—are distinguished based on the goods or services being offered. The majority of consumer products and services are between 5% and 28%, apart from certain requirements.

GST has made it easier for businesses to comply with the tax system and guaranteed that you, as a consumer, pay a more efficient and transparent tax.

Customs Duty

According to the Customs Act of 1962, customs duty is a tax levied on the import and export of commodities. Basic customs duty, countervailing duty, and anti-dumping duty are some of its constituent parts. In addition of generating money, customs taxes also aid in controlling international trade and safeguarding local businesses.

Excise duty

Previously a significant indirect tax on Indian manufacturing, excise duty is now only applied to specific goods including alcohol, tobacco, and petroleum products. Other products are now subject to the GST system. The central government and state governments in these exempted categories still rely heavily on excise duty as a source of funding.

Value Added Tax (VAT) and Sales Tax

Value Added Tax (VAT) and Sales Tax were the two main state-level taxes on the sale of products prior to the introduction of the Goods and Services Tax (GST). VAT still applies to petroleum items and alcoholic drinks, which are exempt from the GST structure because of constitutional requirements, even though the GST has replaced them for the majority of goods.

Stamp Duty

State governments impose stamp duty, a tax, on a variety of legal documents, including agreements, sale transactions, and property transfers. Stamp duty is a separate fee on transactions involving immovable property and is not included in the GST. It is governed by the Indian Stamp Act, 1899, and the legislation of the respective states.

Entertainment Tax

Now mostly incorporated into GST, the entertainment tax was previously imposed by state governments on services including cable TV, amusement parks, and movie tickets. It may still be applied to certain entertainment services that are not included by the GST system, however, by certain states and local governments.