INCOME TAX AMENDMENTS FOR MAY/JUNE 2025 EXAMS

Applicable A.Y. 2025-26 [F.Y. 2024-25]

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A. SALARIES

Rent Free Accommodation

Government Employee(1) Others (2) Hotel Accommodation(3)

Licence Fees 24% of Salary or Hotel Charges

whichever is lower
-

Accommodation owned by Employer If Accommodation

(2a) taken on Rent (2b)

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10% of salary or rent paid by

employer, whichever is lower.

If population(#)less than If population(#) If population (#)

15 Lacs 15 – 40 Lacs > 40Lacs

5% of Salary 7.5% of salary 10% of Salary

(#) As per 2011 census

If the employer provides furniture also then the amount to be added shall be 10% p.a. of the Cost of furniture
or hire charges as the case may be.

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DEDUCTIONS FROM SALARY (Section 16)

From the Gross Salary arrived the following deductions are allowed to the assessee:
1.Standard Deduction [Section 16(ia)The employee shall be allowed a deduction of ₹ 75,000 or the
amount of Gross Salary, whichever is lower under New Tax regime of Section 115BAC(1A).

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In old tax regime it is maximum Rs. 50000

2. Entertainment Allowance [Section 16(ii)]: Deduction on account of entertainment allowance is allowed

only to Govt. employees. The deduction is allowed to the extent of the least of the following: [NO deduction
under Default Tax Regime U/s 115BAC]

• Actual amount received

• 20% of Basic salary
• ₹5000 p.a.
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3. Professional Tax [Section 16(iii)]:As per Section 16(iii), a deduction of any sum paid by the assessee, on
account of a tax paid on employment shall be allowed. This deduction is allowed on payment basis. [NO
deduction under Default Tax Regime U/s 115BAC]

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ILLUSTRATIONS

Question 1: Mr. X is employed in a concern on a monthly salary of ₹ 50,000 per month and an
entertainment allowance and commission of ₹ 1,000 p.m. each. The company provides him with the
following benefits:

1. A company owned accommodation is provided to him in Delhi. Furniture costing ₹ 2,40,000 was
provided on 1.8.2024
2. A personal loan of ₹ 5,00,000 on 1.08.2024 on which it charges interest @ 6.75% p.a. The entire loan
is still outstanding. (Assume SBI rate of interest to be 12.75% p.a.)
3. The company gave him a ring worth ₹14,900 on his 40th birthday on 21.09.2024.
4. He made purchases of ₹ 12,000 on his credit card. The amount along with the annual fees of ₹ 2,000
was paid by the company.
5. His son is allowed to use a motor cycle belonging to the company. The company had purchased this
motor cycle for ₹ 60,000 on 1.05.2021. The motor cycle was finally sold to him on 1.08.2024 for ₹
30,000.
6. He is provided with a motor car which is used for both official and personal purpose by the employee.
The running and maintenances charges fully paid by employee ₹ 36,000.
7. The company pays the telephone bills of ₹ 18,000 for the telephone installed at his residence
8. Expenditure on accommodation in hotels while touring on official duties met by employer ₹ 30,000
9. Value of lunch provided by the employer during office hours. Cost to the employer ₹ 12,000.
10. Mr. X is provided with free electricity. Cost to the employer is ₹ 10,000
11. Life Insurance premium paid by employer Rs. 1,00,000
12. Professional Tax paid by Mr. X is ₹ 2,000
Compute his tax liability under Traditional Tax Regime and Under New Tax Regime u/s. 115BAC,
assuming he has no other income.

Solution:
Particulars Optional regime Default
if opted out of Regime U/s
Section 115BAC 115BAC
Basic Salary ₹6,00,000 6,00,000
Entertainment Allowance ₹12,000 12,000
Commission ₹12,000 12,000
Perquisite value of RFA
10% of ₹ 624000 62400
Add: 10% p.a. of cost of furniture (240000 x 10% x 8/12) 16000 ₹78,400 78,400
Perquisite value of Interest On loan
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 500000 x (12.75 – 6.75)% x 8/12 ₹20,000 20,000
Perquisite value of Gift by Employer – ₹9,900 9,900
Exempted upto 5000 p.a. [14900-5000]
Perquisite value of credit card expenses by employer ₹14,000 14,000
(12000 +2000)
Perquisite value of use & transfer of Motor cycle [note 1] ₹14,000 14,000

Perquisite value of use of car capacity does not exceed ₹7,200 7,200
1.6ltrs(600 x 12)
Perquisite value of Telephone Bills- exem-pted Nil Nil
Perquisite value of Hotel accommodation on official tour Nil Nil
Perquisite value of lunch(assuming at office premises) Nil NIL
Cost of meal: 12000/300 = 40 per meal, hence exempted
PV of electricity provided 10,000 10,000
Life Insurance premium paid by employer 1,00,000 1,00,000
Gross Salary 8,77,500 8,77,500
Less: (1) Standard Deduction (50,000) (75,000)
(2) Professional Tax (2,000) -
Net Taxable Salaries /Total Income ₹8,25,500 8,02,500
Note 1:
Use of motor cycle (April 2024 to July 2024 ) [60000 x 10/100 x 4/12] 2,000
Transfer of Motor cycle
Original cost 60000
Less: Depreciation @ 10 % for 3 completed years 18000
42000
Less: Sale Proceeds 30000 12000
14000
Computation of Tax liability
A. Under Traditional Regime/Optional regime B. Default Regime U/s 115BAC
Upto 2,50,000 NIL Upto 3,00,000 NIL
Next 2,50,000 @ 5% 12,500 Next 4,00,000 @ 5% 20,000
Bal. 3,25,500 @ 20% 65,100 Next 1,02,500 @ 10% 10,250
77,600 30,250
Add: Health and Education Cess @ 4% 3,104 Add: Health and Education Cess @ 4% 1,210
80,704 31,460
R/off 80,700 R/off 31,460
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Question 2: Ms. Jaya is the marketing manager in XYZ limited. She gives you the following particulars:

Basic Salary ₹ 65,000 p.m.

Dearness Allowance ₹ 22,000 p.m. (30% is for retirement benefits)
Bonus ₹ 17,000 p.m.

Her employer has provided her with an accommodation on 1st April ,2024 at a concessional rent. The house
was taken on lease by XYZ Ltd. for ₹ 12,000 p.m. Ms. Jaya occupied the house from 1st November, 2024.
₹4,800 p.m. is recovered from the salary of Ms. Jaya.

The employer gave her a gift voucher of ₹ 8,000 on her birthday. She contributes 18% of her salary (Basic
Pay + DA) towards recognized provident fund and the company contributes the same amount.

The company pays medical insurance premium to effect insurance on the health of Ms. Jaya ₹ 18,000.

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Motor car owned by the employer (cubic capacity of engine exceeds 1.6 litres) provided to Ms. Jaya from 1 st
November, 2024 which is used for both official and personal purposes. Repair and running expenses of
₹50,000 were fully met by the company. The motor car was self-driven by the employee.

Compute her tax liability under Traditional Tax Regime and Under default Tax Regime u/s. 115BAC,
assuming he has no other income.

Answer: Computation of income from Salaries of Ms. Jaya for the A.Y.2025-26
Particulars Traditional New Tax
Regime (₹) Regime (₹)
Basic Salary [₹65,000 * 12] 7,80,000 7,80,000
Dearness allowance [₹ 22,000 * 12] 2,64,000 2,64,000
Bonus [₹ 17,000 * 12] 2,04,000 2,04,000

Perquisite value of accommodation at concessional rent [10% of (65000 + 20,300 20,300

6600+17000) x5 ]or rent paid by employer for 5 months., whichever is
lower = 12000 x 5 ]less [rent paid by employee 4800 x 5 ]

Gift voucher received from employer ₹[8,000 – 5000] 3,000 3,000

Employer’s contribution to recognised provident fund in excess of 12% of 84,816 84,816

Salary is taxable as per section 17(1)(iv)18% * [(₹ 65,000 + ₹ 22,000) *
12] – 12% * {[₹ 65,000 + ₹ 6,600 (being 30% of ₹22,000)] * 12} =
1,87,920 – 1,03,104
[Salary = Basic salary + Dearness allowance, to the extent it forms part of
Pay for retirement benefits]

Medical insurance premium paid be employer – fully exempted NIL NIL

Perquisite Value of motor car for partly personal partly official purpose of 12,000 12,000
capacity more than 1.6 litres) owned by the employer expenses fully met
by the employer – the perquisite value would be ₹ 2,400 p.m. [₹ 2,400 * 5
months]
Salary 13,68,116 13,68,116
Less:- Standard Deduction u/s 16(ia) 50,000 75,000
13,18,116 12,93,116
Less: Deduction under chapter VIA [Sec. 80C employees contribution to 1,50,000 -
RPF ₹1,87,920 or maximum allowed ₹1,50,000, whichever is lower
Total Income 11,68,116 12,93,116
Total Income (R/Off) 11,68,120 12,93,120

Computation of Tax liability

A. Under Traditional Regime B. Under New Tax Regime [Section 115BAC]
Upto 2,50,000 NIL Upto 3,00,000 NIL
Next 2,50,000 @ 5% 12,500 Next 4,00,000 @ 5% 20,000
Next 5,00,000 @ 20% 1,00,000 Next 3,00,000 @ 10% 30,000
Bal.1,68,120 @ 30% 50,436 Next 2,00,000 @ 15% 30,000
1,62,936 On bal 93,120@ 20% 18,624
Add: Health and Education Cess @ 4% 6,517 98,624
1,69,453 Add: Health and Education Cess @ 4% 3945
1,02,569
R/off 1,69,450 R/off 1,02,570
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 B. PROFITS OR GAINS OF BUSINESS OR PROFESSION

1. Amendment in Remuneration limits for partnership firm

Remuneration to Partners

1. Remuneration (salary, Bonus, Commission etc.) is allowable only to working partner.

2. Remuneration must be authorized by the deed.

3. The amount of remuneration paid to all the partners in aggregate shall not exceed the following amounts:
Book profit –
On the first ₹ 6,00,000 of the book profit ₹ 3,00,000 or 90% of book profit whichever is more

On balance 60%

In case of Book Loss ₹ 3,00,000 i.e. Amount paid to working partners or

₹3,00,000 whichever is lower.

Book profit means profit as computed in accordance with the provisions but before remuneration paid to
partner
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Question 3: Net Profit as per P/L account: ₹10,00,000

After debiting the following items:

(1) Remuneration to partners: ₹4,00,000 ( 2,00,000 to each X & Y )

(2) Interest to partners: ₹1,50,000 @ 15% ( ₹75000 each X & Y )

(3) Depreciation: ₹1,20,000 .

Note: Depreciation as per IT rule : ₹ 1,00,000.

Solution: Computation of profit or gains of business or profession

Particulars Amount ( ₹ ) Amount ( ₹ )

Net profit as per P/L 10,00,000
Add: Items debited to P/L but not allowable
( a ) Depreciation as per books 1,20,000
( b ) Interests to partners in excess of 12% p.a ( 1,50,000/15*3 ) 30,000
( c ) Remunerations to partners 4,00,000 5,50,000
Less 15,50,000
Depreciation as per Income tax rules 1,00,000
Business income before deducting remuneration / Book profit 14,50,000
Less: Remuneration allowable lower to the followings :
( 1 ) Amount actually paid 4,00,000
( 2 ) 90% of ₹ 6,00,000 + 60% of ₹ 8,50,000 10,50,000 4,00,000
Business Income 10,50,000

Taxability in the hands of partners

Particulars X ( In ₹ ) Y ( In ₹ )
( 1 ) Interest from Firm 60,000 60,000
( 2 ) Remuneration from firm 2,00,000 2,00,000
( 3 ) Share of profit – exempted ____ ____
Business Income 2,60,000 2,60,000
Interest and remuneration is taxable in the hands of the partners to the extent firm gets deduction.
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2. Amendment in Explanation to Section 37(1)
SL.NO. Section Particulars

1. Explanation Explanation 1 - Any penalty or fine for violation of law not allowed as deduction.

To Section Explanation 3 - For the removal of doubts, it is hereby clarified that the expression
37(1) "expenditure incurred by an assessee for any purpose which is an offence or which
is prohibited by law" under Explanation 1, shall include and shall be deemed to
have always included the expenditure incurred by an assessee,—

(i) for any purpose which is an offence under, or which is prohibited by,
any law for the time being in force, in India or outside India; or

(ii) to provide any benefit or perquisite, in whatever form, to a person,

whether or not carrying on a business or exercising a profession, and
acceptance of such b-enefit or perquisite by such person is in violation of
any law or rule or regulation or guideline, as the case may be, for the
time being in force, governing the conduct of such person; or

(iii) to compound an offence under any law for the time being in force, in
India or outside India.

(iv) to settle proceedings initiated in relation to contravention under such law

as may be notified by the Central Government in the Official Gazette in
this behalf.

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3. Amendment in Contribution Limit to NPS

Employer’s contribution to Allowed as deduction-

Pension Fund u/s 80CCD
(a) amount contributed or

(b) 14% of the salary, whichever is lower.

"Salary” = Basic +DA forming part of salary but excludes all other
allowances and perquisites.
Example: Suppose Employer contributes 15% of employees salary to pension
fund. Employees salary amounted to ₹ 10,00,000. In this case the deduction
will be equal to ₹ 1,40,000.
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4. Insertion of the following Explanation in Section 28

It is hereby clarified that any income from letting out of a residential house or a part of the house by the
owner shall not be chargeable under the head “Profits and gains of business or profession” and shall be
chargeable under the head “Income from house property

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 C. CAPITAL GAINS – DISCUSSED SEPARATELY
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D. INCOME FROM OTHER SOURCES

1. Share Buyback

1. Where Share buyback arises before 1/10/2024 then capital Gains shall be exempted in the hands of
shareholder and also not regarded as dividend for the shareholder. [Rather the company pays Income Tax
@23.296% on such share buyback on [Share buyback price less Issue price]

2. For share buyback arising on or after 1/10/2024 the treatment shall be as under:

(a) The amount received on share buyback shall be regarded as deemed dividend U/s 2(22)(f) and fully
taxable under Other Sources in the hands of shareholders without deduction of any expenses. [Note :
Accordingly Section 2(22)(f) has been inserted in the Act as under: Deemed Dividend includes any
payment by a company on purchase of its own shares from a shareholder in accordance with the provisions
of section 68 of the Companies Act, 2013 (18 of 2013)]

(b) Since the ownership of shares also get transferred there shall be capital gains in the hands of shareholder
and the full value of consideration shall be regarded as NIL (i.e. there shall be a capital Loss)

(c) The company shall no longer be required to pay any tax on share buyback.
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2. Deletion of Section 56 (2) (viib)
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3. Standard deduction of Family Pension enhanced in default regime U/s 115BAC

Family Pension received by widow or legal heirs of deceased employees is taxable under the head Other
Sources. However, the assessee shall be entitled to standard deduction of 1/3rd of amount received or
₹15,000 whichever is less. [For default tax regime the standard deduction is 1/3rd of amount received or
₹25000, whichever is less]

However, Family pension received by the widow or children or nominated heirs, of a member of the armed
forces (including para-military forces) of the Union, where the death of such member has occurred in the
course of operational duties shall be exempted U/s 10(19)

Question 4: Family pension received ₹ 80,000. Compute income as per default tax regime U/s 115BAC.
Answer: Family pension received 80,000
Less: – Standard deduction
1/3rd of 80,000 or 25,000 (whichever is lower) 25,000
55,000
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 Member of armed
forces of union

Death

Operational
Normal course
duties

Amount Received
Same solution as
by legal heirs fully
example above
exempt

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E. DEDUCTION UNDER CHAPTER VIA

1. Section 80CCD (2): The employer contribution to NPs shall be allowed as deduction under Default
regime @14% of Salaries instead of 10% of Salaries.

2. Section 80G: Contribution to National Sports Development Fund shall also be eligible for 100%
deduction without any limit.
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F. TAX DEDUCTION AND COLLECTION AT SOURCE

1. Amendment in Section 192: TDS on Salaries

Note: Where an assessee who receives any income chargeable under the head "Salaries" has, in addition,
—
(i) any income chargeable under any other head of income (not being a loss under any such head other
than the loss under the head "Income from house property"); or
(ii) any tax deducted or collected under the provisions of Part B or Part BB of this Chapter, as the case may
be,
for the same financial year, he may send to the person responsible for making the payment referred to in
sub-section (1), the particulars of—
(a) such other income;
(b) any tax deducted or collected under any other provision of Part B or Part BB of this Chapter, as the case
may be; and
(c) the loss, if any, under the head "Income from house property",
in such form and verified in such manner as may be prescribed, and thereupon the person responsible as
aforesaid shall take into account the particulars referred to in clauses (a), (b) and (c) for the purposes of
making the deduction under sub-section (1):

Provided that this sub-section shall not in any case have the effect of reducing the tax deductible from
income under the head "Salaries", except where the loss under the head "Income from house property" and
the tax deducted in accordance with other provisions of Part B and tax collected in accordance with the
provisions of Part BB, of this Chapter, has been taken into account.
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2.TDS also applicable on deemed dividend U/s 2(22)(f)

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 194 Dividend (i) For Individual Shareholder – 10% NO TDS in the case of a
(including Limit is Rs.5,000 (if payment shareholder, being an individual,
deemed made by other than cash) if the dividend is paid by the
dividend U/s company by any mode other than
2(22)(a) TO
cash; and dividend does not
2(22)(f) paid
(ii) For any other case – No exceed Rs. 5,000.
to resident
limit.
shareholders.

3. In Section 194C
The following note in Section 194C has been amended:
Works contract but does not include— (A) manufacturing or supplying a product according to the
requirement or specification of a customer by using material purchased from a person, other than such
customer or associate of such customer; or (B) any sum referred to section 194J(1)

For the sake of convenience the entire Section 194C as presented in our new
mat also given hereunder:
194C Payment to Either ₹ 30,000 in a where (i) Tax is deducted on Works
Contractor and single contract or ₹ payment for a contract. For this purpose
Sub 1,00,000 p.a. contract( Works contract includes
Contractor including sub-
contract) are (a) Advertising
to
(b) broadcasting and telecasting
including production of
programs
(i)individuals/
HUF @1% (c) carriage of goods and
passengers other than by
railways

(ii) In case of (d) catering.

any other
entity @ 2% (e) manufacturing contracts [refer
table below]

(f) Labour contracts

[ Works contract also includes

construction contracts, security
services; cold storage room contracts,
electrician contracts etc]

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Notes: (1) Works contract but does not include— (A) manufacturing or supplying a product according to
the requirement or specification of a customer by using material purchased from a person, other than such
customer or associate of such customer; or (B) any sum referred to section 194J(1)

(2) In case of goods carriage, tax is not deducted at source where contractor does not own more than 10
goods carriages at any time during the previous year and furnishes a declaration along with PAN to the
payer.

(3) No tax is deducted at source on GST if the same is disclosed separately on the bill.

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4. In the following Sections the rates of TDS has been changed. The sections
have been produced in entirety for the sake of convenience

194DA Payment to a No deduction:- 5% [*2% w.e.f.

resident in 1/10/2024] on
respect of Life (i) if aggregate the amount of
Insurance Policy payment is less than income
(including ₹ 1,00,000 during comprised
Bonus) the financial year. therein [i.e Total
sum received –
(ii) if payment
Premium paid]
covered u/s.
10(10D).

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194G Commission on 15,000 5% [* 2%
Sale of lottery w.e.f.
tickets 1/10/2024]

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194H Commission or 15000 p.a. 5% [* 2% No TDS in the following case:
Brokerage w.e.f. Brokerage on shares and
1/10/2024] securities.

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194-IB Rent payment by 50,000 p.m. @5% 1. The income-tax shall be
individual, HUF or part of the deducted on such income at the
when they are not month [2% W.E.F. time of credit of rent, for the last
“rent” means liable to tax u/s 1/10/2024] month of the previous year or the
any payment, 194I. last month of tenancy, if the
by whatever property is vacated during the
name called, year, as the case may be, to the
under any account of the payee or at the time
lease, sub- of payment thereof, whichever is
lease, tenancy earlier. (once in a year)
or any other 2. The provisions of section 203A
agreement or shall not apply to a person required
arrangement to deduct tax in accordance with
for the use of the provisions of this section.(NO
any land or TAN)
building or 3. In a case where the tax is
both. required to be deducted as per the
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 provisions of section 206AA) such
deduction shall not exceed the
amount of rent payable for the last
month of the previous year or the
last month of the tenancy, as the
case may be.
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Section Individual not liable to If aggregate 5% Deductor is not required to
194M deduct tax u/s. payment At the time of obtain TAN.
194C,194H &194J for exceeds ₹ payment or
Individual/ following payment to any 50 lakhs in credit, earlier
HUF whose resident for – a year
turnover does (i) work contract as [2% W.E.F.
not exceeds referred to in sec. 194C 1/10/2024]
Rs. 1 cr/50 (ii) commission or
lakhs or brokerage as referred to
paying for in sec. 194H
personal use (iii) fees for professional
services as referred to in
sec. 194J
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Section Nature of Payment Monetary Limit Rate of Tax Notes

194-O Payment for sale of For Individual/HUF 1% of the gross

goods or provision of participants: amount of such
services by ₹5 lakhs (gross sales or services or
e-commerce operator to amount of such sale
both.
e-commerce participant. or services or both
during the previous [0.1% W.E.F
year) and PAN/
1/10/2024]
Aadhar No. provided
to e-comm. Operator.

For other articipants:

No limit
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193 Interest on Any amount 10% No tax is to be deducted if interest on

Securities securities is payable on account of the
following:

i) No TDS on payment of interest on

debentures [listed or not] issued a
company (in which public are
substantially interested), to a resident
individual/HUF, if the aggregate amount
of interest on such debenture paid or
likely to be paid during the financial year
does not exceeds ₹ 5,000 and the
payment is made by A/c. payee cheque.

(ii) Any interest payable on certain

specified securities; any security of the
Central Government or State Government
or interest payable to insurers.

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 Provided the nothing in this clause shall
apply to the interest exceeding ten
thousand rupees payable during the
financial year on 8% Savings (Taxable)
Bonds, 2003 or 7.75% Savings (Taxable)
Bonds , 2018 or Floating Rate Savings
Bonds, 2020 (Taxable)56 or any other
security of the Central Government or
State Government as the Central
Government may, by notification in the
Official Gazette specify in this behalf.
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194-IA Payment on ₹50,00,000 or 1% of such 1. Person deducting tax at source
transfer of certain more sum or the U/s 194IA need not have TAN.
immovable No deduction stamp duty
property under sub- value of 2.The due date of payment shall
[other than section (1) such be 30th of next month and the
agricultural land in shall be made property, same shall be paid alongwith
rural India and where the whichever statement in Form 26QB.
compulsory consideration is higher.
acquisition] for the transfer 3.Consideration shall include all
of charges of the nature of club
an immovable membership fee, car parking fee,
property and electricity or water facility fee,
the stamp duty maintenance fee, advance fee or
value of such any other charges of similar
property, are nature, which are incidental to
both, less than transfer of immovable property.
fifty lakh
rupees. 4.Provided that where there is
more than one transferor or
transferee in respect of any
immovable property, then the
consideration shall be the
aggregate of the amounts paid
or payable by all the
transferees to the transferor or
all the transferors for transfer
of such immovable property.
[W.E.F. 1/10/2024]

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5.NEW SECTION IN TDS
Section Nature of Payment Monetary Limit Rate of Notes
Tax
194-T Payment firm of salary, Rs. 20,000 10%
remuneration, commission,
bonus or interest to its
partner
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6.TDS Payments and Returns
1. TDS PAYMENT 2. TDS RETURN
(1) TDS must be deposited to the credit of (1) The Deductor must file quarterly return with
Central Govt. through Challan No. 281 If Govt
deducted in
For Tax deduction u/s. 194IA/194IB: Tax shall
be paid within 30th of the next month always
and shall be accompanied by a challan-cum-
statement in Form No.26QB/26QC

For Tax deduction u/s. 194M: Tax shall be

paid within 30 days from the end of the month
in which the deduction is made and shall be
accompanied by a challan-cum-statement in
Form No. 26QD.

For Tax deduction under Other Sections: The

Deductor must file quarterly return with Govt.

(2) (2)

MONTH ENDING DUE DATE OF Quarter ending Due date of Return

PAYENT
June 30 31st July
APRIL TO FEB 7th of the next month
September 30 31st October
MARCH 30th April
December 31 31st January

March 31 31st May

Exception: If tax is deducted by the Govt. offices TDS returns can be revised in case of any
then it should be deposited in the same day omission etc.
without production of challan i.e., by book
adjustment Provided further that no correction statement
shall be delivered after the expiry of six years
from the end of the financial year in which the
statement is required to be delivered.

(3) E-payment of TDS mandatory for: (3) The deductor must issue a certificate to
deductee confirming deduction of tax at source.
(i) Company

(ii) assessee whose accounts turnover in

preceding F.Y exceeds ₹1 cr in case of
business/ ₹50 lakhs in case of professions.

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Note: No order shall be made deeming a person to be an assessee in default for failure to collect the whole
or any part of the tax from any person, at any time after the expiry of six years from the end of the financial
year in which tax was collectible or two years from the end of the financial year in which the correction
statement is delivered whichever is later.
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Section 198: Tax deducted is income received: All sums deducted in accordance with 8[the foregoing
provisions of this Chapter] 8a[and income tax paid outside India, by way of deduction, in respect of which
an assessee is allowed a credit against the tax payable under this Act,] shall for the purpose of computing the
income of assessee, be deemed to be income received.

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(7) Application to Assessing Officer for lower Deduction/No Deduction [S. 197]

Where, in the case of any income of any person or sum payable to any person, income-tax is required to be
deducted at the time of credit or, as the case may be, at the time of payment at the rates in force under the
Provisions of Sections 193, 194, 194A, 194C, 194D, 194G, 194H, 194I, 194J, 194K, 194LA, 194LBA,
194LBB, 194LBC, 194M, 194-O,194Q and 195, the Assessing Officer is satisfied that the total income of
the recipient justifies the deduction of income-tax at any lower rates or no deduction of income-tax, as the
case may be, the Assessing Officer shall, on an application made by the assessee in this behalf, give to him
such certificate as may be appropriate.
(2) Where any such certificate is given, the person responsible for paying the income shall, until such
certificate is cancelled by the Assessing Officer, deduct income-tax at the rates specified in such certificate
or deduct no tax, as the case may be.
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ASSESSMENT OF TDS/TCS RETURN

Processing of statements of tax deducted at Source/TCS [Section 200A/206CB]

(1) The following adjustment can be made during the computerized processing of statements of tax deducted
at source/TCS – (i) any arithmetical error in the statement; or (ii) an incorrect claim, apparent from any
information in the statement.
(2) the interest, if any, shall be computed on the basis of the sums deductible as computed in the statement;
(3) the fee, if any, shall be computed in accordance with the provisions of section 234E;
(4) After making adjustments, tax, interest and fee would be calculated and sum payable by the
deductor/collector or refund due to the deductor/collector will be determined. Accordingly an intimation
shall be sent within 1 year from the end of the financial year in which the statement is filed to the
deductor/collector regarding amount payable or refundable and refund due shall be granted to the
deductor/collector.
(5) The processing of these statements can be done in Centralized processing center.
(6) The Board may make a scheme for processing of statements made by any other person, not being a
deductor.

Explanation: For this purpose “an incorrect claim apparent from any information in the statement”
shall mean a claim, on the basis of an entry, in the statement –

i) of an item, which is inconsistent with another entry of the same or some other item in such statement

ii) in respect of rate of TDS/TCS , where such rate is not in accordance with the provisions of this Act.

14
 G. TAX COLLECTION AT SOURCE

[There are few changes in the topic in this term. Since there were changes in
earlier term as well so entire new notes is being given for your convenience]

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1. Rates of Tax Collection at source:

Section Nature of goods Percentage of tax collection with

No. reference to purchase price/lease
amount

206C(1) • Alcoholic liquor for human consumption 1%

• Scrap [from manufacturing/mechanical
working]
• Minerals, being coal or lignite or iron ore
• Timber obtained under a forest lease 2.5%
• Timber obtained by any mode after than under
a forest lease
• Any other forest produce not being timber or
tendu leaves
• Tendu leaves 5%

206C(1C) • Lease of parking lot, toll plaza, mining and 2%

quarrying (other than Mineral oil, petroleum
and natural gas)
206C(1F) • Motor vehicle or any other notified goods (* 1%
w.e.f. 1/1/2025), value exceeding Rs. 10 lakh
206C(1G) 1.Remittance for the purposes of
medical treatment shall include-
Nature of Payment
(i) remittance for purchase of
LRS for education, Nil up to ₹ 700,000 tickets of the person to be
treated medically overseas
financed by loan from
(and his attendant) for
financial institution 0.5% above ₹ 700,000 commuting between India and
the overseas destination;
LRS for Medical Nil up to ₹ 700,000 (ii) his medical expense; and
treatment OR (iii) other day to day expenses required
for such purpose.
Education
5% above ₹ 700,000
(other than financed by 2.Education
loan)
Remittance for purpose of education shall
LRS for other purposes Nil up to ₹ 700,000 include,-
(i) remittance for purchase of
20% above ₹ 700,000
tickets of the person
Purchase of Overseas 5% till ₹ 700,000 undertaking study overseas for
tour program package commuting between lndia and
20% thereafter the overseas destination;
(ii) the tuition and other fees to be
paid to educational institute; and
(iii) other day to day expenses

15
 1. No TCS shall be applicable on expenditure through required for undertaking such
international credit card while being overseas till further study.
order.
3. The term 'overseas tour program
2. lt is clarified that the threshold of ₹ 7 lakh for LRS is
package' is defined as to mean any tour
for remitter and not for authorised dealer. package which offers visit to a country
The facility to provide real time update of remittance under
or countries or territory or territories
LRS by remitter is still under development by the RBl, It is
outside India and includes expenses for
clarified that the details of earlier remittances under LRS by
travel or hotel stay or boarding or
the remitter during the financial year may be taken by the
lodging or any other expenditure of
authorised dealer through an undertaking at the time of
similar nature or in relation thereto.
remittance. If the authorised dealer correctly collects the tax
It is clarified that purchase of only
at source based on information given in this undertaking, he
international travel ticket or purchase
will not be treated as "assessee in default". However, for any
of only hotel accommodation, by in
false information in the undertaking, appropriate action may
itself is not covered within the
be taken against the remitter under the Act. definition of 'overseas tour program
It is further clarified that same methodology of taking
package'. To qualify as 'overseas tour
undertaking from the buyer of overseas tour program
program package', the package should
package may be followed by the seller of such package.
include at least two of the followings -
(i) international travel ticket,
(ii) hotel accommodation (with or
without food)/boarding/lodging,
(iii) any other expenditure of similar
nature or in relation thereto.
206C(1H) Sale of any goods (other than goods exported out of 0.1%
India or goods covered in point (i) to (iv) above) of
the value exceeding 50 Lakhs in a financial year

Note: TCS will be charged by the seller on excess

amount over 50 lakhs.

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2. Tax shall be collected at the time of debiting or at the time of receipt, whichever is earlier. However,
in case of motor vehicle and sale of goods U/s 206C (1H) tax shall be collected at the time of receipt.

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3. No TCS shall be charged if the buyer is:

Section NO. No TCS charged if the buyer is -

206C(1) (i) a public sector company, the Central Government, a State Government, an
embassy, a high commission, legation, commission and the trade representation, of a
foreign State and a club; or

(ii) a buyer in the retail sale of such goods purchased by him for personal

16
 consumption.

→ NO TCS u/s. 206C(1) if buyer give a declaration that such goods are used for
the purposes of manufacturing, processing or producing articles or things or for the
purposes of generation of power.

206C(1F) (A) the Central Government, a State Government and an embassy, a High
Commission, legation, commission, consulate and the trade representation of a
foreign State; or

(B) a local authority; or

(C) a public sector company which is engaged in the business of carrying passengers

206C(1G) (i) liable to deduct tax at source under any other provision of this Act and has
deducted such amount.

(ii) the Central Government, a State Government, an embassy, a High Commission, a

legation, a commission, a consulate, the trade representation of a foreign State, a
local authority or any other person as the Central Government may, by notification in
the Official Gazette, specify for this purpose, subject to such conditions as may be
specified therein.

TCS u/s 206C(1G) would not be applicable, if the buyer is an individual who:

- is not a resident in India; and,

- who is visiting India

206C(1H) (i) liable to deduct tax at source under any other provision of this Act and has
deducted such amount.

(ii) the Central Government, a State Government, an embassy, a High Commission,

legation, commission, consulate and the trade representation of a foreign State; a
local authority; or

(iii) a person importing goods into India or any other person as the Central
Government may, by notification in the Official Gazette, specify for this purpose,
subject to such conditions as may be specified therein;

Note: Notwithstanding anything contained in this section, no collection of tax shall be made or
collection of tax shall be made at such lower rate in respect of specified transaction, from such person
or class of persons, including institution, association or body or class of institutions, associations or
bodies, as the Central Government may, by notification in the Official Gazette specify in this behalf.
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4. Meaning of seller for the purpose of charging TCS

Section NO. A seller is one of the following entities:

206C(1) and (1F) The Central Government ; A State Government ; Any local authority ; Any statutory
corporation or authority ; Any company; Any firm; Any cooperative society; An
individual or a HUF whose turnover exceeds Rs. 1cr (for business)/Rs.50 lakhs (for

17
 profession) during the financial year immediately preceding the financial year in
which the specified goods or services are sold.

206C(1H) a person whose total sales, gross receipts or turnover from the business carried on by
him exceed Rs. 10 crore during the financial year immediately preceding the
financial year in which the sale of goods is carried out, not being a person as the
Central Government may, by notification in the Official Gazette, specify for this
purpose, subject to such conditions as may be specified therein.

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Class Discussion
Example 1: X Ltd. (last F.Y. turnover: ₹ 20 crores purchase goods from Y Ltd. (last F.Y. turnover ₹ 2
crores) of ₹ 60 lacs.

 X Ltd. shall deduct TDS u/s 194Q @ 0.1% of ₹ (60-50) lacs = ₹1000

Example 2: X Ltd. (last F.Y. turnover ₹ 2 crores purchase goods from Y Ltd. of ₹ 60 lacs (last F.Y. turnover
₹20 crores)

 206C(IH) becomes applicable and Y Ltd. shall collect TCS @ 0.1% of ₹ (60 -50) lacs = ₹ 1000

Example 3: Suppose turnover of X Ltd. in ex.2 exceeds ₹10 crores in last F.Y.

 Here both sections 194Q and 206C(IH) may have been attracted but CBDT has clarified that in
such cases only 194Q shall be applicable and there shall be no TCS u/s 206C(IH). (But if by
chance seller has collected TCS then 194Q need not be applied)

Example 4: In example 3, the above transaction has taken place though e-commerce operator.

 Here only e-commerce operator is reqd. to deduct TDS u/s 194O @ 1% of ₹60 lacs = ₹60000.

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A. Comparison between 194Q and 206C(1H)

194Q 206C(IH)
(1) TDS applicable @ 0.1% on amount exceeding (1) TCS applicable @ 0.1% on amount exceeding
₹50 lacs only if turnover of buyer from business ₹50 lacs only if turnover of seller from business
exceeds ₹10 crores in preceding F.Y. exceeds ₹10 crores in preceding F.Y.
(2) Payment or credit whichever is earlier. (2) Cash Basis
(3) TDS is on amount excluding GST where GST (3) TCS on [(amount including GST) less ₹50
component is disclosed separately. lacs]
- If TDS is on advance payment & GST break up
not now for that reason then GST to be included
for TDS purposes
(4) 194Q not applicable securities & commodities (4) Same rule.
traded through recognised stock exchange
transactions in electricity renewable energy
certificates.
(5) N.A. for export & import transactions (5) Same rule.
(6) N.A. where the income is wholly exempted of (6) Same rule.
other party
(7) Turnover of business only to be checked of (7) Same rule.

18
 last F.Y.
(8) Not applicable in the year of incorporation of (8) Same rule.
deductor.
(9) In case of purchase return no adjustment reqd. (9) N.A. because TCS on cash Basis.
if goods are replaced.
Otherwise, excess TDS may be adjusted in next
purchase.
(10) w.e.f 1/7/2021. (10) w.e.f. 1/10/2020

5. Formalities under TCS

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(1) If the collectee fails to furnish his PAN/Aadhaar No. then tax must be collected at the higher of the
following rates, namely:—

(i) at twice the rate specified in the relevant provision of this Act; or

(ii) at the rate of 5% [1% for section 206C(1H)]

Provided that the rate of tax collection at source under this section shall not exceed twenty per cent

Tax collector must file quarterly return and issue certificate to the collectee.

(2) As per section 203A the seller has to obtain TAN mandatorily for all cases where TCS is applicable.
Non-obtaining TAN may leads to penalty of Rs. 10,000. Further, it is to be noted that, TAN for TDS and
TCS are same, same TAN can be used for TDS as well as TCS purposes.

(3) TCS so collected shall be deposited within 7th of the following month. [For example- For the month of
March, tax shall be deposited within 7th of April, For the month of April, tax shall be deposited within 7th of
May and like manner].

(4)Rate of Interest for delayed collection/delayed payment

(a)@1% for every month or part thereof on the amount of such tax from the date on which such tax was
collectible to the date on which such tax is collected; and

(b)@1.5% for every month or part thereof on the amount of such tax from the date on which such tax was
collected to the date on which such tax is actually paid,

(5) The seller/licensor/lessor is required to file quarterly statement within the following due dates -

Quarter ending Due date of return

June 30 15th July
September 30 15th October
December 31 15th January
March 31 15th May

In case, of delay furnishing of statement, late fee payable under section 234E is ₹ 200 for every day during
which the failure continues or Amount of TCS; whichever is lower. This fess has to be paid before filing of
the belated return; otherwise return should not be accepted. Also, penalty may be levied @ 100% of the
amount of TCS.

(6) Further, where the the seller/licensor/lessor fails to collect tax, then it is deemed that TCS u/s. 206C(1)
and (1C) has been collected, if the buyer/licensee/lessee has furnished return of income u/s. 139 and taken
19
into account such amount in his income in the return and has paid due tax on it and a certificate of CA is
furnished in this regard by the seller/licensor/lessor.

(7) No order shall be made deeming a person to be an assessee in default for failure to deduct or collect the
whole or any part of the tax from any person, at any time after the expiry of six years from the end of the
financial year in which tax was collectible or two years from the end of the financial year in which the
correction statement is delivered, whichever is later.
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Section 206CCA: Special provision for collection of tax at source for non-filers
of income-tax return.

(1) Where tax is required to be collected at source from a specified person, the tax shall be collected at the
higher of the following two rates, namely:—
(i) at twice the rate specified in the relevant provision of the Act; or
(ii) at the rate of five per cent:
Provided that the rate of tax collection at source under this section shall not exceed 20%.

(2) If the provisions of section 206CC is applicable to a specified person, in addition to the provisions of this
section, the tax shall be collected at higher of the two rates provided in this section and in section 206CC.

(3) For the purposes of this section "specified person" means a person who has not furnished the return of
income for the assessment year relevant to the previous year immediately preceding the financial year in
which tax is required to be collected, for which the time limit for furnishing the return of income under sub-
section (1) of section 139 has expired and the aggregate of tax deducted at source and tax collected at source
in his case is rupees fifty thousand or more in the said previous year.

Provided that the specified person shall not include—

(i) a non-resident who does not have a permanent establishment in India; or
(ii) a person who is not required to furnish the return of income for the assessment year relevant to the said
previous year and is notified by the Central Government in the Official Gazette in this behalf

Explanation.—For the purposes of this sub-section, the expression "permanent establishment" includes a
fixed place of business through which the business of the enterprise is wholly or partly carried on.
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H. FILING OF RETURN

1.Where any return of income is furnished in pursuance of an order under clause (b) of sub-section (2) of
section 119, the provisions of Section 139 shall apply
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QUOTING OF AADHAR NUMBER [SECTION 139AA]

(1) Anyone eligible to get Aadhaar number shall, on or after 1st July, 2017, quote Aadhaar number—
(i) in the application form for allotment of permanent account number;
(ii) in the return of income:

20
Provided that where the person does not possess the Aadhaar number, the Enrolment ID of Aadhaar
application form issued to him is to be quoted. Provided further that nothing in the first proviso shall
apply in respect of any application form for allotment of permanent account number or return of
income furnished on or after the 1st day of October, 2024.

(2)However, in case of failure to intimate the Aadhaar number, the permanent account number allotted to the
person shall be made inoperative on or after 31.3.2022.

(2A) Every person who has been allotted permanent account number on the basis of Enrolment ID of
Aadhaar application form filed prior to the 1st day of October, 2024, shall intimate his Aadhaar
number to such authority in such form and manner, as may be prescribed, on or before a date to be
notified by the Central Government in the Official Gazette.

(3) The provisions of section 139AA shall not apply to an individual who does not possess the Aadhaar
number or the Enrolment ID and is:-
(i) residing in the States of Assam, Jammu and Kashmir and Meghalaya;
(ii) a non-resident as per the Income-tax Act, 1961;
(iii) of the age of eighty years or more at any time during the previous year;
(iv) not a citizen of India.
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ADDENDUM
Penalty for failure to comply with the provisions of section 139A [Section 272B]
Section Default Penalty
272B(1) Failure to comply with the provisions of section 139A ₹10,000
272B(2) Failure to quote PAN/Aadhaar number in any document referred ₹10,000 for each
to in section 139A(5)(c) such default

Failure to intimate PAN/Aadhaar number as required by section

139A(5A)/(5C)

Knowingly quoting or intimating a number which is false

272B(2A) Failure to quote PAN/Aadhaar Number in documents referred to ₹10,000 for each
in section 139A(6A) or authenticate such number in accordance such default
with the provisions contained therein
272B(2B) (i) Failure to ensure that PAN/Aadhaar Number is duly quoted in ₹10,000 for each
the documents relating to transactions referred to in section such default
139A(5)(c) or section 139A(6A)

(ii) Failure to ensure that PAN/Aadhaar Number has been duly

authenticated in respect of transactions referred to under section
139A(6A)

Note – It is necessary to give an opportunity to be heard to the person on whom the penalty under section
272B is proposed to be imposed.
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AMENDMENTS IN TAX RATES:

The entire sheet has been separately provided already
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21
 AMENDMENT IN CAPITAL GAINS
Please note that Entire new notes and sums of capital Gains along with latest classes have been provided by
us. In case you want to check only the amendment portion then its again given hereunder separately

1. TYPES OF CAPITAL ASSETS AND PERIOD OF HOLDING

Capital Assets

------------------------------------------------------------------------------------------

Short Term Long Term

(A) For:

(a) Listed Shares

(b) Mutual Fund (equity oriented)

(c) UTI More than 12 Months

(d) Zero Coupon Bond

(e) Other Listed Securities including units of Business Trust

Upto 12 months

(B) For: (a)shares not listed in More than 24 months

recognized stock exchange in India,

(b) Land or building

(c)All other assets (w.e.f. 23/7/2024)

Upto 24 months

(C) Other Assets: (upto 23/7/2024) More than 36 Months

Upto 36 months

(D) Where Capital Gains is always short term:

(a) Unit of a Specified Mutual Fund ( i.e. max investment in equity is 35%) acquired on or after the 1st
day of April, 2023 or a Market Linked Debenture or

22
 (b) is an unlisted bond or unlisted debenture which is transferred or redeemed or matures on or after
23/7/2024
(c) Depreciable Assets
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2.
Tax Rates on Capital Gains
__________________________________________
 
If listed equity shares or equity oriented fund are sold In any other case
through recognised stock exchange
 
(A) LTCG (A) LTCG

STT is charged. NO STT:

(1)Income tax on LTCG in excess of ₹ 1,25,000 @ 10% 1.Income tax @ 20% with
If such capital Gains arises before 23/7/2024 indexation benefit if capital
Gains arises before 23/7/2024
(2)But if such capital Gains arises on or after 23/7/2024 2.Income Tax @ 12.5% if capital
Then the rate of tax shall be 12.5% after exemption of Gains arises on or after 23/7/2024
Rs. 1,25,000 but without indexation benefit.
However, in the case of individual
or HUF for land and buiding
acquired before 23/7/2024 there is
an option either to pay tax
@12.5% without indexation or
20% with indexation(*)

(B) STCG (B) STCG

STT is charged. NO STT.
Income tax @ 15% if such capital Gains arises Income tax at normal rate.
Before 23/7/2024 and @20% if such capital Gains arises
On or after 23/7/2024
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(*) It is significant to note that the above relief is only for the purposes of capping of LTCG tax liability to 20%
indexation. For all other purposes like aggregation, set-off, carry forward and roll over exemption, the LTCG needs to
be computed without indexation benefit.

3. Amendment in Section 50AA Special provision for computation of capital

gains in case of Market Linked Debenture
Where the capital asset
(a) is a unit of a Specified Mutual Fund acquired on or after the 1st day of April, 2023 or a Market
Linked Debenture or
(b) is an unlisted bond or unlisted debenture which is transferred or redeemed or matures on or after
23/7/2024
the full value of consideration received or accruing as a result of the transfer or redemption or maturity of
such debenture or unit as reduced by—
(i) the cost of acquisition of the debenture or unit; and
(ii) the expenditure incurred wholly and exclusively in connection with such transfer or
redemption or maturity,

shall be deemed to be the capital gains arising from the transfer of a short-term capital asset:
23
Provided that no deduction shall be allowed in computing the income chargeable under the head "Capital
gains" in respect of any sum paid on account of securities transaction tax.
Explanation.— For the purposes of this section—

(i) "Market Linked Debenture" means a security by whatever name called, which has an underlying
principal component in the form of a debt security and where the returns are linked to market
returns on other underlying securities or indices and include any security classified or regulated as a
market linked debenture by the Securities and Exchange Board of India;

(ii) "Specified Mutual Fund" means a Mutual Fund by whatever name called, where not more than
thirty five per cent of its total proceeds is invested in the equity shares of domestic companies:

Provided that the percentage of equity shareholding held in respect of the Specified Mutual Fund shall be
computed with reference to the annual average of the daily closing figures.'.
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4. Amendment in Section 47: Any transfer of a capital asset by an individual or a Hindu undivided
family, under a gift or will or an irrevocable trust [sec.47(iii)]. However, shares allotted under ESOP cannot
be gifted shall be an exempted transfer.

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5. How to compute Fair Market Value (FMV) on 31.1.2018 for assets covered
u/s. 112A

Situations FMV as on 31.1.2018

(1) Listed equity shares or equity oriented fund Highest quoted price traded on 31.1.2018 on such
recognised stock exchange.

Highest price of immediately preceding trading date

(if not traded on 31.1.2018)
(2) Unlisted equity oriented fund The net asset value of such unit as on 31.1.2018

(3) equity shares not listed on 31.1.2018 but listed Cost of Acquisition x CII of 2017-18_______
on the date of transfer or not listed on a CII of year of purchase
recognised stock exchange as on the 31st day of
January, 2018, or which became the property of
the assessee in consideration of share which is not
listed on such exchange as on the 31st day of
January, 2018 by way of transaction not regarded
as transfer under section 47, as the case may be,
but listed on such exchange subsequent to the date
of transfer (where such transfer is in respect of
sale of unlisted equity shares under an offer for
sale to the public included in an initial public
offer)
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6. COST INFLATION INDEX
F.Y. CII F.Y. CII
2001-02 100 2011-12 184
2002-03 105 2012-13 200

24
 2003-04 109 2013-14 220
2004-05 113 2014-15 240
2005-06 117 2015-16 254
2006-07 122 2016-17 264
2007-08 129 2017-18 272
2008-09 137 2018-19 280
2009-10 148 2019-20 289
2010-11 167 2020-21 301
2021-22 317 2021-22 317
2022-23 331 2023-24 348
2024-25 363
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Illustration 1: Discuss the rates of taxes applicable for the following capital assets:

PARTICULARS TAX RATES

1 Long Term Capital Gains on Listed equity 12.5% tax without indexation
Shares sold on 25/9/2024
2 Long Term Capital Gains on Building sold on 20% with Indexation
25/6/2024
3 Long Term Capital Gains on Building sold on 20% with Indexation or 12.5% without
25/9/2024 Indexation
4 Short Term Capital Gains on Building Normal Rate
5 Long Term Capital Gains on Jewellery sold on 20% with Indexation
25/6/2024
6 Long Term Capital Gains on Jewellery sold on 12.5% without Indexation
25/9/2024
7 Short Term Capital Gains on Jewellery Normal Rate

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Illustration 2: State the rates of taxes in the following cases (on or after 23/07/2024)
Particulars Long Term Capital Short Term Capital
Gain Gain
Equity Shares of Private Limited Company 12.5% Tax (No STT) Normal Tax Rate
12.5% Tax (No STT) Normal Tax Rate
Equity shares of unlisted public company
Equity shares of listed companies sold in private 12.5% Tax (No STT) Normal Tax Rate
Placement

Equity shares of listed companies sold through 12.5% Tax (With STT) 20% Tax (With STT)
recognized stock exchange

Equity Oriented Fund 12.5% Tax With STT) 20% Tax (With STT)

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25
 SOLVED ILLUSTRATIONS

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Illustration 1: Smt. Savita Rani was born on 1.4.1964. She is a Deputy Manager in a company in Mumbai.
She is getting a monthly salary and D.A. of ₹45,000 and 12,000 respectively [Only 50% of DA forms part of
salary]. She also gets a House Rent Allowance of ₹6,000 per month. She is a member of Recognized P.F.
wherein she contributes 15% of her salary and half D.A. Her employer also contributes an equal amount.

(b) She is living in the house of her minor son in Mumbai.

(c)During the previous year her minor son has earned an income of ₹30,000(computed) as Rent from a
House Property, which had been transferred to him by Smt. Savita Rani without consideration a few years
back.

(d) During the previous year she sold Govt. of India Capital Indexed Bonds for ₹ 6,00,000 on 30.9.2024,
which she purchased on 1.7.2005 for ₹80,000

(e) Her employer gave her an interest free loan of ₹1,50,000 on 1.10.2024 to one of her son’s wife for the
purchase ofan Alto Maruti Car. Nothing has been paid to the company towards the loan. Take 10.5% as SBI
Rate]

(f) During the previous year she paid ₹15,000 by cheque to GIC towards Medical Insurance Premium of her
dependent mother.

(g) During the year she purchased an immovable property for ₹ 25,00,000 though the value as per Stamp
Valuation authority is ₹ 30,00,000.

(h) Brought forward Short Term Capital Loss ₹ 1,00,000.

(i) Following Donation has been made by Cheque:

(i) National Fund for control and drug abuse ₹ 20,000

(ii) Swachh Bharat Kosh ₹ 10,000

(iii) Clean Ganga Fund ₹ 20,000

(j) She received the following gifts on 1/11/2024:

Nature of assets Date of acquisition by Stamp Value/

the previous owner Market Price

Building from friend 1/8/2023 28,00,000

Jewellery from relative 1/6/2023 10,00,000

(k) Amount spent for medical treatment of specified disease of Husband (aged 70 years) ₹ 90,000. Insurance
claim received ₹ 25,000.

(l) Contract fee from farming in Apple Orchid in Singapore ₹ 5,00,000

Compute tax liability so as to minimize the tax incidence.

Solution: Computation of Tax Liability of Smt. Savita Rani

26
 Default Optional Regime
Particulars Regime
A. Salaries:
1. Basic Salary ₹(45,000 x 12) 5,40,000 5,40,000
2. Dearness Allowances ₹(12,000 x 12) 1,44,000 1,44,000
3. HRA ₹(6,000 x 12) 72,000 72,000
4. Employer Contribution to P.F- 3% of ₹(5,40,000+72,000) 18,360 18,360
5. Interest on loan from employer ₹(150000 x 10.5% x 6/12) 7,875 7,875
Gross Salaries: 7,82,235 7,82,235
Less: Standard Deduction U/S 16(ia) 75,000 50,000
Taxable Salaries: 7,07,235 7,32,235
B. Income from House Property:
Income from property gifted to minor child - She is considered as
deemed owner of the property 30,000 30,000

C. Capital Gains:
Full value of Consideration 6,00,000 6,00,000
Less: Cost of Acquisition 80,000 80,000
Gross STCG: 5,20,000 5,20,000
Less: Brought Forward Loss 1,00,000 1,00,000
Taxable STCG: 4,20,000 4,20,000

D. Other Sources:
(1) Purchase of immovable property for a consideration lower than
stamp duty value ₹(30,00,000-25,00,000) 5,00,000 5,00,000
(2) Gift of building from friend –taxable as stamp duty value
exceeds ₹50000 [U/S 56(2)(X)] 28,00,000 28,00,000
(3) Gift of Jewellery from relative – exempted - -
(4) Contract fee from farming in Apple Orchid in Singapore 5,00,000 5,00,000
Other Sources (D) 38,00,000 38,00,000
Gross Total Income (A+B+C+D) 49,57,235 49,82,235
Less:
Deduction under Chapter VIA
Deduction U/S 80C
Employees Own Contribution to recognized P.F
[15% of (5,40,000+72,000)] - (91,800)

Deduction U/S 80D

Medical Insurance Premium paid (15,000)

Deduction U/S 80DDB

(Amount spent on specified disease or ₹1,00,000, whichever is
lower) Less Insurance claim received ₹(90,000 – 25,000) (65,000)

Deduction U/S 80G

100% of ₹50000 (50,000)
Total Income: 49,57,235 47,60,435
R/O: 49,57,240 47,60,440
Tax on Total Income
Under default regime : ₹1,40,000 + 30% of ₹34,57,240 11,77,172
Under optional tax regime : ₹1,10,000 + 30% of ₹37,60,440 12,38,132
Add: HEC 4% 47,087 49,525
12,24,259 12,87,657
R/O: 12,24,260 12,87,660

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27
Illustration 2: Following details are furnished by Sundaram:

Rupees

Director’s Remuneration (net of tax and own contribution to Provident Fund) 5,00,000

Board Meeting fees 40,000

Sundaram's contribution to Provident Fund 30,000

Employer's contribution to Provident Fund 30,000

Leave Travel Concession received 10,000

(entire amount spent in traveling)

Free use of car of 1500 cc provided by the company.

(Expenses borne by employer – partly personal and partly official)

Medical expenses reimbursed by the company 18,000

Tax deduction at source on Salary 12,000

Sundaram was occupying a bungalow on rent at New Delhi since November, 1989. He agreed to transfer his
tenancy right in the said bungalow in favour of Bala Ltd. for a sum of ₹2,00,000. He invested ₹80,000 in
bonds of NHAI.

Sundaram acquired 2,000 shares of ₹5 Lakhs during 1989-90 . Company allotted him Bonus shares in March
2024 @ 1:1. The entire shares held in the company have been sold by him during November, 2024 @₹1,100
per share.[STT 0.125%] . FMV on 31/1/2018 is ₹ 1000 per share being the highest price, ₹ 990 being the
lowest price; and ₹ 995 being the closing price.

On 1/12/2024 Sundaram received from his friend 10,000 shares in ABC Ltd. as gift Market Value ₹2,00,000.
He also received ₹3,00,000 as gift from Spouse of his Father brother on his birthday on 1/1/2025

Dividends from ACC Ltd., an Indian Company 2,500

Dividend collection charge 200

Interest income of minor child amounted to ₹2,500.

Share of loss from partnership firm 20,000

Share of profit from AOP 30,000

Loss on derivative transactions 80,000

Compute tax liability and advise suitably.

28
Solution:

Computation of Tax liability of Mr. Sundaram for A.Y. 2025 -26

Particulars Default Optional

regime u/s regime/Regular
115BAC Provision when
opted of default
regime
(A) Salaries
(1) Director’s Remuneration ₹(5,00,000 + 30,000 + 12,000) 5,42,000 5,42,000
(2) Employer’s contribution to Recognised P.F. – exempted upto
12% of salary NIL NIL
(3) Leave Travel Concession – exempted upto travel cost in
optional regime 10,000 NIL
(4) Perquisite Value of Motor car provided by employer ₹(1800 x 21,600 21,600
12)
(5) Medical expenses reimbursed by company 18,000 18,000
Gross Salaries: 5,91,600 5,81,600
Less : Standard Deduction u/s 16(ia) 75,000 50,000
Taxable Salaries (A) 5,16,600 5,31,600
(B) Business/Profession
(1) Share of Loss from firm - - -
(2) Share of Profit from AOP – - -
(3) Loss on derivative Transaction – non speculative loss (80000) (80000)
Business/Profession (B) (80000) (80000)
(C) Capital Gains
(I) Tenancy Rights
Full value of consideration 2,00,000 2,00,000
Less : Cost of acquisition NIL NIL
Long Term Capital Gains (I) 2,00,000 2,00,000
(Exemption u/s 54EC: Not allowed against tenancy right)
(II) Original shares (2000)
Full Value of Consideration (2,000 x 1,100) 22,00,000 22,00,000
Less : Cost of acquisition Higher of :
(a) Original cost
5,00,000
(b) FMV on 31/1/2018 20,00,000 20,00,000
Or Sale value lower (2,000 x 1,000) 20,00,000
(II) 2,00,000 2,00,000
(III) Bonus shares (2000) (ST)
Full value of consideration (2,000 x 1,100) 22,00,000 22,00,000
Less : Cost of acquisition NIL NIL
(III) 22,00,000 22,00,000
Capital Gains (C) 26,00,000 26,00,000
(D) Other sources
(1) Board Meeting fees 40,000 40,000
(2) Gift of shares from friend 2,00,000 2,00,000
(3) Gift from relative - -
(4) Dividend from Indian company (dividend collection
charges - not deductible) 2,500 2,500
(5) Interest Income of minor child 2,500 1,000
(2500-1500)
Other Sources (D) 2,45,000 2,43,500
Gross Total Income (A+B+C+D) 32,81,600 32,95,100
29
 Less : Deduction under chapter VIA deduction u/s 80C
Employees contribution to P.F - 30,000
Total Income: 32,81,600 32,65,100
Tax on Total Income Under default regime
At Normal rates on ₹(32,81,600-26,00,000) i.e. ₹6,81,600
Up to ₹ 300000 NIL
Next at ₹ 381600 @ 5% 19,080
Tax at special rates
On Long Term Capital Gains @ 12.5% of ₹2,00,000 25,000
On Long Term Capital Gains on shares @ 12.5% of ₹(2,00,000 –
1,25,000) 9,375
On Short Term Capital Gains on shares @ 20% of ₹22,00,000 4,40,000
Under Regular regime
At Normal rates on ₹ (3295100 – 2600000) i.e. 695100 51,520
Tax at Special rates (same as computed above) __________ 4,74,375
4,93,455 5,25,895
ADD : Health & Education Cess 4% 19,738 21,036
5,13,193 5,46,931
Less : TDS 12,000 12,000
Net Payable: 5,01,193 5,34,931
Round Off: 5,01,190 5,34,930
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30
 GST AMENDMENTS CUM SUPPLEMENTARY NOTES [2025 EXAMS]
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CHAPTER 1: THE CHARGEABILITY

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1.The Charge of tax [Section 9(1) of The CGST Act, 2017)
(1) Subject to the provisions of sub-section (2), there shall be levied a tax called the central goods and services
tax on all intra-State supplies of goods or services or both, except on the supply of alcoholic liquor for human
consumption*, on the value determined under section 15 and at such rates, not exceeding 20%, as may be
notified by the Government on the recommendations of the Council and collected in such manner as may be
prescribed and shall be paid by the taxable person. [Section 9(1)]
(2) The central tax on the supply of petroleum crude, high speed diesel, motor spirit (commonly known as
petrol), natural gas and aviation turbine fuel shall be levied with effect from such date as may be notified by
the Government on the recommendations of the Council. [Section 9(2)]

*Following is also outside the purview of GST: un-denatured extra neutral alcohol or rectified spirit used for manufacture of
alcoholic liquor for human consumption
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2. GST Liability on warranty and ITC

1. Warranty Replacements: No additional GST is payable on warranty replacements made without separate
consideration.
2. Warranty Services by Distributors: GST is applicable only when extra charges are applied for parts or
services.
3. Supply between Distributor and Manufacturer: GST implications depend on the nature of transactions,
such as:
- Distributor uses own stock or buys from third party: GST payable by distributor.
- Manufacturer provides parts upon requisition: No GST payable.
- Credit note for parts replaced: Tax liability may be adjusted.
- Replenishment of stock by manufacturer: No GST payable.
Extended Warranty
1. At the Time of Original Supply: Extended warranty is part of the composite supply, and GST is payable
accordingly.
2. After Original Supply: Extended warranty is treated as a separate supply of services, and the supplier is
liable for GST.
Repair Services
1. GST Applicable: GST is applicable on repair services provided by distributors when they charge for such
services.
Warranty Replacements and Repair Services
Input Tax Credit (ITC)
1. Original Supply: ITC is allowed on the original supply of goods, including warranty.

1
2. Warranty Replacements: No ITC reversal is required for replacements made during the warranty period
without additional consideration.
3. Distributor's ITC: ITC is allowed for distributors who provide warranty replacements or repair services
without additional consideration.
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3. Transactions not regarded as supply under schedule III

1.Activity of apportionment of co-insurance premium by the lead insurer to the co-insurer for the insurance
services jointly supplied by the lead insurer and the co-insurer to the insured in coinsurance agreements,
subject to the condition that the lead insurer pays the central tax, the State tax, the Union territory tax and the
integrated tax on the entire amount of premium paid by the insured.

Note for your understanding purposes:

In a co-insurance arrangement, multiple insurers share the risk of covering a policyholder. The lead insurer
handles direct communication with the policyholder, while the co-insurer shares the risk. When the lead insurer
allocates the co-insurance premium to the co-insurer, they split the premium payment from the policyholder
according to their agreement.
To avoid being considered a taxable supply under GST laws, the lead insurer must pay all applicable taxes
(Central, State, Union Territory, and Integrated tax) on the entire premium. Essentially, the lead insurer
manages tax obligations on behalf of both parties.

2. Services by insurer to the reinsurer for which ceding commission or the reinsurance commission is deducted
from reinsurance premium paid by the insurer to the reinsurer, subject to the condition that the central tax, the
State tax, the Union territory tax and the integrated tax is paid by the reinsurer on the gross reinsurance
premium payable by the insurer to the reinsurer, inclusive of the said ceding commission or the reinsurance
commission shall not be regarded as a supply.
Note for your understanding:
In simpler terms, the insurer can deduct the ceding commission from the reinsurance premium, but the
reinsurer is still responsible for paying taxes on the full, undeducted premium amount. As long as the reinsurer
fulfills this tax obligation, the transaction between the insurer and reinsurer is not considered a supply under
GST laws.Ceding commission is a fee paid by a reinsurer to an insurer (also known as the cedant) for ceding
(transferring) a portion of the insurance risk to the reinsurer
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Chapter 2: Time OF supply

Time of supply in case of Reverse Charge [please note that change is only with respect to
RCM on supply of services]
Particulars For Supply of Goods [Section 12(3)] For Supply of Service [Section 13(3)]
Time of Supply Earlier of the following – Earlier of the following –
(1) Date of receipt of goods. (1) Date of Payment (entry in the books
or Debited in bank A/c, whichever is
(2) Date of Payment (entry in the earlier)
books or Debited in bank A/c,
whichever is earlier) (2) 61st day from the date of invoice/other
document issued by the supplier.
(3) 31st day from the date of However, where invoice is issued by recipient
invoice/other, document issued then time of supply shall be date of payment or
by the supplier. date of invoice , whichever is earlier. [ w.e.f. 1st
Nov. 2024]

( Refer note 1 for interpretation)

2
 If it is not possible to The time of supply shall be the date of Same
determine under the entry in the books of account of the
above clause recipient of supply.
In case of Associated N.A Earlier of the following-
enterprise, where the (1) Date of entry in the books of account of
supplier of service is the recipient
located outside India (2) Date of payment.
“associated enterprises” shall have the same meaning as assigned to it in section 92A of the Income-tax Act, 1961;
[Section 2(12)]

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Note 1:➔If supplier is registered under GST law then supplier must issue the invoices and in such case time of
supply is date of payment or 61st day from invoice, whichever is earlier.
➔If supplier is not registered under GST law then the recipient will issue a self invoice to himself within 30 days
of the receipt of supply and the time of supply shall be date of payment or date of invoice whichever is earlier.

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Chapter 3: Exemptions under GST

1. New exemptions
1. Services provided by Ministry of Railways (Indian Railways) to individuals by way of –
(a) sale of platform tickets; (b) facility of retiring rooms/waiting rooms; (c) cloak room services; (d) battery
operated car services
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2. Services provided by one zone/division under Ministry of Railways (Indian Railways) to another zone(s)/
division(s) under Ministry of Railways (Indian Railways)
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3. Services provided by Special Purpose Vehicles (SPVs) to Ministry of Railways (Indian Railways) by way
of allowing Ministry of Railways (Indian Railways) to use the infrastructure built and owned by them during
the concession period against consideration and services of maintenance supplied by Ministry of Railways
(Indian Railways) to SPVs in relation to the said infrastructure built and owned by the SPVs during the
concession period against consideration.
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4. Supply of accommodation services having value of supply less than or equal to twenty thousand rupees per
person per month provided that the accommodation service is supplied for a minimum continuous period of
ninety days
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5. Renting of residential accommodation shall be exempted in the following cases:
(a) accommodation services for students in student residences;

(b) accommodation services provided by Hostels, Camps, Paying Guest accommodations and the
like.";

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6. Research and development services against consideration received in the form of grants supplied by –(a) a
Government Entity; or (b) a research association, university, college or other institution notified under Section
35 (1)(ii) or (iii) at the time of supply of the research and development service.
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7. Supply of services by way of providing metering equipment on rent, testing for meters/ transformers/

3
capacitors etc., releasing electricity connection, shifting of meters/services lines, issuing duplicate bills etc.,
which are incidental or ancillary to the supply of transmission and distribution of electricity provided by
electricity transmission and distribution utilities to their consumers.
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8.Services of affiliation provided by a Central or State Educational Board or Council or any other similar body,
by whatever name called, to a school established, owned or controlled by the central Government, State
Government, Union Territory, local authority, Governmental authority or Government entity.
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9. Services provided to a Governmental Authority by way of —
(a) water supply; (b) public health; (c) sanitation conservancy;
(d) solid waste management; and (e) slum improvement and upgradation
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10. Satellite Launch Services are exempted.
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11. General and life Insurance of many schemes such as hut insurance, Cattle Insurance, Life micro Insurance upto Rs.
2,00,000 are exempted , the details of which are given in main mat. Reinsurance of these are also exempted. Now ,
reinsurance including retrocession of the scheme shall be exempted.

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2. Amendment in Skill Development Services
(1) Any services provided by –
(a) The National Skill Development Corporation set up by the Government of India;
(b) The National Council for Vocational Education and Training;
(c) An Awarding Body recognized by the National Council for Vocational Education and Training;
(d) An Assessment Agency recognized by the National Council for Vocational Education and Training;
(e) A Training Body accredited with an Awarding Body that is recognized by the National Council for Vocational
Education and Training.
in relation to –
(i) The National skill Development Programme or any other scheme implemented by the National Skill Development
Corporation; or
(ii) A Vocational skill development course under the National Skill Certification and Monetary Reward Scheme; or
(iii) Any National Skill Qualification framework aligned qualification or skill in respect of which the National Council
for vocational education and training has approved a qualification package.

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3. Section 11A: Power not to recover Goods and Services Tax not levied or short-levied
as a result of general practice

Notwithstanding anything contained in this Act, if the Government is satisfied that –– (a) a practice was, or
is, generally prevalent regarding levy of central tax (including non-levy thereof) on any supply of goods or
services or both; and (b) such supplies were, or are, liable to, – (i) central tax, in cases where according to the
said practice, central tax was not, or is not being, levied, or (ii) a higher amount of central tax than what was,
or is being, levied, in accordance with the said practice, the Government may, on the recommendation of the
Council, by notification in the Official Gazette, direct that the whole of the central tax payable on such
supplies, or, as the case may be, the central tax in excess of that payable on such supplies, but for the said
practice, shall not be required to be paid in respect of the supplies on which the central tax was not, or is not
being levied, or was, or is being, short-levied, in accordance with the said practice.”

4
 CHAPTER 4: REVERSE CHARGE MECHANISM
Renting of immovable property shall be under Reverse charge mechanism as under:

5AA Services by way of renting of residential Any person Any registered person
dwelling to a registered person.
5AB Services by way of renting of any immovable Any Any registered person
property other than residential dwelling. unregistered
person
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CHAPTER 5: PAYMENT OF TAXES

Following Note shall be added for interest calculation:
No interest under Section 50 of the CGST Act be charged for delayed return filing on the amount available in
the Electronic Cash Ledger (ECL) as of the due date for filing the return if the said amount is lying in the said
ledger from due date till the date of its debit at the time of filing return.

For the sake of convenience the entire topic is being given again

1. Manner of Interest Calculation [Section 50(3)]

Where the input tax credit has been wrongly availed and utilised, the registered person shall pay interest on
such input tax credit wrongly availed and utilised, @18% p.a.at such rate not exceeding twenty-four per cent.
as may be notified by the Government, on the recommendations of the Council, and the interest shall be
calculated, in such manner as may be prescribed
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2. Manner of calculating interest on delayed payment of tax [New rule 88B]

If a registered person files a tax return after the due date, the interest on tax payable will be calculated based
on the portion of tax paid using the electronic cash ledger. This applies for the period of delay in filing the
return beyond the due date, except if the return is filed after the commencement of proceedings under
sections 73, 74, or 74A. The interest rate will be as notified under section 50(1).

In all other cases, where interest is payable under section 50(1), the interest shall be calculated on the amount
of tax which remains unpaid, for the period starting from the date on which such tax was due to be paid till the
date such tax is paid at the rate specified under section 50(1).

Interest on wrongly availed and utilized Input Tax Credit (ITC) will be calculated on the amount wrongly
availed and utilized. The interest period starts from the date of utilization of the wrongly availed ITC until the
date of its reversal or payment of tax. The interest rate will be as specified under section 50(3).

Explanation: (i) input tax credit wrongly availed shall be construed to have been utilized, when the balance
in the electronic credit ledger falls below the amount of input tax credit wrongly availed, and the extent of
such utilization of input tax credit shall be the amount by which the balance in the electronic credit ledger falls
below the amount of input tax credit wrongly availed.
(ii) the date of utilization of such input tax credit shall be taken to be-
(a)the date, on which the return is due to be furnished under section 39 or the actual date of filing of the said
return, whichever is earlier, if the balance in the electronic credit ledger falls below the amount of input tax
credit wrongly availed, on account of payment of tax through the said return; or
(b)the date of debit in the electronic credit ledger when the balance in the electronic credit ledger falls below
the amount of input tax credit wrongly availed, in all other cases.

5
Note: No interest under Section 50 of the CGST Act be charged for delayed return filing on the amount
available in the Electronic Cash Ledger (ECL) as of the due date for filing the return.
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Note: The amount of ITC available in E-Credit Ledger, under any of the heads of IGST, CGST or SGST, can
be utilized for payment of liability of IGST. Hence, it is the total ITC available in ECL, under the heads of
IGST, CGST and SGST taken together, that has to be considered for calculation of interest under rule 88B and
for determining as to whether the balance in the ECL has fallen below the amount of wrongly availed ITC of
IGST. So to check whether ITC has been wrongly availed and utilized or not we must check total of IGST,
CGST and SGST taken together. There will be no interest liability if the balance of ITC in the E-CREDIT
LEDGER, under the heads of IGST, CGST and SGST taken together, has never fallen below the amount of
such wrongly availed ITC, even if available balance of IGST credit in E-CREDIT LEDGER individually falls
below the amount of such wrongly availed IGST credit.
2. ITC in respect of compensation cess can be utilised only towards payment of compensation cess. Accordingly, credit
of compensation cess available in E-Credit Ledger cannot be taken into account while considering the balance of E-
Credit ledger for the purpose of calculation of interest under rule 88B (3) in respect of wrongly availed and utilized
IGST, CGST or SGST credit.
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INTEREST [18% p.a.]

Situation Period On Which Amount
1. Supplies declared in return but Interest shall be calculated beyond Net GST Payable
delay filing of return due date till actual date (i.e. Output tax – ITC)
2. SCN/ Supplies not declared in When tax was due till actual date of Tax remaining unpaid
return/ all other cases payment (i.e. Gross amount)
3. ITC wrongly availed and utilized From date of utilization till date of Amount of ITC which is wrongly
reversal or payment availed & utilized

Examples on Interest Calculation:

Example 1: Return for March 2025 filed on 25th April 2025 (Due date: 20th April 2025). Output Taxes
₹100000; ITC: ₹80000. Balance ₹20000 was paid on 25th April at the time of filing return.
Interest payable: 20000 x 18/100 x 5/365 = ₹49
Example 2: In the above case, assume return was filed on 20th Dec. 2025 after SCN
Total Period: (10 + 31 + 30 + 31+ 31+ 30 + 31 + 30 + 20) = 244 days
Interest will be calculated on gross amount is ₹100000.
Interest = 100000 x 18/100 x 244/365 = 12033
Example 3: In Example 1, deposit in e – cash ledger was already made on 20th April, 2025. Compute Interest
payable if return filled on 25th April, 2025 and e – cash ledger balance ₹20000 used on that date i.e. 25/04/2025.
Example 4: ITC wrongly availed ₹25000 but reversed before utilization.
 No Interest payable

Example 5: ITC wrongly availed ₹25000.

Total ITC balance (Including above figure): ₹950000.
ITC used for payment of output Taxes: ₹895000
Balance c/f: ₹55000

6
  No Interest payable as balance in ITC exceeds the ITC wrongly availed – it is clear that only to correctly
availed ITC is utilized.

Example 6: ITC Balance: ₹950000 including ₹25000 wrongly availed

Return for April 2025 filed on 16/5/2025 by utilizing entire ITC Balance. The wrongly utilized amount paid
on 26/05/2025.
Answer: Date of utilization of ITC (actual date 16/05/2025 or due date 20/05/2025)
Whichever is earlier: 16/05/2025
Date of payment/reversal: 26/05/2025
Total Delay: 10 days
Interest 25000 x 18/100 x 10/365 = 123
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CHAPTER 6: REGISTRATION
Order of revocation/Rejection of application
(a) Where the proper officer is satisfied, for reasons to be recorded in writing, that there are sufficient grounds
for revocation of cancellation of registration, he shall revoke the cancellation of registration by an order within
a period of 30 days from the date of the receipt of the application.
(b) The proper officer may, for reasons to be recorded in writing, by an order, reject the application for
revocation of cancellation of registration. However, before such rejection a SCN shall be issued and the
applicant shall reply to it within a period of 7 working days. Upon receipt of the information or clarification,
the proper officer shall proceed to dispose of the application (accept or reject) within a period of 30 days from
receipt of clarification. Provided further that such revocation of cancellation of registration shall be
subject to such conditions and restrictions, as may be prescribed.

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CHAPTER 7: INVOICING
Self-invoicing Rule for Reverse Charge
In case of reverse charge u/s 9(3)/(4), the recipient shall issue self-invoice, where the supplier is unregistered.
(“Supplier is unregistered” shall include a supplier who is registered solely for TDS)
Such invoice shall be issued within a period of thirty days from the date of receipt of the said supply of goods
or services, or both, as the case may be.

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CHAPTER 8: Input Tax Credit

1. Amendment in section 17(5) in Blocked credit
No ITC shall be allowed in the following case
Tax paid in fraud, seizure and confiscation cases: any tax paid in accordance with the provisions of sections
74 in respect of any period upto Financial Year 2023-24 [Section 74, 129,130]

2. CLAMING OF ITC IN CERTAIN CASES

7
Section 16(5): Notwithstanding anything contained in sub-section (4), in respect of an invoice or debit note
for supply of goods or services or both pertaining to the Financial Years 2017-18, 2018-19, 2019-20 and 2020-
21, the registered person shall be entitled to take input tax credit in any return under section 39 which is filed
upto the 30Th November, 2021.

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3. Section 16(6) Where registration of a registered person is cancelled under section 29 and subsequently
the cancellation of registration is revoked by any order, either under section 30 or pursuant to any order made
by the Appellate Authority or the Appellate Tribunal or court and where availment of input tax credit in respect
of an invoice or debit note was not restricted under sub-section (4) on the date of order of cancellation
of registration, the said person shall be entitled to take the input tax credit in respect of such invoice or debit
note for supply of goods or services or both, in a return under section 39,–– (i) filed upto thirtieth day of
November following the financial year to which such invoice or debit note pertains or furnishing of the relevant
annual return, whichever is earlier; or (ii) for the period from the date of cancellation of registration or the
effective date of cancellation of registration, as the case may be, till the date of order of revocation of
cancellation of registration, where such return is filed within thirty days from the date of order of revocation
of cancellation of registration, whichever is later.”. [w.e.f. 1st Nov.2024]

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CHAPTER 9: GST Returns

1. GSTR 1A Introduced.
(Provisions relating to GSTR 1 and GSTR 1A are given hereunder)

GSTR 1: Statement of Outward Supplies

Particulars FORM. DUE DATE REMARKS

TH
STATEMENT OF GSTR 1 11 OF THE NEXT The details of outward supplies in GSTR-1 shall include:
OUTWARD SUPPLIES MONTH
[FOR QRMP SCHEME Invoice wise details of –
13TH OF THE MONTH - all supplies made to registered person.
SUCCEEDING THE
QUARTER] - inter-state supplies made to unregistered person of
invoice value > ₹1,00,000.

Consolidated details for each rate of tax of –

Intra-State supplies to unregistered persons.

State wise inter-state supplies on invoice value upto ₹1

,00,000

Debit/credit notes issued during the month for

invoices issued previously.

➔ Amendment through GSTR 1A

A registered person may, after furnishing the details of outward supplies of goods or service or both in FORM
GSTR-1 for a tax period but before filing of return in FORM GSTR-3B for the said tax period, at his own
option, amend or furnish additional details of outward supplies of goods or services or both in FORM GSTR-
1A for the said tax period electronically through the common portal, either directly or through a Facilitation
Centre as may be notified by the Commissioner.
The additional details or the amendments of the details of outward supplies of goods or services or both
furnished in FORM GSTR-1A may, as per the requirement of the registered person, include the -
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(a) invoice wise details of -

(i) inter-State and intra-State supplies made to the registered persons; and

(ii) inter-State supplies with invoice value more than one lakh rupees made to the unregistered
persons;

(b) consolidated details of -

(i) intra-State supplies made to unregistered persons for each rate of tax; and

(ii) State wise inter-State supplies with invoice value upto one lakh rupees made to unregistered
persons for each rate of tax;

(c) debit and credit notes, if any, issued during the month for invoices issued previously.]

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2. OTHER RETURNS
[Section 39/52/44/45]
[The timeline for GSTR 4 has been extended. However for the sake of convenience the entire
table has been given again.]
OTHER RETURNS
[Section 39/52/44/45]
Particulars Form Due Date
Composite Tax Payer GST CMP-08 Within 18 days after the end
The return furnish shall include invoice wise inward (quarterly of each quarter.
supplies and consolidated details of outward Statement
supplies. No ITC shall be allowed for invoice containing the
received prior to opting the Scheme. details of self-
assessed tax)

FORM GSTR-4 On or before 30th day of June

[Return annually for following the end of such
every F.Y] financial year.
Non-resident Tax payer GSTR-5 within 13 days after the end of a
The return contents the details of outwards supplies, (monthly) calendar month or within 7 days
inward supplies and tax payable. The details of after the last day of the period of
outward supplies shall be auto generated in GSTR- registration, whichever is
2B of the recipient. earlier.
Input Service Distributor: Return shall be GSTR-6 within 13 days after the end of
filed on the basis of auto generated inward supplies. (monthly) such month.
It shall contain the details of tax invoices on which
credit has been received and distributed. The credit
so distributed shall be auto generated in GSTR-2B of
the recipient.
Person required to deduct tax The details GSTR-7 within 10 days after the end of
of TDS furnished by the deductor shall be auto (monthly) such month.
generated in GSTR-2B of the supplier (deductee).
Even NIL TDs return has to be filed.
E-commerce operator required to GSTR-8 within 10th day of the following
collect tax (monthly) month in which collection is
made.
The details of TCS shall be auto generated in GSTR-
2B of the supplier (collectee). The details of place of
supply and net taxable value shall be matched with

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 the corresponding details furnished by the supplier in
GSTR-1.
Annual Return GSTR-9 on or before the thirty-first day
Not applicable for ISD, TDS,casual/non-resident (normal) of December following the end
taxable person. of such financial year.
Taxpayers with an aggregate annual turnover of
up to Rs. 2 crores for the financial year are also GSTR 9B-
exempt from filing the annual return For TCS
Suppliers of Online Information Database Access
and Retrieval Services (OIDAR services) are
exempted to furnish Annual Return (GSTR-9)
[Where turnover exceeds Rs. 5 crores a self certified
reconciliation statement to be furnished in STR Form
9C)

Final Return [Section 45] GSTR-10 within 3 months of the date of

Every registered person who is required to cancellation or date of order of
furnish a return u/s. 39(1) and whose cancellation, whichever is later.
registration has been cancelled shall furnish a
final return.
Persons having Unique Identity Number (UNO, GSTR-11 Eligible to claim refund once in
Consulate/embassy of foreign countries/notified every quarter on taxes paid on
person) notified inward supplies.
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CHAPTER 10: Place of Supply

Place of Supply for over-the-counter Sales to unregistered persons shall be as follows [Section 10(1) (ca) of The IGST
Act] applicable w.e.f. 1.10.2023
Particulars POS
Where the address of the unregistered person is recorded in POS is location as per address of unregistered
the invoice. person recorded in the invoice. [Please note that
even mentioning the name of the State instead of
complete address is sufficient]
Where the address of the unregistered person is not POS is location of the supplier
recorded in the invoice.
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Note: Place of supply for E-Commerce sales
Where billing address and delivery address are different for an unregistered person, then POS is the address
of delivery recorded on the invoice and such address of delivery should be recorded on the invoice to
determine POS. [Circular No. 209/3/2024 GST dated 26.06.2024]
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2. Write a note on place of supply for telecom services.
The place of supply of telecommunication services including data transfer, broadcasting, cable and direct to
home television services to any person shall -
(a) in case of services by way of fixed telecommunication line, leased circuits, internet leased circuit, cable or
dish antenna, be the location where the telecommunication line, leased circuit or cable connection or dish
antenna is installed for receipt of services;

(b) in case of mobile connection for telecommunication and internet services provided on post-paid basis, be
the location of billing address of the recipient of services on the record of the supplier of services;

(c) in cases where mobile connection for telecommunication, internet service and direct to home television
services are provided on pre-payment basis through a voucher or any other means -

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(i) through a selling agent or a re-seller or a distributor of subscriber identity module card or re-charge voucher,
be the address of the selling agent or re-seller or distributor as per the record of the supplier at the time of
supply; or
(ii) by any person to the final subscriber, be the location where such prepayment is received or such vouchers
are sold;
(iii) If prepaid service availed through net banking/online location of recipient.
(d) In other cases, address of recipient, and if not known, location of supplier
Note: For leased circuits involving multiple states refer proportionate rules given separately.
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CHAPTER 11: Circulars and Notifications
[while some of the circulars are recent in nature, some other circulars were given in earlier amendment sheets
and have now been given again for your convenience]
(1) Supply of food or beverages in a cinema hall is to be treated as ‘restaurant service’ where food or
beverages are supplied by way of or as part of a service, and supplied independent of the cinema exhibition
service. If the sale of cinema ticket and supply of food and beverages are clubbed together, and such bundled
supply satisfies the test of composite supply, the entire supply will attract GST at the rate applicable to
service of exhibition of cinema, the principal supply. [Eating Joints is a wide term and includes counters
or restaurants at cinema halls whether run by cinema operator or given to a third party. The customer may
or may not avail such services. [Circular No. 201/13/2023 GST dated 01.08.2023]
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(2) Whether shares held in a subsidiary company by holding company is a supply:
Shares and securities are neither goods nor services. It cannot be said that a service is being provided by the
holding company to the subsidiary company, solely on the basis that there is a specific classification entry
'997171' being "the services provided by holding companies, i.e. holding securities of (or other equity interests
in) companies and enterprises for the purpose of owning a controlling interest.". Mere holding shares is not a
supply U/s 7 and hence not liable to GST. [Circular No. 196/08/2023 GST dated 17.07.2023]

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(3) Circular No.209/3/2024-GST: The circular clarifies the place of supply of goods to unregistered persons,
particularly in cases where the billing address is different from the address of delivery of goods, especially in
the context of supplies made through e-commerce platforms.

The clarification states that: - Where the supply of goods is made to an unregistered person, the place of
supply would be the location as per the address of the said person recorded in the invoice and the location of
the supplier where the address of the said person is not recorded in the invoice.
- In cases where the address of delivery of goods is different from the billing address, the place of supply shall
be the address of delivery of goods recorded on the invoice.
- The supplier may record the delivery address as the address of the recipient on the invoice for the purpose of
determining the place of supply.
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(4) Circular No. 211/5/2024-GST: The time limit for availing input tax credit (ITC) under Section 16(4) of
the CGST Act, 2017, in respect of supplies received from unregistered persons under reverse charge
mechanism (RCM).

The relevant financial year for calculating the time limit for ITC availment is the financial year in which the
invoice is issued by the recipient under Section 31(3)(f) of the CGST Act.
- The invoice must be issued by the recipient, and tax must be paid on the supply, to avail ITC.
- If the invoice is issued after the time of supply, interest must be paid on the delayed payment of tax, and
penal action may be taken under Section 122 of the CGST Act.
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(5) Circular (No. 219/13/2024-GST) on June 26, 2024, to clarify the availability of input tax credit (ITC) on
ducts and manholes used in the network of optical fiber cables (OFCs) for providing telecommunication
services.

The circular clarifies: - ITC is not barred under section 17(5) of the CGST Act for ducts and manholes used
in the network of OFCs.
- Ducts and manholes are considered "plant and machinery" as per the explanation in section 17 of the CGST
Act, and are used for making outward supply of transmission of telecommunication signals.
- The availability of ITC on ducts and manholes is not restricted under clause (c) or clause (d) of sub-section
(5) of section 17 of the CGST Act.
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(6) Circular (No. 221/15/2024-GST) on June 26, 2024, to clarify the time of supply for services provided
under the Hybrid Annuity Mode (HAM) model of National Highways Authority of India (NHAI) projects.

The circular clarifies: - The time of supply for services under HAM contracts, including construction and
operation & maintenance (O&M), is the date of issuance of the invoice or the date of receipt of payment,
whichever is earlier, if the invoice is issued on or before the specified date or the date of completion of the
event specified in the contract.

- If the invoice is not issued on or before the specified date or the date of completion of the event, the time of
supply is the date of provision of the service (i.e., the due date of payment as per the contract) or the date of
receipt of payment, whichever is earlier.
- The tax liability on the concessionaire under the HAM contract would arise at the time of issuance of the
invoice or receipt of payment, whichever is earlier.
- The amount of interest included in the installments/annuity payable by NHAI to the concessionaire is also
includible in the taxable value for the purpose of payment of tax.
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(7) Circular (No. 222/16/2024-GST) on June 26, 2024, to clarify the time of supply for services related to
spectrum allocation under GST.

The circular clarifies: - The time of supply for spectrum allocation services is the earlier of the date of
payment or the date of issuance of the tax invoice, in cases where the telecom operator opts for making
payments in installments.

- The supply of spectrum allocation services is considered a continuous supply of services, and the tax invoice
is required to be issued on or before the due date of payment.
- The same treatment regarding the time of supply may apply to other cases where natural resources are
allocated by the government to successful bidders.
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GENERAL:
Note: 1. Reference in Section 35(accounts and records); Section 49(e-liability ledger), Section 50(interest on
delayed payment); Section 51(TDS) and Section 10 to Section 74 shall also include reference to section 74A.
2.With the introduction of GSTR 1A, the registered person can claim ITC on the basis of details of outward
supplies mentioned by supplier in GSTR 1 or GSTR 1A and accordingly these shall be reflected in GSTR 2B.

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 CHAPTER 12: SUMMARY OF ACCOUNTS AND RECORDS
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Section 35: Accounts and other records

- Every registered person must maintain accurate accounts and records of:
- Production or manufacture of goods
- Inward and outward supply of goods or services
- Stock of goods
- Input tax credit availed
- Output tax payable and paid
- Other particulars as prescribed
- The accounts and records must be maintained at the principal place of business, and may be
maintained electronically.
- The Commissioner may notify a class of taxable persons to maintain additional accounts or documents.
- Every owner or operator of a warehouse or go down, and every transporter, must maintain records of
consigner, consignee, and other details of goods in storage or transit.
- For goods not accounted for the tax payable shall be determined by proper officer and provisions of sections
73, 74, 74A shall apply.
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Section 36: Period of retention of accounts

- Registered persons must retain their accounts and records for 72 months from the due date of
furnishing the annual return.
- If they are party to an appeal or revision, they must retain the records for one year after final disposal
of the proceedings.
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Rule 56: Maintenance of accounts by registered persons
General Provisions:
1. True and Correct Accounts: Maintain true and correct accounts.
2. Additional Particulars: Maintain accounts of imported/exported goods, supplies attracting reverse charge,
and relevant documents.
Accounts and Records
1. Stock Accounts: Maintain stock accounts, including opening balance, receipts, supplies, and balance of
stock.
2. Advances Account: Maintain a separate account of advances received, paid, and adjustments made.
3. Tax Accounts: Maintain an account of tax payable, tax collected, input tax, and input tax credit claimed.
Particulars to be Maintained
1. Supplier and Recipient Details: Maintain names and addresses of suppliers and recipients.
2. Premises Details: Maintain complete addresses of premises where goods are stored.
Storage and Preservation of Records
1. Principal Place of Business: Keep books of account at the principal place of business.
2. Electronic Records: Maintain electronic records, including a log of edited/deleted entries.
Special Provisions
1. Manufacturers: Maintain monthly production accounts.

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 2. Service Providers and Works Contractors: Maintain accounts showing quantitative details of
goods/services used/supplied.
Authentication and Preservation of Records
1. Digital Signature: Authenticate electronic records with a digital signature.
2. Preservation of Records: Preserve records for the period specified in Section 36.

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Rule 57: Generation and maintenance of electronic records

- Registered persons must maintain electronic back-up of records and produce them on demand in hard
copy or electronic format.
- They must also provide details of files, passwords, and codes used for access.
- The electronic records must be authenticated by digital signature.
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Rule 58: Records to be maintained by owner or operator of go down or warehouse
and transporters
Owners or operators of warehouses or go downs must maintain records of:
- Goods stored, delivered, and disposed of
- Particulars of consigner and consignee
- Other details as prescribed

Transporters must maintain records of:

- Goods transported, delivered, and stored in transit
- Particulars of consigner and consignee
- Other details as prescribed
- The records must be maintained in a manner that facilitates identification and physical verification.
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