All posts by : Nayan Saluja

The following are the types of assesse other than Individuals: –

The Residential Status of an HUF depends upon two factors, the location of control and management of it affairs and the residential status of its Karta.

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NOTE:

For the purpose of calculating the period of Karta’s stay in India, we shall add up the stay in India of all successive Karta’s of the Family, in case of death of First Karta.

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Example:

Head office of Arun & HUF, a Hindu undivided family is situated in Australia is managed by Mr. Arun, who is a resident in India only 2 years out of 10 years during the previous year 2024-25. Determine the residential status of HUF for A.Y 2025-26, if the affairs of the family business are (i) wholly controlled from Australia (ii) partly controlled from India.?

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In the first case since the affairs of the HUF are controlled and managed wholly outside India, HUF will be considered as Non-Resident in A.Y 2025-26.

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In the second case, the affairs of the HUF are controlled partly from India. Therefore, HUF is a resident in India in the A.Y 2025-26. However, since Mr. Arun does not satisfy both the above-mentioned conditions. The HUF will be considered as Resident but not Ordinarily Resident.

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Firms and other Association of Persons can fall under two categories only. They may either be residents or non-residents. The category of non-ordinarily residents does not apply to such assessee.

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Example:

A firm has five partners who are permanent resident in India. The firm owns a rubber estate in Malaysia. The estate is managed and controlled by the partners in India, through an agent in Malaysia. Determine the residential status of the firm.

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Even if the control and management of the firm is partly situated in India, the firm becomes resident. Here, all the partners reside in India and manage at least a part of affairs of the estate. As such, the firm is resident in India.

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Resident status of a company is explained below:

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“Place of effective management” means a place where key management and commercial decision that are necessary for the conduct of the business of an entity are in substance made.

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Example:

International Remedies is a registered company in Germany, and has a registered office in Germany, but the management and control are situated wholly in India. What will be the residential status of the company for tax purposes?

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As the company’s control and management is situated wholly in India, it will be resident in India and the location of registered office of the company is immaterial.

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If in the above question if the control and management is partially situated in India, the company is non-resident in India for tax purposes.

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The Indian chemicals limited is a registered Indian Company carrying business in India and in gulf countries. The control and management of affairs was partially situated in Riyadh during the year ending March 2025. What will be the resident status of the company for A.Y 2025-26?

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The Indian chemical limited is an Indian company, therefore it will be treated as a resident in India irrespective of the fact that its POEM is partially outside India..

The taxability of a person in India depends upon its residential status in India for any particular Financial Year. The term residential status must not be confused with the citizenship. A person may be a citizen of India but may end up being a non- resident or vice versa. Also note that residential status of different types of persons like Individuals, Huf’s , Firms, Company etc. are determined differently however in this article we are discussing about the residential status of an Individual only.

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For the purposes of Income Tax in India, the tax classifies taxable person as:

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The taxability differs for each category of taxpayers. So, let us understand         how a taxpayer becomes a resident, resident but not ordinarily resident or non- resident.

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A Taxpayer would classify as resident in India if he satisfies any one of the following two conditions: –

Exceptions: –

If an Individual qualifies as a resident, the next step is to determine if he/ she is a Resident and Ordinarily Resident (ROR) or Resident but not Ordinarily Resident (RNOR). He will be a ROR if he satisfies both the conditions: –

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Therefore, there are 3 situations in which an Individual is said to be RNOR:

An Individual failing to satisfy the condition of stay in India for:

Resident and Ordinarily Resident: A resident and ordinarily resident will be charged to tax in India on his global income i.e. income earned in India as well as income earned outside India.

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Resident but not Ordinarily Resident: There is a thin line in taxability of income between resident and ordinarily resident and resident and non-ordinarily resident, on below income RNOR’s are not required to pay taxes.

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Non- Resident: A non-resident will be charged only to tax on income received in India or source of income received is from India. However, income earned outside India having no connection to India, is not taxable.

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Stay in India includes stay in territorial waters of India i.e. 12 nautical miles into the sea from the India coastline.

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The period of stay needs not to be continuous or active.

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Both the date of departure as well as the date of arrival in India are considered for counting the number of days stayed in India.

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Income from foreign source means that income earned outside India, excluding the income from a business operated or profession set up in India, which is not deemed to accumulate or arise in India.

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An Individual shall be considered as deemed to be person of Indian origin if he/ she or either his/ her parent or any of his/ her grandparent was born in undivided India.

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Non-resident Indian means an Individual who is a citizen of India or Indian origin but is not a resident.

For Income tax purposes the residence of an Individual has nothing do with its citizenship, place of birth or domicile. Therefore, an Individual can be resident in more than one country even though he has only one domicile.

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The following are the types of assesse other than Individuals: –

Slab rate for HUF under old scheme is as follows: –

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Slab rate for HUF under new scheme is as follows: –

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Surcharge for HUF

In addition to tax and surcharges CESS of 4% is applied to HUF.

For Dividends and Capital Gain taxable under 111A, 112A and 115D highest rate of surcharge will be 15%.

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Tax slab for domestic company is as follows: –

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Surcharge: –

In case company is opting for Section 115BAA & 115BAB the surcharge will be 10% irrespective of the income.

In any other cases Surcharge will be as follows: –

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In addition to this CESS will be applicable @ 4%.

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Tax slab for foreign companies: –

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Surcharge: –

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In addition to this CESS will be applicable @ 4%.

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Tax rate will be flat 30% on income except special rate incomes.

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Surcharge: –

Surcharge @ 12% if total income is more than Rs. 1 crore.

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In addition to this CESS will be applicable @ 4%.

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Slab rate under old scheme for AOP: –

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Slab rate for AOP under new scheme is as follows: –

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Slab for Co. operative society is as follows: –

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Surcharge: –

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In addition to this CESS will be applicable @ 4%.

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Slab rate for BOI under old scheme is as follows: –

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Slab rate for BOI under new scheme is as follows: –

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Surcharge

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In addition to tax and surcharges CESS of 4% is applied.

For Dividends and Capital Gain taxable under 111A, 112A and 115D highest rate of surcharge will be 15%.

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Slab rate for AJP under old scheme is as follows: –

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Slab rate for AJP under new scheme is as follows: –

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In India, the Income Tax applies to Individuals based on a slab system, where different tax rates are assigned to different income ranges and different ages. As the person’s income increases, the tax rate also increases. This type of system is known as progressive tax system..

The budget 2024 has introduced significant changes to the tax rates under new regime, which will be applicable from A.Y 2025-26. Taxpayers can now avail higher standard deduction, family pension deductions and so on. The new slab rate under new regime is as follows: –

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NOTE: –

Tax rebate upto Rs. 25,000 is applicable if the total income does not exceed Rs. 7,00,000. However, this rebate is not applicable to NRI.

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Under old regime there were no changes in the 2024 budget. The slab rate under old regime is as follows.

Individuals below 60 Years.

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Individuals aged 60 to 80 years.

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Individual Above 80 Years

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The additional charge levied on higher income earning individuals over and above tax is known as surcharges. It is levied on tax payable, not on income generated. Basically, it is tax on tax. The Surcharge under new & old regime is as follows: –

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NOTE: –

From A.Y 2025-26 the surcharge under new regime is capped at 25% as compared to 37% under old regime.

For Dividends and Capital Gain taxable under 111A, 112A and 115D highest rate of surcharge will be 15%.

A 4% Health & Education cess is applicable on the total tax payable after including surcharge.

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The following are some major deduction & exemptions you cannot claim under new regime: –

The new tax regime is beneficial for middle class taxpayers who have a taxable income up to Rs. 15 lakhs. The old regime is better of high-income earners.

The new income tax regime is beneficial for those people who make low investment. As the new regime offer six income tax slabs, anyone paying taxes without claiming tax deductions can benefit from paying a lower rate of tax under the new tax regime.

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EXAMPLE: –

Mr. Anil Kumar aged 30 years has Income from Salary Rs. 15 lakhs, income from short term capital gain Rs. 1 lakhs and interest from savings bank Rs. 12,000. He invested Rs. 1,50,000 in 80C and Rs. 50,000 in NPS (employee contribution same as employee contribution). What is his tax liability under new regime as well as old regime?

Tax liability under old regime

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Tax liability under new scheme

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CONCLUSION: –

Since his tax liability is less in new regime so he should for tax under new regime as it would lead to saving in Rs. 57,920.

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TCS stands for Tax collected at Source. TCS is a kind of tax that is collected by the seller from the buyer on sale of certain type of goods if the amount exceeds a specified limit, so that it can be deposited to the government.

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TCS is required to be collected at the source if the value of transaction exceeds a specified amount.

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The purchaser can claim this tax collected by the seller while paying his income tax liability for the year, and if the TCS collected is more than the income tax liability of the assessee then he/ she will be entitled to a refund.

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The main purpose of introduction of TCS was to reduce the Tax evasion by the person receiving the income.

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Note: –

Seller– A seller who sells specific goods and is responsible for collection of tax from the purchaser.

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Purchaser– A purchaser is the person who buys specific goods from seller is responsible for paying TCS amount to seller.

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Section 206C(1) of Income Tax Act, 1961 mandates the collection of tax at source (TCS) on sale of goods.

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TCS requirement arises:

Few examples of date of deduction are: –

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Any person other than Individuals/ HUFs (Individuals/ HUFs are required to collect TCS if their turnover is more than Rs. 1 crore or gross receipts is more than Rs. 50 lakhs during the previous year) are required to collect TCS under Section 260C(1) on sale of various goods like:-

The TCS rate under this Section is: –

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No TCS if: –

The due date for deposit of TCS is as below: –

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TCS is to be deposited monthly on the dates mentioned above but the return is to be filed quarterly on or before the below mentioned dates: –

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TCS under this section has to filed quarterly through FORM 27EQ and the collector has to issue FORM 27D to the buyer within 15 days of filing of return.

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Following penalties/fees will be levied if there is delay in TCS deduction or delay in deposit of TCS or non-filing of quarterly return.

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Q. What is the threshold limit for TCS under 206C(1)?

A. NO, there is no threshold under Section 206C(1).

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Q. Is Section 206C(1) applicable when the payee is a non-resident?

A. YES, this section also applies when the buyer is non-recipient.

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Q. Is TCS applicable on GST amount also?

A. NO, TCS u/s 206C(1) is not applicable on GST amount, TCS is applicable on net amount after deduction of all taxes.

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TCS stands for Tax collected at Source. TCS is a kind of tax that is collected by the seller from the buyer on sale of certain type of goods if the amount exceeds a specified limit, so that it can be deposited to the government.

.

TCS is required to be collected at the source if the value of transaction exceeds a specified amount.

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The purchaser can claim this tax collected by the seller while paying his income tax liability for the year, and if the TCS collected is more than the income tax liability of the assessee then he/ she will be entitled to a refund.

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The main purpose of introduction of TCS was to reduce the Tax evasion by the person receiving the income.

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Note: –

Seller– A seller who sells specific goods and is responsible for collection of tax from the purchaser.

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Purchaser– A purchaser is the person who buys specific goods from seller is responsible for paying TCS amount to seller.

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Section 206C(1F) of Income Tax Act, 1961 mandates the collection of tax at source (TCS) on sale of motor vehicle.

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TCS requirement arises:

Few examples of date of collection are: –

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Any person other than Individuals/ HUFs (Individuals/ HUFs are required to collect TCS if their turnover is more than Rs. 1 crore or gross receipts is more than Rs. 50 lakhs during the previous year) are required to collect TCS under Section 260C(1C) on Sale of Motor Vehicles exceeding Rs. 10 lakhs.

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NOTE: –

The threshold limit of Rs. 10 lakhs has to be looked at on each individual purchase and not on aggregate purchases made during the year.

The TCS rate under this Section is: –

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No TCS if: –

The due date for deposit of TCS is as below: –

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TCS is to be deposited monthly on the dates mentioned above but the return is to be filed quarterly on or before the below mentioned dates: –

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TCS under this section has to filed quarterly through FORM 27EQ and the collector has to issue FORM 27D to the buyer within 15 days of filing of return.

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Following penalties/fees will be levied if there is delay in TCS collection or delay in deposit of TCS or non-filing of quarterly return.

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Q. What is the threshold limit for TCS under 206C(1F)?

A. The threshold under Section 206C(1F) is Rs. 10,00,000 per individual transaction.

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Q. Is Section 206C(1F) applicable when the payee is a non-resident?

A. YES, this section also applies when the buyer is non-recipient.

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Q. Is TCS applicable on GST amount also?

A. YES, TCS u/s 206C(1F) is also applicable on GST amount, TCS is applicable on total amount including gst.

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TCS stands for Tax collected at Source. TCS is a kind of tax that is collected by the seller from the buyer on sale of certain type of goods if the amount exceeds a specified limit, so that it can be deposited to the government.

.

TCS is required to be collected at the source if the value of transaction exceeds a specified amount.

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The purchaser can claim this tax collected by the seller while paying his income tax liability for the year, and if the TCS collected is more than the income tax liability of the assessee then he/ she will be entitled to a refund.

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The main purpose of introduction of TCS was to reduce the Tax evasion by the person receiving the income.

.

Note: –

Seller– A seller who sells specific goods and is responsible for collection of tax from the purchaser.

.

Purchaser– A purchaser is the person who buys specific goods from seller is responsible for paying TCS amount to seller.

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Section 206C(1F) of Income Tax Act, 1961 mandates the collection of tax at source (TCS) on sale of motor vehicle.

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TCS requirement arises:

Few examples of date of collection are: –

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Any person other than Individuals/ HUFs (Individuals/ HUFs are required to collect TCS if their turnover is more than Rs. 1 crore or gross receipts is more than Rs. 50 lakhs during the previous year) are required to collect TCS under Section 260C(1C) on Sale of Motor Vehicles exceeding Rs. 10 lakhs.

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NOTE: –

The threshold limit of Rs. 10 lakhs has to be looked at on each individual purchase and not on aggregate purchases made during the year.

The TCS rate under this Section is: –

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No TCS if: –

The due date for deposit of TCS is as below: –

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TCS is to be deposited monthly on the dates mentioned above but the return is to be filed quarterly on or before the below mentioned dates: –

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TCS under this section has to filed quarterly through FORM 27EQ and the collector has to issue FORM 27D to the buyer within 15 days of filing of return.

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Following penalties/fees will be levied if there is delay in TCS collection or delay in deposit of TCS or non-filing of quarterly return.

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Q. What is the threshold limit for TCS under 206C(1F)?

A. The threshold under Section 206C(1F) is Rs. 10,00,000 per individual transaction.

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Q. Is Section 206C(1F) applicable when the payee is a non-resident?

A. YES, this section also applies when the buyer is non-recipient.

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Q. Is TCS applicable on GST amount also?

A. YES, TCS u/s 206C(1F) is also applicable on GST amount, TCS is applicable on total amount including gst.

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TCS stands for Tax collected at Source. TCS is a kind of tax that is collected by the seller from the buyer on sale of certain type of goods if the amount exceeds a specified limit, so that it can be deposited to the government.

.

TCS is required to be collected at the source if the value of transaction exceeds a specified amount.

.

The purchaser can claim this tax collected by the seller while paying his income tax liability for the year, and if the TCS collected is more than the income tax liability of the assessee then he/ she will be entitled to a refund.

.

The main purpose of introduction of TCS was to reduce the Tax evasion by the person receiving the income.

.

Note: –

Seller– A seller who sells specific goods and is responsible for collection of tax from the purchaser.

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Purchaser– A purchaser is the person who buys specific goods from seller is responsible for paying TCS amount to seller.

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Section 206C(1C) of Income Tax Act, 1961 mandates the collection of tax at source (TCS) on leasing or licensing or transferring of any interest for the purpose of business.

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TCS requirement arises:

Few examples of date of collection are: –

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Any person other than Individuals/ HUFs (Individuals/ HUFs are required to collect TCS if their turnover is more than Rs. 1 crore or gross receipts is more than Rs. 50 lakhs during the previous year) are required to collect TCS under Section 260C(1C) on leasing, licensing, or transferring any right or interest in: –

The TCS rate under this Section is: –

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No TCS if: –

The due date for deposit of TCS is as below: –

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TCS is to be deposited monthly on the dates mentioned above but the return is to be filed quarterly on or before the below mentioned dates: –

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TCS under this section has to filed quarterly through FORM 27EQ and the collector has to issue FORM 27D to the buyer within 15 days of filing of return.

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Following penalties/fees will be levied if there is delay in TCS collection or delay in deposit of TCS or non-filing of quarterly return.

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Q. What is the threshold limit for TCS under 206C(1C)?

A. NO, there is no threshold under Section 206C(1C).

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Q. Is Section 206C(1C) applicable when the payee is a non-resident?

A. YES, this section also applies when the buyer is non-recipient.

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Q. Is TCS applicable on GST amount also?

A. NO, TCS u/s 206C(1C) is not applicable on GST amount, TCS is applicable on net amount after deduction of all taxes.

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TCS stands for Tax collected at Source. TCS is a kind of tax that is collected by the seller from the buyer on sale of certain type of goods if the amount exceeds a specified limit, so that it can be deposited to the government.

.

TCS is required to be collected at the source if the value of transaction exceeds a specified amount.

.

The purchaser can claim this tax collected by the seller while paying his income tax liability for the year, and if the TCS collected is more than the income tax liability of the assessee then he/ she will be entitled to a refund.

.

The main purpose of introduction of TCS was to reduce the Tax evasion by the person receiving the income.

.

Note: –

Seller– A seller who sells specific goods and is responsible for collection of tax from the purchaser.

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Purchaser– A purchaser is the person who buys specific goods from seller is responsible for paying TCS amount to seller.

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TCS requirement arises:

There are more than 20 sections of TCS below are few examples of commonly used TCS rates: –

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The due date to deposit TCS is as Follows: –

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TCS is to be deposited monthly on the dates mentioned above but the return is to be filed quarterly on or before the below mentioned dates; –

Following penalties will be levied if there is delay in TCS deduction or delay in deposit of TCS.

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Following are the TCS returns that are used for different purposes.

8.When will higher TCS rate apply?

If the purchaser falls under the below mentioned condition, then TCS rate will be: –

Tax collection at source is exempted in the following cases: –

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