Got a Notice Under Section 143(2) of Income Tax Act? Here's What You Should Do Now

Timely filing of your income tax return is such a euphoric feeling, isn't it? You have made the disclosure, availed the deductions, and filed your return on time. And then, out of the blue, you get a notice in your mailbox — a notice that states your return has been selected for scrutiny under section 143 2 of income tax act.

Now what?

If you hear this before, don't panic. You're not alone. Thousands of taxpayers, both companies and individuals, receive the same income tax notices annually. And the majority of them also panic at first. But the good news is: if you play smart and within the time frame, there's absolutely nothing to fear.

This blog, courtesy of Book My Accountant (BMA), will take you through what the notice is about, why it occurs, and the precise steps to follow—particularly if you do not wish to incur penalties or tax issues down the road.

What Does a Section 143(2) Notice Mean?

Let's make it easy. Notice under section 143 2 of income tax act indicates the Income Tax Department needs to examine your return in more detail. It doesn't indicate that you are in trouble. It only means that something in your return puzzled them and they require clarification.

It might be because:

You have reported a high amount of income or deducted large amounts.
There is inconsistency between your Form 26AS/AIS and your ITR.
You had significant transactions—namely, selling a property or investing a large sum.
Your return was arbitrarily picked up by the system for scrutiny.

Briefly, this is routine scrutiny by the tax department. You just have to reply correctly and in time.

How Does Section 144B Relate to This?

You may have also heard of section 144B. It addresses faceless assessment.

Are those days gone when you used to have to go to an IT office? Now all of this is done online — safely, openly, and without any human bias. If your return is selected for assessment, all correspondence will be through the income tax portal.

So yes, even if you receive a notice under section 143(2), the assessment will probably follow the procedure under 144B.

Why Did You Receive a Notice?

Folks will wonder, "But I didn't do anything wrong. Why me?"
The truth is, here are some of the usual triggers:
Enormous refunds received
Donations or deductions that don't make sense based on your income
Transactions flagged by banks or third parties but not included in your return
Business expenses appearing to be exaggerated
Technical discrepancies in income or tax credits

Even if you've been completely above board, certain patterns or numbers can trigger your return for audit.

Step-by-Step: What You Should Do Immediately

Let's go into action mode. Here's your plan:

Step 1: Read the Notice Carefully

The assessment year (e.g. AY 2024–25)
The date of issue
The deadline for response
Whether it’s under 143(2) or also mentions 144B

Don't freak out. Just know what they're looking for.

Step 2: Collect Your Documents

Before you reply, you'll need to substantiate your claims with appropriate documents. Start with:

PAN & Aadhaar copies
ITR Acknowledgement
Bank statements
Salary slips / Form 16
Form 26AS, AIS, and TIS reports
Deduction proofs (80C, 80D, home loan, etc.)
Capital gain statements
Business records, if applicable

In essence, you need to construct a solid, fact-based reply.

Step 3: Log into the e-Filing Portal

Go to https://www.incometax.gov.in.

Proceed to "e-Proceedings" under "Pending Actions".

Locate the notice and click on "Submit Response".

Here you can attach supporting documents and reply in writing as needed.

Step 4: Respond Before the Deadline

Suppose the notice was published on 23rd June 2025 with a deadline to respond of 8th July 2025. If you happen to miss this date, the department can go ahead with a best judgment determination. That is, they will determine your case in your absence — and that might not be favorable for you.

What If You Need More Time?

If you are really not able to file on time, you can get an income tax extension through the portal. Simply state your reason clearly. Extensions are issued in actual cases.

But it's always best to be prepared and proactive. Answer early if you are able to.

Why a Tax Expert Can Make a Huge Difference

Even if you’re comfortable handling your taxes, scrutiny notices can get technical. If you’re a salaried person with multiple income streams, a business owner, or someone who has claimed heavy refunds, consulting a Chartered Accountant (CA) is wise.

Here’s how professionals like the team at BMA can help:

Identify errors or mismatches in your ITR vs. AIS/Form 26AS
Draft a legally strong response under the correct tax provisions
Upload clear and complete documentation
Handle follow-ups or departmental queries on your behalf
You wouldn’t want to lose a refund or face penalties because of an innocent mistake.

Tips to Avoid Notices in the Future

Want to stay off the department’s radar? Here’s how:

File your income tax return before the income tax return last date
Reconcile Form 26AS, AIS, and your actual income before filing
Don’t overclaim deductions
Disclose all sources of income, including crypto, rent, dividends
For businesses, keep books current and tidy
Think about getting a professional tax review prior to filing

And if you fear that you need extra time to file, get an income tax extension ahead of time instead of waiting until the very last minute.

What Happens if You Don't Respond?

Seriously? It's just not worth taking the chance.

If you don't respond:

The department might think that you're concealing something
Penalties and interest could be charged
Your income tax refund could be withheld
It may lead to further investigation

If it's a company tax return, the risk is even higher — your history of compliance counts for loans, tenders, audits, and reputation.

Dos and Don'ts of Tax Notice Handling

✅ Do This	❌ Avoid This
Check portal regularly	Ignoring the notice
Respond on time	Waiting till the last minute
Submit full documents	Uploading incomplete files
Keep records safe	Misplacing old returns
Ask a professional	Trying to wing it alone

Final Thoughts

Receiving a notice under section 143 2 of income tax act can be alarming, but it doesn't have to be an issue. It's a normal part of the tax system these days. Remain calm, remain truthful, and react intelligently.

And don't forget, if it's your first time receiving a notice or you are getting the notice every income tax this year, BMA is a call away. We are experts at solving both individual and company tax filing, with one-on-one care.

Disclaimer

This blog is for information purposes only. It is not a source of legal advice. Readers should contact a competent tax advisor or the Income Tax Department for personal advice. Book My Accountant (BMA) will not accept liability for action taken on the basis of this blog.

Why Is Ongoing Financial Record-Keeping Crucial for Small Businesses in 2025?

In an age of lightning quick technological growth and evolving policies, small business persons have to place precise management of money at the top of their agendas. Papers and account books are no longer the trend. Now, the state of tax situation scenario, compliance, and audit management has undergone a sea change, especially in India, as the tax authority opted for AI software and real-time tracking.

At Book My Accountant (BMA), we’ve seen the transformative power of proactive record management firsthand. Businesses that embrace digital documentation and automated processes are not only staying compliant but also gaining a competitive edge, streamlining operations, and freeing up valuable time.

But why exactly is ongoing, meticulous financial record-keeping so essential in 2025?

Let's explore.

The Changing Face of Tax Compliance in 2025

The Indian Revenue Service has gone the entire nine yards with its IT drive. Faceless evaluations, AI-based AI GPT-audits, and real-time analytics have the government watching over its shoulder nearer than ever. Being in violation means astronomical charges, and one slip-up is dollar-painful for a company—dollars, yes, but also reputation.

Why Small Businesses Must Adapt

Small businesses, start-ups, and entrepreneurs underestimate or ignore keeping proper records—thinking that's reserved for large enterprises. But in 2025, it is dangerous to have such a thought. Risk of being short of differences at the time of an audit, paying penalties, or being denied Input Tax Credit (ITC) can ruin a small business.

In real life, the most typical recent tax department notices are of GST mismatched inputs, unhanded invoices, or no record at all. What do they all have in common? Improper or missing record-keeping.

The solution is easy and clear: Inculcate regular proper record-keeping as a habit.

The 2025 Record-Keeping Blueprint for Today's Small Business

Transition from paper records and manual accounting to electronic, automated records is no longer an option but a requirement. This is what every small business must adopt this year:

1. Electronic Books of Accounts

Use sophisticated cloud-based accounting software such as Zoho Books, QuickBooks, Tally, or FileNest by BMA. They help with:Cash Book: Post all the cash payments and receipts on a daily basis.

Sales & Purchase Records: Maintain chronological and detailed records.

Ledger: Organize transactions in a readable manner.

Automated Bank Feed Integration: Connect your bank accounts with your accounting program for real-time entry without human error.

Integration is particularly important in 2025 as it aligns with the government's transition to automated reporting and real-time analysis of data.

2. Regular, Current Financial Statements

Prepare and maintain three fundamental financial reports:

Profit & Loss Statement: Displays your company's revenues and expenses.
Balance Sheet: Displays a statement of assets, liabilities, and equity.
Cash Flow Statement: Discloses liquidity activities.

Having them ready for auditing puts you in good standing and allows you to make sound decisions. It is also important in loan proposals, investor negotiations, or whatever financial analysis.

3. Storage of Tax Returns

Save original and revised ITRs securely in the cloud for at least 6 years. Cloud storage hubs like FileNest offer immediate audit access, avoiding potential hours of digging through paper files.

4. Supporting All Deductions

The "Save every receipt" campaign has never been more relevant. All allowance or deduction undertaken shall be substantiated with:

Paid and unpaid bills and invoices
Vendor contracts
TDS certificates
Transaction and loan documents

Having date and category accounts is a breeze to audit or review.

5. Bank Reconciliation a Habit

Make it a monthly habit to perform bank reconciliations to tie your books with bank statements. Differences tend to trigger audit warning flags, especially with faceless audits. It is a matter of minutes using current technology, an easy non-negotiable habit.

6. Official Correspondence and Notices

Always write down and download Income Tax Department notices, emails, and responses in document form. Physical documents are proof of your attendance and preparedness, in case of a contradiction.

GST Accounting: Why It Matters Even More

GST isn't returns, it's leaving a clean history of transactions.

Essential GST Documents to Retain in 2025

GST Invoices: Need to be made precise with HSN/SAC codes, GSTINs, and bill numbers.
Credit/Debit Notes: Accurate records should be maintained for every adjustment with proper cross-references.
GST Return Logs: Accurate records should be maintained for GSTR-1 (outward supplies), GSTR-3B (summarised), GSTR-9 (annual return), and GSTR-2B (ITC summary).

Claiming and Verifying ITC

Credibility is required for Input Tax Credit Claiming. Be ready to verify every claim with:

Vendor returns and filings
Vendor payment receipts
Matching invoice details with GSTR-2B

The Rise of AI in GST Compliance

With reconciliation software empowered by AI, such as GSTR 2B mismatch alerts, you are intimated regarding potential errors or spurious transactions in advance, thus making it simpler and less complex to comply.

Electronic Proof of GST Payments

Sweep all electronic challans, payment vouchers, and reconciliation statements on a monthly basis. These are useful in the event of an audit or in the event of a challenge from the tax department over your returns.

Checklist Before an Income Tax or GST Audit

Planning is the secret to smooth audit experiences. Here is a useful but concise checklist:

Reconcile Books & Bank Statements: Transactions match perfectly.
Match ITC Claims with GSTR 2B: Don't let any discrepancies remain.
Verify Invoices & Payments: Invoices, receipts, and bank matching accurately.
Verify Tax Return Accuracy: Numbers reconciled each period.
Organize Supporting Documents: Scanned, dated, signed, and stacked in order.

Self-audits at regular intervals with this checklist will allow gaps to be detected in advance and confidence to be built.

The Redefining Emerging Trends in Tax Compliance in 2025

Being at the forefront is about embracing new-gen solutions and trends:

Tax Document Digital Lockers: Centralize, secure all docs.

AI-Based Audit Readiness Tools: Allow automated compliance checks.
GST Reconciliation Software: Identify mismatches and discrepancies in real-time.
Real-Time Filing Platforms: File returns quicker and more precisely.
MSME Compliance Scorecards: Track your path to compliance.
Blockchain Accounting Systems: Offer transparency and data integrity.
E-Invoice Verification APIs: Integrate real-time invoice verification.

Think BMA's FileNest, for example, with its automated tagging, automated classification, and intelligent data entry—reducing labor by up to 70%, enabling your staff to focus on growth opportunity.

"When compliance becomes routine, audits become just another meeting." — Tax Expert, BMA

How BMA Powers Your Compliance Journey

We at Book My Accountant combine expert expertise with state-of-the-art technology. We assist you in automating books, GST and income tax return, audit preparation, and putting intelligent tools into everyday activities.

Our attention is not only towards deadline fulfillment but to facilitate smooth and seamless compliance system that speaks of the value and credibility of your business.

Your 2025 Action Plan: Get Moving

Step-by-step guide simplified

Digitize Everything: Scan paper receipts, invoices, and statements into digital secure copies.
Automate Reconciliations: Use intelligent bank matching and GST reconciliation software.
Educate Your Team: Conduct compliance basics training sessions.
Partner with Experts: Leverage BMA's assurance of continuous support.
Stay Updated: Stay current on the top compliance solutions and best practices.

Ready to Future-Proof Your Business?

Wait no longer for the unexpected audit or fine letter. Begin today by scheduling a free compliance review with BMA. Let us help you build a seamless, hassle-free path to 2025 and beyond.

Book Your Free Consultation Now

Create a compliance-first culture that drives growth, attracts investment, and shields your business from unwanted penalties. The journey to hassle-free taxation and audit readiness starts here!

Disclaimer by Book My Accountant
The content on this web site is for general information purposes only and should not be used as tax, financial, or legal advice. Every business is different, and the situation may call for special advice in some cases. We recommend that you consult with an experienced accountant or tax professional before making any choice to go compliant or implementing new financial procedures. Book My Accountant expressly disclaims all responsibility for any failure to or neglect of error or for any action taken on the basis of this material.

10 Pre Review Tax Checks to Build Your 2025 Compliance

In 2025, India's taxation system is evolving with the passing of the Income Tax Bill 2025, looking to streamline compliance as well as add more transparency. As the government is tightening efforts to spot aggressive tax evasion and promote voluntary taxation, it is crucial that citizens and businesses alike stay vigilant.

At Book My Accountant, we are of the opinion that not only is it necessary to pay taxes, but to pay taxes ethically and quick. Through our Pre Review Tax Checks, we help clients remain financially sound and risk-free. Let us speak about the top 10 pre-review checks which need to be performed by each responsible tax payer in 2025.

1. Proper Financial Records

GST, TDS, and income tax returns are being made stricter. Errorless accounts are the need of the day.

Action Plan:

Keep all the income, expense, and deduction through proper software (like Tally, Zoho Books, QuickBooks).

Bank statements reconcile on a monthly basis.

Audit digital and physical documents periodically.

Fact: As per MCA statistics, 78% of SME non-compliances cases are due to incomplete or improper records.

2. Check All Deductions and Tax Credits

Inflating expense or claiming fake credits might tempt clients to notices under Section 143(1).

Action Plan:

Verify receipts for deductions like 80C, 80D, and HRA.

Don't mix personal expenses with business claims.

Familiarize yourself with the new rules of the new tax regime 2025.

‍3. Employ a Qualified Tax Advisor

With evolving norms (such as faceless audits and AI-based scrutiny), expert guidance is no longer a preference—it's a necessity.

Action Plan:

Start bookings on advisory.

Pre-March 31 review of tax planning every year.

Bookmark CA advisory services by experts such as Book My Accountant.

4. Be Aware of Evolving Tax Laws

With electronic taxation, e-invoicing limits, and penalty reforms, ignorant bliss can prove costly.

Action Plan:

Monitor the CBDT, GSTN updates.

Attend webinars and government-conducted awareness drives.

Subscribe to newsletters of known sources like BMA Blog.

5. Avoid Aggressive Tax Planning

Sophisticated arrangements or enigmatic transactions are sure to be a reason for Section 68 or 69 notices.

Action Plan:

Consider your plan from the "substance over form" angle.

Maintain highest transparency and justifiability.

Key to remember: Ethical tax planning is not tax evasion.

6. Maintain Each Transaction in Order

At all times, whether you're submitting ITR-3 or you have a business, documentation is your greatest strength in audits.

Action Plan:

Keep soft copies and hard copies of all bills, contracts, loan documents.

Maintain capital gains, investment evidences, and rent deeds.

In case of a business, maintain board minutes, GST bills, and ledgers.

7. Verify Sources of Income

With the digital monitoring becoming the order of the day, Income Tax Department cross-verifies your ITR with Form 26AS and Annual Information Statement (AIS) today.

Action Plan:

Reconcile reported incomes with TDS entries in 26AS.

Reconcile interest received on FDs, mutual funds, receivables for rent, etc.

Declare all side income, be it crypto, freelancing, or referral apps.

8. Install Internal Compliance Controls

Internal controls identify risk pockets early for startups, SMEs, and companies.

Action Plan:

Implement an internal tax review team.

Conduct quarterly internal audits.

Utilize compliance dashboards to track filings, payments, and notices.

9. Train Personnel in Ethical Tax Practices

Deployment of junior staff to expense classification or recording of invoicing can lead to penalties.

Action Plan:

Conduct periodic training on tax legislation and ethics.

Make sure accounting SOP complies with the latest legal requirements.

Encourage integrity and transparency in accounting reports.

10. Tax Compliance Calendar Preparation

Delayed filing of GSTR-3B, TDS return (Form 26Q), or Advance Tax may attract penalties and interest.

Action Plan:

List all significant due dates (monthly, quarterly, annual).

Remind when to file forms.

Tag new notifications (e.g., Budget 2025 announcements) on the calendar.

Why Book My Accountant for PRP

At Book My Accountant (BMA), our Pre-Review Preparation Check Service ensures:

Systematic verification of records.

Professional Tax Compliance Expert.

Comparison of Form 26AS/AIS.

Tax planning through ethical means.

Filing setup compliance calendar.

We work in Kolkata, Bhubaneswar, and Bengaluru through PAN-India remote tax services.

Conclusion

Tax honesty isn't a law—it's a belief. Amidst increased scrutiny and reviews, AI-fortified audits, and live reporting, these 10 PRP checks will keep you safe from future threats and allow you to become part of an honest and fair tax system.

Stay compliant. Stay honest. Send your pre-review jitters to BMA!

Disclaimer:
Information within this blog is educational and general information. It is not professional tax advice. To learn about custom services, visit a seasoned tax practitioner or call Book My Accountant. Laws and regulations can shift, and as of print accuracy is provided based on available materials
Book My Accountant

Setting Your Business Up for Success with Pre Review Checks

When conducting a business in India, developments in tax laws and regulations are to be every so often a challenge to keep track of. Whether starting, operating as an MSME, or managing an ever-growing business, knowing and understanding the income tax compliance and GST rules will just about keep you free from any fines or legal troubles. It gives auditors and inspectors so much flexibility in terms of auditing your premises or coming down upon anyone in the process of tax evading : The Income Tax Act and the CGST Act of 2017.

To keep your business compliant in India, obtain details from government conductors regarding mandatory filings, threshold limits, reporting requirements, and related matters. Even innocent non-compliance incurs financial obligations, notices, and reputation issues. The article will focus on some key legal provisions under these Acts, the pitfalls usually faced by entrepreneurs, and practical ways of dealing with taxation under Indian law.

Income Tax Act: Sections 133A and 132 Section 133A

Powers of Income Tax Officials Under Section 133A of the income tax Act, Income tax officers enter the premises of business or profession for checking purposes. The officials then check:

Books of Accounts: Manual and computerized accounts.
Documents and Records: Any other documents relevant to the business's financial operations.
Stock and Cash: Physical stock, cash with the business, and all articles of value are subject to verification.

This provision controls the basic premise of honesty and fair accounting on the part of the business. Therefore, any inconsistencies or non-compliance found during this inspection can have serious repercussions such as penalties and further assessment.

Section 132: Search and Seizure

Section 132 of the Income Tax Act, on the other hand, grants powers of search and seizure, popularly referred to as "raids." The department may conduct such operations when it has reason to suspect any person or company of-their being involved in:

Hoarding illegal or black money
Hiding assets not declared to them
Engaging in unexplained transactions or extravagant expenditures.

Credible info from various sources, like government departments and surveys, often prompts such searches. If the authorities consider the information credible, they can execute the search. Hence, it is essential for businesses to duly maintain their records completely and accurately.

CGST Act, 2017: Section 67

Similarly, the CGST Act, 2017 outlines key provisions for GST searches and seizures. Section 67 gives power to authorized GST officers to do the following:

Inspect: Business premises for checking compliance.
Search: Find and seize things, documents, or goods that seem to be used to evade taxation or conceal evidence.

Such officers may carry out these actions if they possess reasonable grounds to believe that a taxpayer is involved in tax evasion. For such intrusive measures, strong compliance practices must be kept up by any business.

Heed Common Mistakes That Attract Investigations

Understanding half the provision is the other half of the battle. The other part is for the businessman to avoid the most common pitfalls which usually trigger scrutiny or investigations. Here are some examples of the common mistakes committed by businessmen.

Income Tax Compliance Related Issues

Non-filing of income tax return: Non-filing of returns on time or at all raises the red flag and quickly sweeps you into the baited maze of an unwanted audit.
Incorrect Records: Inaccurate and incomplete financial record keeping may attract penalties and scrutiny.
Undisclosed Income: Undeclared income flags suspicion and prompts investigation into land, property, and jewelry investments.

GST Compliance Problems

Deficient Documentation: Poor documentation leads to much more inquisition during audits.
Incorrect Invoices: Errors in sales invoices, such as incorrect GST rates, will incur penalties.
Mismatch Between GSTR 2A and GSTR 3B: Mismatches between sales reports lead to suspicion and might trigger audits.
Failure to Reconcile Books: Failing to reconcile books regularly against GST returns makes discrepancies unavoidable.
GST Returns Not Filed on Time: Late submission of returns leads to penalties and may also raise questions regarding compliances.
Ignoring GST Notices: Inconsistencies arise if books are not reconciled regularly against GST returns.
Wrong Classification of Transactions: Transactions that are classified wrong would result in incorrect tax liabilities and will invite scrutiny.

It is very important for an Indian businessman to understand the provisions of the Income Tax Act as well as the CGST Act. Such business records would tend to be very honest and accurate, and full compliance with tax regulations would minimize the inspections, audits, and raids on your business. Avoiding common mistakes and understanding the law protects your business from legal issues and penalties. Handling tax affairs is always a very tedious task. Consulting taxation professionals would, for sure, bring you to the highway of compliance and perfect knowledge.

Conclusion

Bookmyaccountant ( BMA ) is also excited to inform you about our latest service that is meant to take care of your organization's pre-review checks in a very thorough manner. Our team consists of experts who take care of the intricacies involved in tax regulations and compliance requirements to ensure that your financial records are perfect and updated.

Through our pre-review preparation service, you will undergo an independent assessment of accounting practices, detailed consideration of documentation, and individualized consultation based on the needs of your business. The team would identify any compliance-related problems, resolve discrepancies, and sanitize records to ensure a confident approach to any review.

Our desire is that we are able to empower you to create your own working systems to establish transparency and avert unnecessary hassle. Whether it be for an internal review or an audit, we will support you throughout the process.

We invite you to reach us at info@bookmyaccountant.com or 7890002000 for more details about our assistance in preparing for a successful review! Do not hesitate—your business needs to be prepared for anything that comes its way!

📌 Disclaimer
This blog is for informational purposes only and does not constitute legal or tax advice. Readers are advised to consult their tax advisors or reach out to Book My Accountant (BMA) for tailored professional guidance based on their specific circumstances. BMA will not be liable for any decision taken based on the content of this blog.

Comprehending Section 194T: TDS on Payment Made by Partnership Firms to Partners

With the income tax situation changing, it is more crucial for firms to remain connected with their tax affairs. One of the major areas which partnership firms should be well aware of is Section 194T of the Income Tax Act, 1961 introduced in the Finance (No. 2) Bill, 2024, concerning the Tax Deducted at Source (TDS) on payment made to partners. This provision aims to ensure that tax compliance is streamlined and that partners are fairly taxed on the distributions they receive. In this blog, we’ll delve into Section 194T, exploring its implications for partnership firms and partners, and how it affects the broader landscape of income tax e-filing in India.

What is Section 194T?

Section 194T was added to solve the issue of tax on payment given by partnership companies to their partners. According to this section, any payment in excess of a certain amount received by a partner from the partnership firm would be subject to TDS. The very fundamental concept of TDS itself is to check if the tax is being deducted at the time of generation of income so that potential evasion of tax might be avoided.

When Does Section 194T Become Effective?

Section 194T would be particularly effective for:

Registered and Unregistered Partnership Firms: They come under that category.
Payment to Partners: Where a payment is being made to partners by a partnership firm that crosses the limit amount — defined as ₹20,000 in a financial year—the firm needs to deduct TDS at the rate of 10% at the time of crediting the income or before effecting the payment whichever is earlier.

It is compulsory for firms in partnership to monitor their payments so that this section is complied with, particularly as far as remitting their income tax returns is concerned. If the TDS is not deducted, then it will attract penalties and interest, and this will cause problems in the entire firm filing its taxes.

It is required to know the effect of TDS on partners in the interest of the firm and the partners. On payment made to partners, deducting TDS:

Declaration of Income: Partners have to declare what they get from the firm (after deduction of TDS) as income while submitting the income tax return. It keeps the transaction in an open form and makes their identification of total income rightfully easier.
TDS Deduction Claim: Partners can claim TDS deducted by the firms at the time of filing the income tax return, thus lowering their overall tax payment.
Effect on Cash Flow: Since TDS lessens the partners' cash flow, partners will have to take care of their own finances.

Significance of Compliance

Compliance by the partnership firm and also by partners is mandatory under Section 194T provisions. Non-compliance can result in:

Penalties: Firms can be penalized if they fail to deduct or pay the TDS in time.
Legal Consequences: Filing in delay will draw the income tax department's attention, and they may issue notices.

Tax Filing Procedure for Partnership Companies

Process for filing taxes of partnership firms for TDS includes the following:

Calculation of TDS: The firm has to calculate the amount of TDS to be deducted while paying partners with utmost caution. The threshold should be kept in mind so that deductions are not made unnecessarily.
Payment of TDS: The deducted sum should be paid to the government on the income tax e-filing website. TDS is usually payable within a week from the end date of the month in which deduction is being done.
Filing of TDS Returns: The firm is also required to file quarterly TDS returns, reporting the TDS deducted and paid, in Form 26Q. This is an important process in being compliant.
Issuance of TDS Certificate: Once the TDS return is filed, the firm is required to issue TDS certificates (Form 16A) to partners, indicating the TDS deducted. The certificate is useful for partners when they are reporting income tax return.

e-Filing Simplified

The Government of India has eased the process of e-filing income tax. Partnership firms and partners can now file their tax requirement online from the income tax e-filing portal. They are:

Filing of Income Tax Returns: Partners need to file their return with the e-filing website taking into consideration the credit of TDS to be reflected appropriately.

Keeping Proper Records

A successful tax planning largely depends on maintaining proper records. Partnership Firms should have proper records of:

Payments made to partners
Withholdings of TDS
Certificates of TDS issued

This will not only become easy to file appropriately but will also ready the firm in advance for any potential demand from the income tax department.

Payments Subject to TDS Under Section 194T

Type of Payment	TDS Applicability	Remarks
Salary/Remuneration	Yes	TDS applies if the aggregate exceeds ₹20,000 in a financial year.
Commission	Yes	TDS applies if the aggregate exceeds ₹20,000 in a financial year.
Bonus	Yes	TDS applies if the aggregate exceeds ₹20,000 in a financial year.
Interest on Capital/Loan	Yes	TDS applies if the aggregate exceeds ₹20,000 in a financial year.
Profit Share	No	Exempt from TDS under Section 194T.
Capital Withdrawal	No	Exempt from TDS under Section 194T.
Expense Reimbursement	No	Exempt from TDS under Section 194T.

Pros and Cons of Section 194T

✅ Pros	❌ Cons
Improved Tax Transparency Helps the Income Tax Department monitor partnership remuneration.	Cash Flow Disruption Partners may receive less than expected as TDS is cut upfront.
Better Financial Planning Regular deduction helps partners manage advance tax and avoid last-minute burdens.	Increased Compliance Burden More documentation, TDS returns, and deadlines to handle for firms.
Stronger Documentation & Accountability Firms are encouraged to maintain clear financial records, improving audit-readiness.	TDS on Book Entries TDS applies even on credited (not paid) amounts—affecting firms with cash constraints.
Ease in ITR Filing for Partners With TDS credit shown in Form 26AS, partners can smoothly proceed with income tax return filing.	Ambiguity in Deed Interpretation If the partnership deed isn’t clearly defined, categorizing payments becomes tricky.
Aligns with Digital India Mission Encourages usage of income tax e filing portal, and other paperless tools.	Risk of Penalties Delay in deduction, payment, or filing of TDS returns may lead to interest, penalty, or disallowance of expenses.

Tax Strategy: Planning and Consultation

Due to the intricacy in taxation and rules under Section 194T, it is recommended that partnership firms use tax experts or consultants. This assists businesses:

Keep abreast with modifications in taxation legislation
Develop tax savings schemes
Provide seamless compliance with income tax and TDS

Conclusion

All the partnership firms in India need to be aware of Section 194T. With due precautions while being TDS compliant and making use of facilities available on the website of e-filing income tax, firms can manage their taxations better. Tax tides change constantly and hence it is better to remain updated so that partners and partnerships can both meet their dues and pay lesser tax.

Overall, Section 194T is not only a compliance but also a chance for partnership firms to enhance their financial health by adopting strategic tax planning. Having knowledge about the TDS mechanism and its impact on income tax return filing, partnerships can foster transparency cultures, sense of responsibility, and compliance that ultimately prove to be beneficial to all concerned stakeholders.

📌 Disclaimer by Book My Accountant (BMA):
This blog is for informational purposes only and does not constitute legal or tax advice. Readers are advised to consult their tax advisors or reach out to Book My Accountant (BMA) for tailored professional guidance based on their specific circumstances. BMA will not be liable for any decision taken based on the content of this blog.

Mandatory ISD Registration from 1st April 2025

Mandatory registration as an Input Service Distributor (ISD) is required for all entities that have more than one GSTIN based on a single PAN effective 1st April 2025. ISD registration was previously optional, but it is now mandatory as per the new GST amendment. This amendment aims to facilitate the distribution of Input Tax Credit (ITC) while ensuring compliance and allowing credit management for entities with multiple branches. Companies receiving standard input service bills at a head office and distributing ITC to multiple branches will be most affected. To comply, they must pre-register as ISDs, establish proper ITC distribution processes, and ensure effective compliance practices from the start.

Understanding Input Service Distributor (ISD)

An input service distributor is an office of the business that receives tax invoices for input services and distributes the available input tax credit (ITC) to related branches or units having separate GSTINs but using the PAN of that business.
Distributing Input Tax Credit The input tax credit (ITC) available for distribution in every month has to be distributed in that month itself and to be reported in Form GSTR-6. Furthermore, the ISD must distribute every tax credit arising from payments made under the reverse charge mechanism under Sections 9(3) and 9(4) to the respective recipients. If the input service is availed only by one recipient, input tax credit should be distributed to that one recipient only. To distribute the available tax credit among multiple recipients who use the input services, they must do so in proportion to their turnover.

The distribution has to be done,
ITC to Branch = (Branch Turnover / Total Turnover) x Total ITC
Branch Turnover = turnover, as referred to in section 20, of person R1 during the relevant period
Total Turnover = the aggregate of the turnover, during the relevant period, of all recipients to whom the input
service is attributable in accordance with the provisions of section 20
Total ITC = the amount of credit to be distributed.
XYZ Ltd. is a company with its head office in Mumbai (ISD) and branch offices in Delhi, Bangalore, and Chennai.
The Mumbai head office receives an invoice from an advertising agency for ₹1,00,000 + 18% GST (₹18,000 GST Credit). This advertisement benefits all three branches, so the ITC needs to be distributed proportionately.

Turnover of Branches:

Delhi Branch: ₹10,00,000
Bangalore Branch: ₹5,00,000
Chennai Branch: ₹5,00,000
Total Turnover = ₹10L + ₹5L + ₹5L = ₹20,00,000

ITC Distribution Calculation:

Since the ITC of ₹18,000 needs to be distributed based on turnover, the allocation is:

Branch	Turnover (₹)	Share (%)	ITC Distributed (₹)
Delhi	10,00,000	50%	₹9,000
Bangalore	5,00,000	25%	₹4,500
Chennai	5,00,000	25%	₹4,500
Total	20,00,000	100%	₹18,000

Financial Risks of Non-Compliance with ISD Rules-

Failure to comply with Input Service Distributor (ISD) rules poses significant financial and operational risks to business organizations. Non-compliance with ISD protocols would deny branches any allowable Input Tax Credit (ITC) for general services, which would only increase tax cost. Similarly, errors in ISD and/or mismatches of ITC in Goods and Services Tax (GST) returns would increase the likelihood of receiving a GST notice, or auditing, and/or potential penalties.

Non-compliant businesses face increased scrutiny from tax authorities due to uncertainty in ITC apportionment, raising the risk of financial liabilities. The cost of ITC would be much more significant if taxpayers could claim benefits for any Reverse Charge Mechanism (RCM) transactions prior to April 2025, which leads to additional taxes being paid. However, this holds true if the company ensures satisfactory ISD compliance, properly apportions the ITC between branches, reduces compliance risks, and results in lower taxes with a clear flow of ITC. It also supports claiming ITC based on RCM, subsequently after April 2025, improving cash flow for the company's overall improved tax efficiency. To reduce tax litigation and financial losses, companies must value their ISD compliance and ensure proper ITC disbursement.

Conditions to be Met by an Input Service Distributor (ISD)

Registration:

An Input Service Distributor (ISD) is required to separately register as an "ISD" in addition to their regular GST registration. When applying through REG-01, the taxpayer will have to indicate ISD registration at serial number 14. Under the law, only upon making that declaration is the ISD permitted to distribute Input Tax Credit (ITC) to its recipients.

Invoicing :

Raise ISD invoices while disbursing ITC to respective units or branches.

Filing of Returns:

The returns will be filed on a monthly basis in GSTR-6 on or before the 13th of the ensuing month reporting the ITC paid out.

Returns:

The total tax credit paid out by the aggregators should not exceed the available tax credit at the end of the relevant month.

Filling :

ISD has to report the remitted ITC in GSTR-6, to be filed by 13th of next month.

Consequences of Not Registering as an Input Service Distributor (ISD)

From April 1, 2025, companies that do not register as an Input Service Distributor (ISD) can encounter various difficulties, including legal and monetary penalties:

Penalties and Interest

Failure to comply with obligatory ISD registration can invite penalties for improper distribution of Input Tax Credit (ITC). If ITC is claimed in excess, tax officials can recover it from the recipient along with interest under Section 21 of the GST Act.

Increased GST Audits and Scrutiny

Companies that are not registered under ISD are prone to audits and investigation by the tax department. Discrepancies in the claim of ITC can invoke in-depth inquiry, resulting in legal issues.

ITC Reversal and Cash Flow Interruptions

Incorrect or non-registered ISD operations might lead to ITC claim reversal. This makes branches pay tax directly rather than availing eligible ITC, affecting cash flow and working capital management.

Tax Notices and Financial Burdens

Mistaken ITC claims at the head office without ISD registration can result in tax notices. These notices can translate into extra financial burdens and operational interruptions.

Operational Inefficiencies and Credit Allocation Problems

In the absence of an appropriate ISD mechanism, companies might find it difficult to distribute ITC effectively among various branches. This can lead to credit distribution disputes and financial management inefficiencies.

The entity must obtain a separate registration as an ISD, even if it has a normal GST registration.

Step-by-Step ISD Registration Process

Step 1: Access the GST Portal
Step 2: Navigate to Registration Application
Step 3: Fill Part A of Form GST REG-01
Step 4: Fill Part B of Form GST REG-01
Details of Promoters/Partners:
Authorized Signatory:
Bank Account Information
Step 5: Upload Required Documents
a. Proof of Constitution of Business
b. Proof of Principal Place of Business
c. Identity and Address Proofs of Promoters/Partners
d. Bank Account-Related Proof
e. Photograph of Promoters/Partners
f. Letter of Authorized Signatory in case of partnership firm, company, HUF, etc.
g. DSC in applicable cases like company , etc.

CONCLUSION

We at BMA take satisfaction in streamlining tricky tax regimes, and if each person is best proper to showcase this, it's far the Input Service Distributor (ISD) device beneath GST. Compliance calls for a painstaking recognition on detail, consistency, and a clear information of the way to distribute enter tax credit (ITC) between divisions. That's wherein we step in. We provide full support for businesses with ISD registration, compliance setup, and monthly return filings. Our strong approaches ensure that we assign ITC appropriately and fairly at locations, preventing mistakes, loss of credit, and undue notices from the tax department. Whether you have a decentralized headquarters or are a large company with decentralized operations, we streamline ISD management to ensure your tax credits are compliant and optimized.

With us on your side through BMA , you can cast off tax monitoring issues and cognizance at the boom of your enterprise, as we deal with your ISD requirements with accuracy and on time.

Disclaimer
The above is general information. Material on this site is for general information purposes only. Readers are advised to consult a professional tax consultant before making any tax decision. Despite the exercise of care in updating information, BMA cannot be held liable for error or omission or loss arising from use of such information

Why Indian Companies Must Conduct Compliance Audits to Avoid Legal Problems?

With the hectic corporate lifestyle of the present, compliance has also become an even higher need than before. A confused combination of industry practices, laws, and government policies surrounds Indian corporations. A Compliance Audit is now mandatory for corporations to avoid legal pitfalls and conduct business operations. This blog discusses the significance of Compliance Audits in India and how they enable companies to avoid legal complexities.

Understanding Compliance Audits

Compliance Audit is a thorough check of an organization's compliance with relevant laws, industry standards, and internal policies. It is a guarantee that business is conducted as per government policies to avoid companies falling into legal traps. In India, the audits raise issues such as:

Financial Reporting – Up keeping accuracy in bookkeeping, accounts, and tax return to spare from irregularity and penalty by the tax authorities.
Labour Laws – Compliance of the employee rights, workplace safety, minimum wage act, PF/ESI contribution, and other labour compliances concerning the employees as per law.
Environment Regulations – Compliance of the pollution control acts, waste management policy, and corporate sustainability initiatives to make operations eco-friendly.
Data Protection and Cybersecurity – Safeguarding sensitive customer and business data from breaches, misuse, and data exploitation, and adherence to the IT Act and GDPR legislations wherever applicable.
Industry-Specific Compliance - Industry-specific evolving regulations, i.e., pharma compliance, food security law, or financial regulatory acts for banks and NBFCs.

Just as students need to follow rules at school to ensure everything remains orderly and disciplined, the same principle applies to firms adhering to legal and regulatory guidelines to ensure smooth business operations. Furthermore, as Indian regulations continue to evolve, compliance becomes an ongoing activity that firms must diligently maintain. By doing so, they can effectively navigate these changes and facilitate long-term success. Ultimately, this commitment to compliance not only minimizes risks but also enhances the overall stability and growth potential of the business.

Types of Compliance Audits

In the Indian scenario, compliance audits can be divided into the following categories:

Regulatory Compliance Audit: It ensures that the company is adhering to laws of operation, including taxation and labour laws. Regulatory compliance would, in most cases, involve keeping track of updates in legislation periodically, which would be a burdensome task for most companies.
Corporate Compliance Audit: Governance and ethical business practices to make sure that a corporation complies with its policies and procedures. A sound corporate compliance program encompasses codes of conduct, training employees, and risk assessments.
Audit entails careful examination of the extent to which the firm strictly abides by legal legislations, such as the Companies Act and the industry laws. Firms should also consider relevant laws like the Information Technology Act and Goods and Legal Compliance of India: Services Tax (GST) laws.
Business Compliance Audit: The audit consists of a broader review of all business activities to ensure conformity with external demands and internal regulations. In addition, this comprehensive assessment can include nearly all areas of business operations, thereby enabling businesses to operate with high degrees of integrity and accountability. Consequently, by encompassing various aspects of their activities, organizations can enhance their overall compliance and foster a culture of ethical practices throughout the company.

Types of Compliance Audits

Compliance audits in India are classified into three broad categories:

Regulatory Compliance Audit – Compliances to law of legislations, i.e., taxation, labour legislation, company acts, and environmental legislations.
Corporate Compliance Audit – Governance, business ethics, financial reporting integrity, and internal company policy compliances.
Business Compliance Audit – Detailed examination of operation compliance, terms of contracts, vendor and supplier agreements, and risk management procedures.

Why Compliance Audits Are Significant to Indian Companies

1. Mitigation of Legal Risks and Evading Penalties

Non-compliance invites penalties of extreme magnitude in the form of gigantic fines, company closures, and indictment of company officials. Regular compliance audits not only allow companies to identify likely risks before they can gain strength, but they also enable them to implement preemptive corrective measures. Consequently, this proactive approach helps organizations mitigate potential issues and maintain regulatory compliance effectively. Furthermore, regulators such as the Income Tax Department, GST Council, SEBI, RBI, and other government authorities periodically update policies. As a result, it becomes essential for companies to engage in constant upgrading and ensure compliance to adapt to these changes. By doing so, they not only safeguard their operations but also enhance their credibility and reputation in the marketplace.

2. Process Improvement and Optimization of Operations

Audits enable process improvement by eliminating inefficiencies, redundancies, and loopholes in compliance. Organizations with frequent checks on compliance can streamline processes, justify the use of resources, and enhance overall productivity. Standardization of processes and compliance with best practices under any circumstance eliminate wastage and enhance profitability.

3. Enhanced Image and Market Credibility

A compliant record history adds to the credibility of a company among its customers, investors, and stakeholders. Compliance with law and ethics fosters long-term trustworthiness and integrity in the marketplace. Compliance audit demonstrates that the company trusts the rule of law and makes it an investor as well as a customer choice to do business ethically.

4. Vendor Compliance Improvement and Business Relationships

With the exception of a few, most firms, particularly multinational firms, impose their auditing on partners and suppliers. Compliance verifications on book of accounts can offer opportunities for new business partnerships and collaboration. Firms with good governance history and regulation compliance lead the front pages in government transactions as well as B2B transactions.

5. Compliance with Regulatory Adjustments and Policy Adjustments

With continuous Indian legal and tax reforms, business houses must continue to be in compliance with new laws. Compliance audits empower businesses to maintain compliance with new laws, thereby allowing them to transition smoothly to these regulations without incurring penalties. Moreover, companies make proactive efforts to implement periodic legal counsel and computerized compliance monitoring systems, facilitating their ability to adapt swiftly to new amendments and government decrees. As a result, this strategic approach enhances their overall compliance readiness and minimizes risks associated with regulatory changes.

6. Financial Transparency and Prevention of Fraud

Audits ensure adherence to the law, enhance internal audit control and transparency. This reduces the chances of fraud, financial misappropriation and accounting malpractices. Proper audit trails allow businesses to detect irregularities, escape tax evasion accusations and gain the confidence of banks.

7. Investor Confidence and Business Growth

Investors would invest in these companies which have transparent compliance policies. Documented Compliance Audit is a promise to the stakeholders of the governance and legal compliances of the firm and hence more investor-friendly. Less legally embroiled companies are able to focus on development and growth in the market.

8. Saves Executives from Personal Liability

Directors and officers of the company in India are held personally liable for default on the part of the company. The management is apprised and compliant with frequent audits to save their career and personal assets. The Companies Act, 2013, and similar acts impose stringent conditions upon company directors, and hence they must see to it that all corporate legislations are being complied with.

Steps to Conduct a Compliance Audit

To have an efficient and successful audit procedure, organizations must complete the following steps:

Define the Scope and Objectives – Identify the most critical areas to audit based on industry needs, internal regulations, and potential risk indicators.
Gather Documentation and Evidence – Organize the required documents, financial records, employee procedures, environmental permits, and compliance certificates for auditing.
Assess Existing Procedures and Define Shortfalls – Balance legal requirements with existing processes to assess areas of non-compliance and process inefficiency.
Document Risk Analysis and Conclusion – Place strengths, weaknesses, and areas for improvement into an official report of compliance.
Implement Corrective Steps and Compliance Controls – Remediate areas of non-compliance through new policies, staff training, and process adjustments.
Regular Audits and Future Monitoring – Organize frequent compliance tests to neutralize future laws, carry out regular audits, and gain long-term compliance with the law.

Technology-Based Reliance for Compliance Audits

Businesses, due to technological progress, are able to employ compliance management software, risk assessment based on artificial intelligence, and cloud audit systems as a means of handling compliance. Automation of compliance monitoring makes it possible to monitor obligation and compliance continuously while adapting to shifting laws.

Challenges of Compliance Audits and Solutions

Keeping up with the Ever-Changing Laws – Employ lawyers or compliance consultants to be updated on recent amendments to the laws.

Management of Facts and Documentation Collection Issue – Employ computerized filing services to file easily and prepare for audit.
Restraints to Resources – Engage professional firms like Book My Accountant (BMA) to determine over-all and reasonable-cost auditing services.
Employee Sensitization and Training Needs Gaps – Conduct periodic compliance seminars and training exercises to empower participants with knowledge of legal requirements.

Conclusion

Compliance Audit is not just a compliance necessity but an organizational growth business model. By detecting and treating legal hazards in advance, companies are operationally better geared, build stronger market trust, and safeguard their financial interests. Compliance should never be seen as a nuisance but as a method to enable governance, enhance openness, and help ensure long-term sustainability.

Book My Accountant (BMA) is a compliance audit specialist firm offering small, medium, and large-scale enterprises with compliance audit services. With superior knowledge of Indian regulatory regimes and industry-compliance requirements, BMA helps business entities deal with compliance confidently. Our experts render businesses penalty-free and compliant and ensure long-term business success.

Disclaimer

This website is intended for general information purposes only and should not be construed as legal advice. In regard to matters of compliance, please consult with a qualified legal practitioner or compliance professional.
Author: Book My Accountant (BMA)

AI for Tax Compliance : How It's Revolutionizing TDS Assessments in India

India's tax regime is undergoing a sea change with the introduction of Artificial Intelligence (AI) and Data Analytics. Tax Deducted at Source (TDS) evaluations, which previously had been based on human instincts, are now being managed by AI-powered automation and data analytics. It increases compliance, accuracy, and efficiency in calculating taxes, and business houses and chartered accountants are being forced to adopt such newer technology.

The Application of AI in TDS Evaluations

Artificial intelligence-based systems are transforming TDS evaluation services through automated procedures, identification of discrepancies, and reduction of errors. Earlier, manual reconciliation and data entry used to be performed, hence resulting in errors and inaccuracy in computation. AI-based platforms apply machine learning algorithms to reconcile transactions, enable accurate deductions, and meet government policies.

Key Advantages of AI in TDS Evaluations

Error Minimization: AI minimizes human error to a large degree by cross-verification with pre-defined taxation laws and prior experience.
Enhanced Processing: Computer-based processing minimizes processing time to a large degree compared to manual assessments.
Forensic Predictive: AI anticipates potential discrepancies in TDS filing so that business houses can solve the same in good time.
Compliance with Regulator Regulations: AI products reflect the newest tax laws, thus accurate deductions based on regulation changes.

Light heartedness to Enterprises for Engagement Adoption:

Use of AI for TDS auditing lightens the level of compliance attainable by companies without being bogged down by cumbersome weights of manual checks and adjustments.

How Data Analytics Facilitates TDS Compliance

Data analytics is especially applicable to enhancing TDS consultancy service by authenticating patterns, detecting possible frauds, and delivering tax deduction insights. In the era of generating vast amounts of financial information on a daily basis, sophisticated analytics solutions allow organizations to:

Set Deduction Patterns: Pattern recognition ability enables organizations to find maximum tax-saving possibilities.
Detect Frauds: Artificial Intelligence-based analytics recognize discrepancies in deductions, which are advantageous for tax consultants and auditors to correct the mismatches.
Enhance Decision-Making: Real-time data analytics allow tax experts to make an optimum decision on tax compliance and tax planning.

AI & Data Analytics in TDS Consultancy Services

Indian TDS consulting companies are further investigating the potential of AI and analytics in an attempt to deliver successful tax solutions to clients. Tax consultants are using AI-driven dashboards to evaluate tax liability, identify mismatches, and maintain legal compliances.

Book My Accountant, a leading tax and financial services brand, is at the forefront of this transformation. With its expertise in TDS assessment services, the company provides AI-driven solutions that simplify calculating and adhering to taxes.

Why Companies Need AI-Based TDS Consultancy Services

Firms in Bhubaneshwar, Kolkata, and Bangalore need professional consultancy in tax to handle the complicated TDS provisions. A professionally managed TDS consultancy firm Kolkata like Book My Accountant keeps firms up to date about changing tax laws without any interference of any human being.

In the same way, TDS consultancy Bhubaneshwar services also utilize AI-based analytics to assist in maximizing tax deductions and avoiding compliance problems. With the integration of AI, companies can automate repetitive tax activities, minimizing human intervention and enhancing accuracy.

For Bangalore companies, AI-based TDS consultancy Bangalore solutions make it an easy job to deal with taxes. From e-billing to auto-filing of tax, AI revolutionizes the process of how companies deal with TDS assessments.

How Book My Accountant Leverages AI & Data Analytics for TDS Compliance

Book My Accountant leverages AI solutions to provide easy TDS assessment services. The organization provides:

Automated TDS Filings: Quick processing and timely compliance.
Real-Time Tax Tracking: Real-time tax assessments through AI-based dashboards.
Tax Solutions Personalized: Customized solutions for maximizing tax deductions to the extent and penalties avoided.
Data-Driven Decision Making: Analytics-based to achieve increased accuracy and compliance with laws.

Deploying AI to TDS estimates is not the tomorrow dream but the reality for companies eager to match the pace with times in an age of tax automation.

Upcoming AI & Data Analytics Trends for TDS Assessments

The future of TDS computations in India will see increased developments in AI and analytics, including:

Blockchain Integration: Transparent and secure tax transactions.
Machine Learning Models: Enhanced predictive tax calculations.
Cloud Solutions for TDS: Remote management and auto-launch tax data.

Since there is going to be more advancement in AI, organizations employing AI-founded tax consultants are going to have quicker, bug-free, and compliant TDS calculations.

Conclusion

Artificial intelligence and data analytics are revolutionizing tax deduction at source assessment services and making it fast, efficient as well as accurate. Book My Accountant offers industry-best TDS consultancy services in Bhubaneshwar, Kolkata, and Bangalore for implementing AI-based solutions for authentic taxes.

To experience the best-in-class AI-based TDS solutions, schedule an appointment with Book My Accountant today and enjoy a hassle-free experience of technology at tax.

Disclaimer
The above is general information. Material on this site is for general information purposes only. Readers are advised to consult a professional tax consultant before making any tax decision. Despite the exercise of care in updating information, Book My Accountant cannot be held liable for error or omission or loss arising from use of such information.

Major Income Tax Modifications for FY 2025-26: NIL Tax on Incomes up to Rs 12 Lakhs

Revised Tax Slabs

The budget introduces a restructured tax slab system to ensure a progressive taxation approach. The new tax rates are as follows:

New Income Tax Slabs for FY 2025-26 (as per Budget 2025)

Annual Income (₹)	Tax Rate (%)
Up to ₹4,00,000	No Tax
₹4,00,001 - ₹7,50,000	5%
₹7,50,001 - ₹12,00,000	10%
₹12,00,001 - ₹15,00,000	15%
₹15,00,001 - ₹20,00,000	20%
₹20,00,001 - ₹25,00,000	25%
Above ₹25,00,000	30%

This restructuring aims to provide relief to middle-income earners while ensuring that higher-income individuals contribute a fair share to the nation's revenue.

The Finance Minister's recent budget speech for the year 2025-26 has brought a revolutionary change in India's income tax scenario. This move is proposing people a great deal, especially those with an income of up to Rs 12 lakhs. In this blog, we shall introduce the main features and implications of the new income tax regime.

1. Exemption Limit: A New Beginning

Traditionally, the income tax exemption limit was Rs 2.5 lakhs for those who were less than 60 years old. In the following financial year, though, there was a surprise twist with those having income up to Rs 12 lakhs exempted from income tax. That is way higher than previous exemptions, and the idea is to lower tax on mid-level income earners.

2. Section 87A Extended Rebate

Most relevant among these extensions is the rebate under Section 87A for taxable incomes that have been lifted to Rs 12 lakhs. That is, such eligible assessee shall not only benefit from a bigger exemption limit but also from the rebate path. It must especially be noted in this regard that this rebate remains reserved only for resident individuals. Foreigners living in India or non-resident Indians are not eligible to claim it.

3. Tax Liability of Salaried Individuals

For salaried people, it is all the more useful. Although the minimum exemption amount is the same at Rs 4 lakhs, one can see that such people can be exempt from taxation up to a point of income of Rs 12.75 lakhs if one takes average deductions and other deductions into consideration. This brings the tax scenario for the salaried community more favourable, and they get to experience prosperity in terms of finance and consumption.

4. Special Rate Incomes: Clarification Needed

Though the new regulations have been welcomed with open arms, special rate incomes like Short-Term Capital Gains (STCG) have instilled fear.

These revenues are not liable for the rebate under the current clauses whether the aggregate revenue of the taxpayer is below Rs 12 lakhs. This provision of the new scheme has brought some ambiguity. Most of the taxpayers are enquiring whether they can avail themselves of the rebate scheme if their taxable revenue is mainly from such special sources.

5. Introduction of Marginal Relief

In order to avoid that the taxpayers suddenly find themselves bearing the tax burden as their incomes just cross Rs 12 lakhs, marginal relief has been provided for by the budget.

This is invoked when the taxpayer's income just crosses this threshold. The marginal relief provides that the tax levied on the income in excess of Rs 12 lakhs is never greater than the size of the excess income, in order to avoid so-called "tax trap." For example, a taxpayer can avail of a marginal relief of overall income of Rs 12,70,587, so that his total tax burden would be the size of the income in excess of Rs 12 lakhs.

6. Implications for the Taxpayer

These measures are aimed at having beneficial effects on tax payers. With an increase in the exemption amount and increasing the rebate under Section 87A, the government aims to increase the disposable incomes of citizens, which will be able to generate economic growth as well as consumption by consumers. It can also simplify the system of taxation, decreasing the compliance burden on individuals.

Other than that, marginal relief schemes are a thoughtfully generous favor for taxpayers' well-being. The budget cost of violating a tax limit could sometimes deter individuals from seeking further meritorious compensations that could hinder economic growth. Taxpayers have much to gain with such an enlightened step on the part of the government here in this budget, with increasing economic liberty.

Conclusion

The newly released budget of FY 2025-26 is a landmark for India's income tax situation, particularly with the inclusion of NIL tax for incomes up to ₹12 lakhs. In addition to lowering the tax burden for mid-income groups, this future-proof budget also promises to increase the economic growth by increasing the disposable income. The introduction to Section 87A and marginal relief also go towards establishing the government's aim of enacting a more progressive tax regime.

And all the while, taxpayers are trying to cope with all this and keep up to speed and seek advice from an expert, especially regarding special rate incomes and rebates qualifying.

Book My Accountant Talks

We, at Book My Accountant, are dedicated to guiding you through the implications of these tax reforms and helping you get the best out of the new regime. Our experts are ready to provide you with personalized advice and assistance according to your financial situation.

Greet this exciting new era of Indian taxation with optimism, and let us help you make the most of the possibilities of the future unfolding. We can construct foundations for a prosperous economic future together.

You may approach us at any time for any fact or assistance you may require regarding tax planning and compliances. Your welfare matters to us!

Top 5 Tax Consultants in Kolkata for 2025

You can overcome the challenges of taxation by consulting a professional who can forecast a better return on your investments. Expert tax planning and compliance advice is essential for entrepreneurs and those aiming to maximize tax returns. 2025 brought sharply increased demand for professional tax advisors, especially in large, bustling cities such as Kolkata. This article highlights the top five tax consultants in Kolkata, emphasizing their skills and services, including GST.

Book My Accountant

Overview

Book My Accountant is a top tax consultancy in Kolkata, offering complete tax solutions. They are a comprehensive financial resource, handling company formation and income tax compliance. Customized tax prep services maximize deductions and reduce taxpayer rates.

Services Offered

Income Tax Filing: Customized tax prep services maximize deductions and reduce taxpayer rates.
GST Services Kolkata: These include registration, filing, assessment, litigation and compliance and also comprises guidance on the confusions of the GST law for enterprises.
Company Formation: They help new companies establish themselves and ensure that all necessary legal compliance is envisioned and implemented from the start.
ROC Compliance: Comprehensive services for meeting the requirements imposed by the Registrar of Companies (ROC).
TDS/TCS Services: Timely filing of TDS and TCS returns is essential to avoid penalties.
Compliance Audit: Detailed audits to verify compliance with all relevant standards.
Financial Planning: Continuous financial planning services aimed at generating a more effective financial plan for the clients.

Why Choose Them?

Book My Accountant, a top tax advisor, consistently earns high marks for credibility and reliability in Kolkata. They understand client needs and stay updated on tax laws to ensure compliance and maximize client benefits.

Goyal Tax Services Pvt. Ltd.

Overview

Goyal Tax Services Pvt. Ltd. has established itself as a firm known for its expertise in accountancy and taxation. They have also gained a loyal customer base through their proactive role as tax advisors.

Services Offered

Tax Planning Services: These tax planning tools help the customers have a smaller tax liability as based on the corresponding financial status.
GST Services Kolkata: At Goyal Tax Services Pvt. Ltd., one is provided with strong GST consultancy services and compliance to the dynamic GST landscape.
Audit and Assurance Services: Comprehensive audits to provide transparency and compliance in financial reporting.

Why Choose Them?

Goyal Tax Services Pvt. Ltd.'s focus on client education and satisfaction has made it the top competitor in Kolkata. Their principal task is explaining technical tax concepts to its clients so they may be better informed when making decisions.

RSM India

Overview

RSM India has a strong market presence in the city of Kolkata and offers a broad range of professional services, such as tax consultants , audit and risk advisory services. Their international reach enhances their local expertise.

Services Offered

Corporate Tax Services: They offer a comprehensive set of corporate tax planning and compliance services that businesses can tailor to their specific needs.
GST Services Kolkata: Complete GST advisory services up through closing required for easier compliance of clients' business.
Financial Advisory: Performance enhancement through tailored financial advisory services.

Why Choose Them?

With a global network, RSM India offers insights into local and international tax laws, making them a top choice for clients seeking a broader perspective.

Partha Das & Associates

Overview

Partha Das Associates is a boutique tax consultancy firm distinguished by its attention to personalized service and its dedication to meeting every client's individual requirements.

Services Offered

Individual Tax Filing: Expertise in doing tax preparation for oneself, helping clients comply with personal tax liability as best they can.
GST Services Kolkata: Awareness of GST so that business activities are carried out in an accurate manner.
Transfer Pricing Services: Guide to transfer pricing, that is, of particular relevance to companies operating in foreign markets in respect to international trade.

Why Choose Them?

They are committed to providing clients a more personal and service focused relationship to which clients feel nurtured and listened to. They are able to design individual plan which is adapted to personas financial needs.

Saha & Associates

Overview

Saha Associates is a comprehensive financial consultancy firm that combines tax services with broader financial planning and consulting.

Services Offered

Business Tax Compliance: Assisting businesses in ensuring timely and accurate tax compliance.
GST Services Kolkata: They provide efficient GST services that businesses can use to mitigate the risk of non-compliance and enforcement.
Strategic Tax Planning: There are strategic recommendations for personal and corporate taxes.

Why Choose Them?

Saha Associates combines experience with a client-focused approach, making it a reliable legal and tax consultancy in Kolkata. That, in their aim, is to the betterment of clients’ tax systems is commendable.

Conclusion

Selecting a top tax consultant in Kolkata is crucial for financial benefits and tax compliance. In Kolkata, various firms can meet your GST and tax planning needs in 2025, allowing you to choose one that fits your personal requirements.

We need to get in touch with any of the above mentioned consultants for customisable solutions with respect to taxation, particularly for GST related purposes in Kolkata. Their help gives the information to comprehend the intricacies of taxation and guarantee financial well being.