Investing

If you’re a non-resident Indian (NRI) earning income in both India and your country of residence, you might’ve faced a frustrating situation—getting taxed twice on the same income. 

Sounds unfair, right? 

That’s exactly where DTAA India steps in. The Double Taxation Avoidance Agreement (DTAA) is a treaty that India has signed with many countries to protect you from being taxed twice on the same income.

What is Double Taxation?

Double taxation simply means getting taxed on the same income in two different countries. For instance, if you live in the US and earn rental income from a property in India, both India and the US may tax you on it. That’s double trouble.

Luckily, India DTAA agreements aim to solve this issue.

How DTAA Helps Avoid Double Taxation

DTAA allows you to either:

• Avoid paying tax in one country altogether, or
  
• Get credit for the tax already paid in one country while filing taxes in the other.

Why DTAA is Important for Taxpayers and NRIs

If you’re an NRI, DTAA India isn’t just a tax rule, it’s a smart tool to help you keep more of your hard-earned money. Apart from paying tax twice, DTAA treaties often offer lower withholding tax rates on specific incomes like:

• Interest from bank deposits (as low as 10%)
  
• Dividends from Indian companies
  
• Royalties or fees for technical services

This is a huge plus if you have NRO accounts, investments in Indian companies, or earn consulting income.

How DTAA Works in India

Key Provisions Under India’s DTAA Treaties

India has signed DTAA treaties with over 90 countries, each with its own set of rules. But the core idea remains: helping you avoid double taxation.

Here’s how DTAA India usually works:

• It determines your tax residency.
  
• It defines which country gets the primary right to tax different types of income.
  
• It decides the method of tax relief—either exemption or credit.

Types of Reliefs Provided

1. Exemption Method: One country agrees to exempt certain income from taxation if it is taxed in the other.
   
2. Tax Credit Method: You pay tax in the source country and get a credit for that in your resident country.

For example, if you paid tax in India, your resident country will reduce that much tax from your final bill.

Countries with Which India Has DTAA

India’s DTAA network includes countries where a large number of Indians live, such as:

• USA
• UK
• Canada
• Australia
• Singapore
• UAE
• Germany

Apart from these, India has DTAA with Malaysia, Mauritius, Netherlands, France, Saudi Arabia, and many more. You can check the complete list on the Income Tax Department’s website.

How NRIs Can Claim Benefits Under DTAA

Here’s a simple step-by-step guide to claim DTAA India benefits:

Step-by-Step Process:

1. Get a Tax Residency Certificate (TRC) from the country where you reside.
   
2. Fill Form 10F—available on the income tax e-filing portal.
   
3. Draft a self-declaration confirming your eligibility for DTAA.
   
4. Submit these documents to the Indian entity paying you (bank, employer, etc.).
   
5. Ensure these are filed before the financial year ends.

Essential Documents Required

• Tax Residency Certificate (TRC)
  
• Form 10F
  
• PAN Card
  
• Passport and visa copies
  
• Self-declaration for no Permanent Establishment in India

These documents prove that you’re eligible for tax relief under India DTAA rules.

Types of Income Covered Under DTAA

Different income types are treated differently under DTAA India. Here’s a quick overview:

• Salary: If you’re working abroad but receiving salary from India, DTAA helps decide where the tax applies.
  
• Capital Gains: Say, you sold shares or property in India. The tax treatment depends on the treaty.
  
• Interest Income: If you earn interest on NRE/NRO deposits, DTAA can lower your tax rate to as little as 10%.
  
• Dividends & Royalties: These are also covered under DTAA, often at reduced tax rates.

If you’re into share market advisory, you’ll especially benefit from knowing how DTAA applies to capital gains.

Common Methods of Relief Under DTAA

1. Exemption Method: Income is taxed in only one of the two countries.
   
2. Tax Credit Method: Tax paid in India is credited in your resident country to avoid double taxation.

Example: You paid ₹1 lakh tax in India. While filing abroad, you claim this amount as credit, reducing your tax payable there.

Important Points to Remember While Claiming DTAA Benefits

• Always file Form 10F and TRC before the due date.
  
• Ensure accurate PAN and account details.
  
• Remember, deadlines matter—especially if you’re managing multiple income sources.
  
• Stay updated with income tax calculation on salary to avoid under-reporting.

Also, don’t forget about professional tax compliance if you’re working across countries.

Challenges and Common Mistakes in DTAA Claims

• Submitting incomplete or wrong documentation (especially TRC).
  
• Not knowing whether you’re a tax resident or not.
  
• Not understanding how direct tax applies differently under treaties.

Take expert help if you’re unsure—many share market advisory services now offer tax consultation too.

Recent Developments Related to DTAA in India

India has been renegotiating treaties with countries like Mauritius and Singapore to plug loopholes used for tax evasion.

There’s also been a push for more transparency through Automatic Exchange of Information (AEOI) between countries. Stay tuned to the income tax portal for updates.

Conclusion

Understanding DTAA India is crucial if you’re an NRI juggling income across borders. It saves you from paying more tax than necessary and keeps things legally clean. Whether it’s salary, capital gains, or interest income, knowing how India DTAA works can make a huge difference to your finances.

FAQs

Q. Is DTAA benefit automatic for NRIs?
No, you need to actively claim it by submitting TRC, Form 10F, and other required documents.

Q. What happens if I don’t submit a TRC?
Without a valid TRC, Indian tax authorities won’t allow DTAA benefits. You’ll be taxed as a regular resident.

Q. Can residents of India claim DTAA benefits?
Generally, DTAA benefits are for residents of treaty countries. Indian residents usually don’t qualify unless they have foreign income and face double taxation.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

Filing your Income Tax Return (ITR) accurately is crucial to staying compliant with Indian tax laws. 

One of the lesser-known but very important details to enter during ITR filing is the business code. The Income Tax Business Code List is a structured way of identifying and classifying the nature of a taxpayer’s profession or business activity.

Understanding your business type also helps determine tax benefits correctly, especially when evaluating exemptions vs deductions for various eligible expenses and income heads.

In this article, we will explore everything you need to know about selecting the correct business code, its significance, and how to avoid common errors.

What is a Business Code in Income Tax Return?

A business code is a numeric code that corresponds to a specific profession or business activity. This code is selected from a predefined business code list income tax released by the Income Tax Department.

When filing ITR, especially forms like ITR-3 or ITR-4, you are asked to choose a business code that best defines your source of business or professional income.

These codes help in:

• Categorizing your income accurately
  
• Enabling department-specific tax treatment
  
• Aligning your profession with the right exemptions and deductions
  
• Avoiding ambiguity during return processing

Why Selecting the Correct Business Code is Important?

Filing an incorrect business code can result in discrepancies and could even trigger scrutiny. Here’s why selecting the right code is essential:

• Accuracy in Tax Classification: The correct code reflects your real source of income.
  
• Claiming Benefits: Business codes guide what exemptions vs deductions you’re eligible for.
  
• ITR Form Relevance: Helps match your income type with the applicable ITR form.
  
• Reduced Scrutiny Risk: Ensures smoother processing and minimizes the chances of receiving tax notices.
  
• Ease of Audit: In case of audits, a correct business code supports transparent representation.

When is Business Code Required in ITR?

Applicability of Business Codes for Different ITR Forms

The requirement to enter a business code depends on the ITR form you’re filing and the type of income you report. Here’s a brief guide:

• ITR-1 (Sahaj): For salaried individuals and pensioners. Business code not required.
  
• ITR-2: For income from capital gains, foreign assets, or more than one house property. Business code not required.
  
• ITR-3: Mandatory for individuals/HUFs with income from business/profession.
  
• ITR-4 (Sugam): Required for presumptive income under sections 44AD, 44ADA, or 44AE.

Mandatory Disclosure for Business and Professional Income

If your income source falls under:

• Business Income: Trading, shop owners, manufacturing, etc.
  
• Professional Income: Consultants, stock market advisor, legal professionals, medical practitioners.
  
• Freelance or Service Providers: Web developers, content creators, marketers.

Then, disclosing your income with the correct business code is mandatory. Selecting the wrong business code or skipping it may impact your return’s validity.

Categories of Income Tax Business Codes

Refer to the official Income Tax Department website, incometax.gov.in, for the full list, especially if your business type is niche.

Common Mistakes While Selecting Business Codes

Accurate code selection avoids complications. However, many taxpayers unknowingly commit errors that can affect their tax records.

For instance, a freelance graphic designer selecting a general trading code can misclassify their income. This mismatch may result in wrong tax treatment or processing delays.

Skipping Business Code Selection

Some taxpayers intentionally skip entering the business code, assuming it is not essential. But for ITR-3 and ITR-4 filers, it’s mandatory. Omission can cause your return to be marked as defective.

Impact on Return Processing and Scrutiny Risk

Using an incorrect code may result in:

• Your return being flagged for manual verification,
  
• Mismatched income heads leading to demand notices,
  
• Loss of eligibility for benefits like presumptive taxation, tax on mutual funds, and others.
  
• Increased chances of being selected for audit.

Conclusion

Choosing the correct business code from the Income Tax Business Code List is not just a formality; it is a critical element that determines how your income is interpreted and taxed.

Whether you’re a share market advisor, consultant, or small business owner, staying updated on these requirements will ensure you stay compliant and avoid future complications related to TDS in India or other financial areas.

FAQs

What happens if I select the wrong business code?

Selecting an incorrect code may lead to misclassification of income, wrong tax treatment, delayed refunds, and, in some cases, scrutiny notices from the IT Department.

Can I update my business code after ITR submission?

No, you cannot edit a submitted ITR directly. However, you can file a Revised Return within the due date to correct the business code or other errors.

Do salaried individuals need to fill a business code?

No. Business codes are not required for individuals with only salary income filing ITR-1. But if they have side income from freelancing or business, then business code is needed.

Are business codes different for each ITR form?

No, business codes are not different for each ITR form. The same Income Tax Business Code List applies across forms like ITR-3 and ITR-4, where business income is reported.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

Introduction

Many trusts and institutions often struggle to establish credibility regarding the cause, the proper use of donations, and their legality. The Indian tax system thus came up with Form 10B as a tool to bring transparency into this process. 

What is Form 10B in Income Tax?

Form 10B of Income Tax Act is an audit report that must be submitted by certain trusts and institutions. This form is filed under the Income Tax Act to confirm that the accounts of a trust or institution have been audited and are in line with tax laws. 

It helps the Income Tax Department understand whether a trust has applied its income in the right way and maintained transparency. If you are learning about income tax concepts, understanding the purpose of Form 10B is important for grasping how tax compliance works for charitable entities.

Why Form 10B is Important for Charitable and Religious Trusts

For charitable and religious trusts, tax exemptions under sections 11 and 12 depend on accurate reporting. Filing the audit report in Form 10B income tax format supports your claim for these benefits. If you run a trust or society, this form is a step to staying compliant and avoiding losing out on exemptions.

Who Needs to File Form 10B?

Applicability Under Section 12A(1)(b) of the Income Tax Act

According to the Third Amendment of the Income Tax Act, every organisation or trust registered under Section 12 is required to furnish Form 10B under certain conditions. You need to file Form 10B income tax when:

• The total income of the trust or institution, before applying Sections 11, 12, or certain sub-clauses of Section 10(23C), exceeds ₹5 crores during the previous year.
• Any foreign contribution is received during the previous year. In this case, filing is mandatory even if the organisation is not registered under Section 12A or approved under Section 10(23C).
• Any portion of the trust’s income is spent outside India during the previous year.

Entities Required to Furnish Audit Report via Form 10B

If you represent any of the following entities, you must file Form 10B income tax when any of the above scenarios apply:

• Charitable or religious trusts
• Societies
• Section 8 companies
• Universities and educational institutions
• Hospitals and medical institutions

In addition, you must have an audit done by a Chartered Accountant and submit the audit report with Form 10B on the Income Tax Department’s e-filing portal. If you’re building your understanding of income tax basics or planning compliance for your organisation, it helps to stay updated with the current filing rules for Form 10B of Income Tax Act. 

Purpose of Filing Form 10B

Ensuring Transparency in Income and Expenditure

When you file Form 10B income tax report, it gives the tax authorities a clear view of how funds are raised, spent, or accumulated. It promotes accountability, which is important in sectors dealing with public or donor funds.

Claiming Tax Exemptions for Trusts and Institutions

To claim exemptions under Section 11, the trust must prove its income is applied for charitable or religious purposes. Form 10B helps validate this application of income. Without it, the claim for exemption may be rejected.

Conditions for Filing Form 10B

Income Threshold Limits

You must file Form 10B if your trust’s or institution’s total income (before claiming exemptions under Sections 11, 12, or Section 10(23C)) exceeds ₹5 crore in a financial year. An audit report from a Chartered Accountant is required along with the form.

Audit Requirements for Trusts, Societies, and Section 8 Companies

To file Form 10B income tax report, the trust, society, or Section 8 company must get its accounts audited by a Chartered Accountant. For this process:

• Both the taxpayer and the Chartered Accountant must be registered on the e-filing portal
• PAN of both parties must be active
• The taxpayer must add the CA through the “My CA” service on the portal
• The CA must have an active, registered Digital Signature Certificate (DSC)
• The taxpayer must have applied for registration or already be registered as a charitable or religious trust or institution under Section 12A by filing Form 10A, which activates the option to file Form 10B in their e-filing account.

Step-by-Step Guide to Filing Form 10B

Timeline and Due Date for Filing

Form 10B must be submitted one month before the income tax return due date under Section 139(1). Generally, this is 30th September of the assessment year. For example, for FY 2024-25, the due date is 30th September 2025. Filing late may lead to penalties and cancellation of tax exemptions.

How to File Form 10B Online via the Income Tax Portal

1. Log in to the income tax e-filing portal
2. Go to the “e-File” section and select “Income Tax Forms”
3. Choose “Form 10B” from the dropdown
4. Fill in the required details, upload audit report, and submit it using a valid digital signature
5. Keep an acknowledgement for future reference

Details Required in Form 10B

General Information About the Organization

You’ll need to provide basic details like:

• Name and PAN of the organization
• Registration number under Section 12A/12AB
• Assessment year and financial year

Details of Income, Application, and Accumulation

The form requires:

• Details of voluntary contributions received
• Expenses related to charitable or religious activities
• Accumulated income and reasons for accumulation (if any)

Audit Observations and Certification

The auditor gives a declaration stating whether:

• The books are maintained properly
• The income has been applied according to the rules
• There are any irregularities or violations

Consequences of Non-Filing or Delay in Filing Form 10B

Loss of Tax Exemptions

If Form 10B is not submitted within the prescribed timeline, the Income Tax Department may deny tax exemptions under Sections 11 and 12 or Section 10(23C). The entire income of the trust or institution may then be subject to tax at applicable rates.

Penalties and Late Fee Implications

As per Section 271B of the Income Tax Act, if a trust or institution fails to get its accounts audited when required, a penalty of 0.5% of the total turnover or gross receipts, subject to a maximum of ₹1,50,000, may be levied. Though Form 10B filing is under Section 12A(1)(b) and Section 10(23C), and there is no automatic penalty just for late submission, missing the audit requirement can invite this penalty along with the larger risk of losing tax exemptions.

Recent Changes and Updates Related to Form 10B

CBDT Notifications and New Rules

Recent changes under the Income-tax (Twenty-ninth Amendment) Rules, 2023, through Notification No. 7/2023 and further updates from the Central Board of Direct Taxes (CBDT), have brought notable updates to Form 10B income tax reporting:

1. Two Audit Forms Introduced:

Until AY 2022-23, all trusts were required to file only Form 10B to claim exemptions under Sections 11 and 12. From AY 2023-24 onwards:

• Trusts with income exceeding ₹5 crore, or those receiving foreign contributions or earning business income, must now file Form 10B.
• Trusts with income below ₹5 crore, and without any foreign contributions or business income, are required to file Form 10BB.

2. Expanded Disclosure Requirements:

• The revised Form 10B now asks for additional details, such as:
• Registration details under Sections 12A or 12AB
• Application and accumulation of income
• Sources and application of donations and contributions
• Investments made under Section 11(5)
• Compliance with restrictions under Section 13
• TDS reconciliation with Form 26AS

3. New Filing Deadline:

The due date for submitting Form 10B has been revised to one month before the due date for filing ITR-7. For AY 2025-26, this means the form must be submitted by 31st August 2025.

4. Stronger Auditor Verification Requirements:

Auditors now need to verify multiple aspects of tax compliance more rigorously. This increases the responsibility of both the management of trusts and the auditors, highlighting the importance of maintaining accurate and detailed financial records.

Best Practices for Filing Form 10B

Maintaining Proper Financial Records

Keep clean, well-documented records of all income, expenses, and donations. Having audited statements ready helps in smoother filing. This also aligns with financial compliance, just like companies offering stock market advisory services maintain audit trails.

Timely Filing to Avoid Compliance Issues

Filing early avoids last-minute errors and delays. It also helps you correct any issues in advance. Delays may lead to questions on your financial transparency and disrupt future planning.

Conclusion

Importance of Accurate and Timely Filing of Form 10B

Filing the Form 10B income tax report plays an important role in maintaining an institution’s credibility and securing tax benefits. For charitable trusts, religious organisations, and Section 8 companies, accuracy and timely submission reflect transparency and good governance. Just as using a share market advisory helps investors make informed choices, staying consistent with tax compliance builds long-term financial clarity and public trust for the organisation.

FAQs

1. Is Form 10B mandatory for all trusts?

No, it is mandatory only if the total income before claiming exemptions under Sections 11 and 12 crosses the basic exemption limit.

2. What is the penalty for late filing of Form 10B?

A penalty of up to ₹1.5 lakh may be imposed under Section 271B if the form is not filed on time. 

3. Can Form 10B be revised after submission?

Currently, there is no option to revise Form 10B once submitted. It is important to check and confirm all details before filing. Understanding what is income tax and staying updated with compliance requirements can help avoid such errors.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

Understanding tax compliance is essential for smooth business transactions. One such important provision is the Form 27C Income Tax Act, which allows eligible buyers to declare certain purchases as exempt from Tax Collected at Source (TCS). 

Alongside provisions like Form 27C, understanding other tax aspects, such as tax on mutual fund investments, is equally important for overall financial planning. 

What is Form 27C?

Form 27C is a declaration form that allows certain buyers to purchase specific goods without the seller collecting TCS. As per the Income Tax Act, this form can be submitted by buyers who declare that the purchased goods are not meant for trading or manufacturing and that their income is not taxable under the Income Tax Act.

It essentially helps in bypassing the requirement of paying TCS at the time of purchase if the buyer falls under the eligible category.

Purpose of Form 27C Under Income Tax Act

The primary objective of Form 27C of Income Tax Act is to help buyers avoid TCS when the goods are purchased for specific purposes. The form is used by individuals or Hindu Undivided Families (HUFs) to declare that the goods bought will not be used for trading, and their income is either nil or not taxable.

Sellers are legally required to collect TCS on certain transactions, such as the sale of scrap, coal, or liquor. However, if buyers furnish Form 27C, they can be exempt from TCS. The aim is to simplify tax compliance and avoid unnecessary tax collection on exempt transactions. Additionally, just as share market advisory services help investors make informed stock decisions, Form 27C provides clarity and relief in applicable tax scenarios.

How Form 27C Helps in Avoiding TCS

TCS can sometimes create cash flow issues for buyers, especially for those who are not liable to pay tax or operate in tax-exempt environments. Form 27C online submission helps buyers avoid this burden. 

When this form is submitted in a timely manner with accurate details, the seller is not required to deduct TCS on the transaction. This way, Form 27C helps improve liquidity and reduces compliance workload for both parties.

Applicability of Form 27C

Who Can Submit Form 27C?

Form 27C Income Tax Act can be submitted by:

• Resident individuals (not companies or firms)
  
• Hindu Undivided Families (HUFs)
  
• Buyers who declare that goods are for personal use and not for trading or manufacturing
  
• Buyers whose income is either below taxable limits or exempt under the Income Tax Act

Eligibility Criteria for Buyers and Sellers

To be eligible to file Form 27C:

• The buyer should be a resident of India.
  
• The goods must not be used for business or trade.
  
• The buyer must submit a declaration stating that the income on such goods is not taxable.

The seller, or “collector,” should be engaged in selling goods where TCS is applicable (e.g., scrap, liquor, timber, etc.). Sellers must ensure that Form 27C is valid and properly filled before accepting it to avoid future tax complications.

When Should Form 27C be Submitted?

The Form 27C Income Tax Act should be submitted before the transaction or at the time of purchase. The buyer gives the declaration to the seller, who then forwards it to the income tax authorities.

Consequences of Late Submission

If Form 27C is not submitted on time:

• The seller is required to collect TCS.
  
• The buyer cannot claim exemption from TCS.
  
• It may lead to tax liabilities and interest for non-compliance.
  
• Penalties may apply under the Income Tax Act.

Information Required in Form 27C

The form begins with capturing the personal information of the buyer or declarant. These include:

• Full name
  
• Permanent Account Number (PAN)
  
• Address
  
• Status (individual or HUF)

This helps in verifying the identity of the declarant and confirming their eligibility for exemption from TCS.

Details of Goods Purchased and Transaction Value

The form must also include the following:

• Description of goods
  
• Quantity
  
• Value of goods
  
• Date of transaction

These details ensure transparency and make it easier for the seller to assess the applicability of TCS.

Declaration of Non-Taxable Status

One of the most important parts of Form 27C is the declaration that the buyer’s income is not taxable. This statement helps the seller confirm that the buyer is exempt from TCS as per the Form 27C Income Tax Act guidelines.

Verification by Buyer and Collector

Once the buyer fills the declaration, the form must be signed and verified. The collector (seller) must also verify the declaration and ensure it is genuine before forwarding it to the income tax department.

How to Submit Form 27C

Step-by-Step Process for Filing Form 27C

1. Download Form: Get the Form 27C either from the Income Tax portal or your seller.
   
2. Fill the Details: Enter personal and transaction information accurately.
   
3. Make the Declaration: Clearly declare the purpose of purchase and confirm that the income is non-taxable.
   
4. Sign the Form: Both buyer and seller must sign the form.
   
5. Submit to Seller: Hand over the form to the seller before the transaction.

• Submission to the Seller/Collector

After signing, the buyer submits the form to the seller. The seller retains a copy and is responsible for forwarding the same to the Income Tax Department through the online TIN (Tax Information Network) system.

Forwarding to the Income Tax Department

The seller logs into the TIN portal and uses the Form 27c online submission facility. The scanned form or data is uploaded, and an acknowledgment is generated for record purposes.

Time Limits for Each Stage of Submission

• Buyer to Seller: Before or at the time of purchase
  
• Seller to IT Department: Within 7 days from the end of the month in which Form 27C is received

Failure to submit within this time may lead to the disallowance of TCS exemption.

Features of Form 27C

Key Highlights of Form 27C Structure

• It consists of two parts: one for the buyer’s declaration and one for the collector’s verification.
  
• PAN of both buyer and seller is mandatory.
  
• Purpose of goods must be declared.
  
• Digital submission is allowed.

Use of Form 27C in TCS Exemption Scenarios

Form 27C is primarily used in industries where TCS is applicable, such as:

• Scrap dealers
  
• Liquor retailers
  
• Timber merchants
  
• Coal traders

In such sectors, buyers often use this form to avoid upfront TCS if they meet eligibility conditions.

Legal Framework Governing Form 27C

Form 27C is governed under Section 206C(1A) and Section 206C(1B) of the Income Tax Act. These provisions outline the requirement of declaration for TCS exemption and the duties of both buyer and seller.

Points to Remember While Filing Form 27C

Accuracy in Information Provided

Make sure every detail filled in the form is accurate and matches official records. Mismatches in PAN, address, or transaction details can invalidate the form and nullify the TCS exemption.

Maintaining Copies for Record-Keeping

Both the buyer and the seller should maintain copies of the submitted Form 27C for future reference. These can be useful in case of tax scrutiny, audits, or disputes.

Role of Digital Signature in Online Submission

For form 27c online submission, using a valid Digital Signature Certificate (DSC) is mandatory. This ensures authenticity and non-repudiation of the document during e-filing. Digital signatures streamline the compliance process, especially for businesses that file multiple declarations.

Conclusion

Form 27C plays a critical role in tax compliance for businesses and individuals purchasing goods on which TCS is applicable.

By using Form 27C, buyers can effectively reduce their cash outflow and avoid future complications related to tax refunds or disputes. For sellers, proper verification and submission help them stay compliant with tax laws and avoid penalties.

Whether you’re a buyer or a seller, understanding Form 27C helps you manage your transactions better, just like knowing the difference between exemptions vs deductions in income tax or understanding your obligations under TDS in India.

FAQs

Is Form 27C mandatory for small value transactions?</h3>

No, Form 27C is usually applicable to transactions where TCS is mandatory under the law. Small-value transactions that don’t fall under the TCS category do not require Form 27C.

Can Form 27C be corrected after it is filed?

No, once submitted, Form 27C cannot be modified online. If there is an error, the buyer must submit a fresh declaration to the seller with the correct information.

Who is responsible for sending Form 27C to the Income Tax Department?

The seller, also known as the collector, is responsible for sending Form 27C to the Income Tax Department within the prescribed timeline after receiving it from the buyer.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

Filing your Income Tax Return (ITR) can seem technical, especially when you’re dealing with terms like JSON files. But don’t worry—it’s not as complicated as it sounds. 

If you’re e-filing your ITR through the offline method, you’ll need to handle something called a JSON file.

Many taxpayers face confusion about how to open JSON file of income tax, edit it, or fix errors if the file fails to load. This guide will explain it all in a simple way. 

Whether you are a salaried professional, or a business owner dealing with indirect tax, or someone exploring the new vs old tax regime, knowing how to use these files correctly is vital for smooth filing.

Let’s begin by understanding what JSON files are and why they matter.

What is a JSON File in Income Tax Filing?

JSON stands for JavaScript Object Notation. It’s a data file format used by the IT Department to store the information you input in your Income Tax Return (ITR). When you fill in the details using the Income Tax offline utility and save them, the utility generates a JSON file.

This file is then uploaded to the income tax portal to complete your return filing process.

Why is a JSON File Required for ITR Filing?

When you choose to file your ITR offline (by downloading the utility), the data you enter isn’t directly submitted online. Instead, it’s stored in a JSON format. This ensures consistency and accuracy in the transfer and processing of your financial data.

It also helps if you are taking the help of share market advisory services or tax consultants, as they can simply edit and generate this file on your behalf for filing.

How to Download the JSON Utility from Income Tax Portal

Step-by-Step Guide to Download JSON Utility

To work with a JSON file, you first need the Income Tax Return (ITR) Utility—a software provided by the Income Tax Department of India.

Here’s how you can download it:

1. Visit the official income tax e-filing website: https://www.incometax.gov.in
   
2. Navigate to the ‘Downloads’ section in the main menu.
   
3. Select the Assessment Year (e.g., AY 2024-25).
   
4. Choose your relevant ITR form – like ITR-1, ITR-2, etc.
   
5. Click on the ‘Download’ link for the corresponding JSON utility.
   
6. A ZIP file will be downloaded.
   
7. Extract the ZIP file and open the utility (either Excel-based or Java-based).

Once installed, you can begin entering your data and open JSON file income tax.

Supported Versions for Different ITR Forms

Each ITR form has a separate version of the utility:

• ITR-1 (Sahaj): For salaried individuals and pensioners.
  
• ITR-2: For individuals and HUFs not having business income.
  
• ITR-3: For individuals and HUFs with business/professional income.
  
• ITR-4 (Sugam): For presumptive income under section 44AD, 44ADA, or 44AE.

Ensure that you’re using the correct version. If not, your file might throw errors or fail to load.

How to Open a JSON File of Income Tax

To know the answer of how to open a JSON file of Income Tax, use the official Income Tax Utility. Follow these steps:

1. Open the utility on your computer.
   
2. Click on ‘Import Pre-filled JSON’ or ‘Import Draft JSON’.
   
3. Browse and select your saved JSON file.
   
4. The utility will automatically load all the previously entered data.
   
5. You can now review, edit, and validate the data.

This method ensures the data loads correctly and is aligned with the latest formats and validations used by the Income Tax Department.

Opening JSON File Using Other Tools (View Only)

Sometimes, people try to open JSON files using text editors like Notepad or online JSON viewers.

While this is possible, it’s only for viewing purposes. JSON is a text-based format, so if you open it outside the utility:

• You’ll see raw code and data structures.
  
• Editing here can corrupt the file and make it unusable.
  
• It’s not recommended unless you’re a software developer or data expert.

For all practical purposes, especially when filing your return, it’s best to use the official Income Tax Utility.

How to Edit a JSON File Correctly

Loading JSON File into the Income Tax Utility

To edit a JSON file, you need to load it back into the utility:

1. Launch the ITR Utility.
   
2. Click on ‘Open’ or ‘Import JSON’ option from the homepage.
   
3. Select the relevant file and open it.
   
4. Make sure it matches the version of your utility.

Once the file is open, you’ll be able to edit any section, personal details, salary income, capital gains, business income, etc.

Making Corrections and Saving the File

Here’s how to edit and save it:

• Correct any incorrect figures, spelling errors, or mismatched PAN numbers.
  
• Add or remove details based on your new documents (e.g., new Form 16, or revised windfall tax info).
  
• After editing, click on ‘Validate’ to check for errors.
  
• If everything is fine, click on ‘Save’ or ‘Generate JSON’.
  
• The utility will create a new JSON file, ready for upload.

This edited file can now be uploaded to the Income Tax Portal.

Common Issues While Opening JSON Files

File Format Errors

Sometimes, when you try to open income tax JSON file, an error message pops up like “Invalid file format”.

Causes:

• The file was manually edited outside the utility.
  
• File extension was changed (e.g., .txt instead of .json).
  
• Corrupted file due to improper download.

Solution: Delete the file and download or regenerate it using the official tool again.

Version Mismatch Problems

If the version of the utility doesn’t match the version used to create the file, you will get a “Version Mismatch” error.

Fix: Visit https://www.incometax.gov.in and download the latest version of the utility for your ITR form.

Make sure your Assessment Year and ITR form version match the file.

Solutions for Opening Errors

Here are quick fixes:

• Use only the official utility.
  
• Always keep a backup of the original JSON file.
  
• Don’t rename or modify the file extension.
  
• Check for software compatibility (Java version, if needed).

Precautions to Take While Handling JSON Files

Ensure Proper Download and Installation

Many people face issues because they:

• Use outdated versions
  
• Download utilities from third-party websites
  
• Skip extracting the ZIP file

Always:

• Download from the official income tax site.
  
• Extract and install correctly.
  
• Update regularly to get the latest forms and bug fixes.

Do Not Modify JSON Files Outside the Utility

It’s tempting to fix minor errors directly in Notepad. But this can break the file.

Avoid using:

• Notepad
  
• Online editors
  
• Third-party JSON software

Doing so could result in an invalid file and errors while uploading.

Conclusion

Understanding how to open JSON file of income tax and using it properly is essential for accurate tax filing. Whether you are opting for the new vs old tax regime, claiming deductions, or calculating indirect tax liabilities, the JSON file is your data carrier.

Always use the official utility, stay updated, and avoid manual edits. For professionals, especially those involved in share market advisory, this is a must-know process to ensure seamless ITR filing for clients.

FAQs

Can I open a JSON file without the Income Tax Utility?

Yes, but only to view the contents, not for editing or filing. You can use Notepad or online viewers, but it’s not advisable for making changes.

What if the JSON file does not open after downloading?

If the JSON file does not open after downloading, first check whether you have extracted the ZIP file correctly. Ensure that you’re using the latest version of the income tax utility, as outdated versions can lead to compatibility issues. Also, verify that the file is not corrupted during download. If the problem continues despite these checks, it’s best to delete the current file and download a fresh copy from the official income tax portal.

Can I edit the JSON file manually?

Technically, yes, but never do it. Manual edits can damage the file and lead to rejection during upload.

Which software is needed to open a JSON file?

Use the Income Tax Return Utility, available for download at the official portal. No other software is needed for safe handling.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

Filing an income tax return in India has become more streamlined over the years, thanks to digital integration and identity verification processes. A key part of this system is the use of Aadhaar for income tax return filing. Whether an individual already has an Aadhaar card or is still in the enrollment process, the Income Tax Department has made provisions to ensure that returns can still be filed smoothly.

This article explores how the Aadhaar Enrollment ID plays a crucial role when Aadhaar is not yet issued, and how to link, update, and troubleshoot issues for a seamless ITR process.

What is Aadhaar Enrollment ID?

Understanding Aadhaar and Enrollment ID

The Aadhaar card is a unique identification document issued by the UIDAI (Unique Identification Authority of India). It is used across various services—government subsidies, bank KYC, and, most importantly, for filing income tax returns. But what happens when an individual applies for Aadhaar but hasn’t received the card yet?

This is where the Aadhaar Enrollment ID (EID) comes in. It is a 28-digit number generated at the time of Aadhaar registration, which acts as proof that the individual has applied for Aadhaar. The EID can temporarily be used in place of the Aadhaar number during ITR filing.

Format and Details of Enrollment ID

The EID is divided into two parts:

• The first 14 digits are the enrollment number (e.g., 1234/12345/12345)
• The next 14 digits represent the date and time of enrollment (e.g., 01/01/2025 12:00:00)

Together, this 28-digit code verifies that the Aadhaar application is under process, which is important when linking with PAN or submitting tax documents.

Importance of Aadhaar Enrollment ID for Income Tax Return Filing

Until FY24, individuals who had applied for Aadhaar but hadn’t received it were allowed to file their income tax return using their 28-digit Aadhaar Enrollment ID. This provided temporary compliance under Section 139AA of the Income Tax Act.

However, as per changes introduced in Budget 2024, this relaxation has been withdrawn starting AY 2025–26. The updated ITR forms for the new assessment year no longer include the option to quote an Enrollment ID. Taxpayers must possess a valid Aadhaar number to file their return or apply for a PAN card.

Impact on ITR Processing Without Aadhaar

Failing to quote Aadhaar may lead to:

• Invalidation of ITR submission
• Inoperative PAN if Aadhaar linkage is not completed by 31 December 2025
• Delays in tax refunds and TDS reconciliation

The EID can still be retrieved from the UIDAI website for non-ITR purposes, but it is no longer valid as a substitute for Aadhaar when filing tax returns.

How to Find Your Aadhaar Enrollment ID?

Steps to Retrieve Aadhaar Enrollment Slip

If the Aadhaar Enrollment Slip is misplaced, it can be retrieved in the following way:

1. Visit the UIDAI website (https://uidai.gov.in)
2. Go to ‘My Aadhaar’ > ‘Retrieve EID/UID’
3. Enter the registered mobile number or email
4. Submit OTP and download the Enrollment ID details

This slip serves as official proof for ITR filing when Aadhaar is pending.

What to Do If Enrollment ID is Lost

If the mobile number linked with the Aadhaar application is no longer in use or if both Aadhaar and EID details are lost, the individual must revisit the Aadhaar center to re-enroll or update their information.

How to Link Aadhaar Enrollment ID with PAN for ITR?

Procedure to Link Aadhaar Enrollment ID and PAN

To link Aadhaar (or Enrollment ID) with PAN:

1. Visit the Income Tax e-filing portal (https://www.incometax.gov.in/)
2. Go to ‘Link Aadhaar’ section
3. Enter PAN, Aadhaar Enrollment ID, name as per Aadhaar, and other details
4. Submit the form and verify via OTP sent to the registered mobile number

Effective from 1 July 2025, Aadhaar authentication has also become mandatory for applying for a new PAN card. Applicants must have a valid Aadhaar number to initiate the PAN issuance process.

Deadline and Penalties for Non-Linking

The final deadline to link Aadhaar with PAN is 31 December 2025, as notified by the Central Board of Direct Taxes (CBDT). Failure to comply by this date will render the PAN inoperative from 26 January 2026, leading to restrictions on financial transactions, ineligibility to file ITR, and imposition of a ₹1,000 penalty under Section 234H.

Filing Income Tax Return Using Aadhaar Enrollment ID

Under Section 139AA of the Income Tax Act, if you’ve applied for Aadhaar and are awaiting issuance, you’re permitted to quote the 28-digit EID while filing your ITR.

Where to Enter Enrollment ID in ITR Form

While filing the ITR online:

• In the “Personal Information” section, there’s a field asking for Aadhaar number
• If Aadhaar is not available, choose the option “Applied for Aadhaar”
• Enter the 28-digit Aadhaar Enrollment ID

Ensure that the EID matches exactly with the slip issued by the UIDAI, including date and time.

Common Mistakes to Avoid During Filing

• Typing errors in the Enrollment ID
• Using expired or invalid enrollment slips
• Not updating Aadhaar after issuance
• Mismatch in names between PAN and Aadhaar records

These mistakes can delay ITR processing, refunds, and even result in notices from the department. It’s best to double-check details before final submission. 

This is even more critical for those filing capital gains or tax on mutual funds, where even minor mismatches may delay processing or refunds.

What If Aadhaar is Generated After Filing ITR?

Steps to Update Aadhaar Details Later

Once the Aadhaar number is issued, taxpayers must:

1. Login to the income tax portal
2. Navigate to ‘Profile Settings’ > ‘My Profile’
3. Enter the new Aadhaar number
4. Submit and verify with OTP

This update is crucial for future ITR filings and refund processing.

Correcting Mismatches and Errors

If there is a mismatch in name, gender, or date of birth between PAN and Aadhaar, linking may fail. In such cases:

• Update PAN via NSDL or UTIITSL
• Or, update Aadhaar at the nearest Aadhaar Seva Kendra

Correcting these inconsistencies helps in accurate KYC, which is also relevant for those registered as a stock investment advisor, or dealing with tax on mutual funds and TDS in India.

Legal Provisions and Government Notifications

Many taxpayers still wonder whether an Aadhaar card is mandatory or not for filing income tax returns. The answer is yes, unless exempted under specific categories such as NRIs, individuals above 80 years, or residents of certain states. For everyone else, Aadhaar or the Enrollment ID must be quoted at the time of filing.

Mandatory Rules under Income Tax Law

Under Section 139AA of the Income Tax Act:

• It is compulsory to quote Aadhaar (or EID) when filing ITR
• PAN will be inoperative if not linked by the due date
• This applies to all eligible Indian residents, except those specifically exempted

Recent Changes and Updates

The government has offered flexibility to those who haven’t received their Aadhaar yet, allowing use of Enrollment ID. However, this is only a temporary arrangement. Once Aadhaar is issued, linking becomes mandatory. Non-compliance could attract financial and procedural issues—even if the taxpayer is eligible for exemptions vs deductions, the refund may be withheld if linkage fails.

Conclusion

Ensuring Smooth ITR Filing with Aadhaar Enrollment ID

For taxpayers across India, the message is clear—Aadhaar for income tax return is not optional anymore. Even if someone hasn’t received their Aadhaar card, using the Enrollment ID is a valid workaround. However, timely linking with PAN, entering correct details, and fixing errors as soon as Aadhaar is issued are essential steps. Staying updated on government rules and being proactive in correcting issues can go a long way in avoiding penalties and processing delays. Whether it’s claiming refunds, reporting TDS, or any other tax-related work, linking Aadhaar ensures a smoother financial journey.

FAQs

Is Aadhaar mandatory for everyone while filing ITR?
Yes, quoting Aadhaar is mandatory for most individuals under Section 139AA. However, those who haven’t received it yet can use the Aadhaar Enrollment ID temporarily.

Can I file ITR without Aadhaar if I have an Enrollment ID?
No. From AY 2025–26, quoting Aadhaar Enrollment ID is no longer permitted. Taxpayers must possess and quote a valid Aadhaar number to file their ITR.

What if my Aadhaar and PAN details do not match?
In case of mismatches, the individual must update either Aadhaar (through UIDAI) or PAN (through NSDL/UTI). The ITR process may fail or be delayed until the mismatch is resolved.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

Futures and Options (F&O) trading can lead to substantial profits or losses. Understanding how to report F&O loss in Income Tax Return is crucial for compliance and maximizing tax benefits.

This guide explains the tax treatment, set-off and carry forward rules, correct ITR forms, and common mistakes to avoid when filing a tax return. 

It also helps you understand how to file ITR online accurately and claim F&O losses properly.

What is F&O (Futures and Options) Trading?

Futures and Options (F&O) are types of derivative contracts in the share market. Their value comes from an underlying asset like stocks or indices. In Futures, traders agree to buy or sell at a set price on a future date. Options give the right, but not the obligation, to buy or sell. Many traders and share market advisors use F&O to earn quick profits, manage risks, or protect their investments.

Retail and professional share market advisor strategies frequently include F&O to leverage positions, hedge portfolios, or speculate on short-term price movements. 

How F&O Trading is Treated Under Income Tax Law

Under Indian Income Tax law, F&O trading is treated as business income, not capital gains. This classification means that both profits and F&O losses in income tax return filing fall under “Profits and Gains from Business or Profession.” Unlike capital gains, which offer exemption thresholds, business income from F&O does not carry this privilege. 

Hence, if traders incur a F&O loss in their income tax return, they must declare it under business income and follow specific set-off rules. Proper F&O loss ITR filing also ensures eligibility to carry forward losses and avoid scrutiny from the tax department, making timely and accurate reporting essential for all traders.

Tax Treatment of F&O Trading Income and Loss

Classification as Business Income

Income derived from F&O trading is considered speculative or non-speculative business income, depending on the nature of the trades. Intraday trading is typically speculative, while F&O contracts are non-speculative under Section 43(5). Therefore, F&O loss in income tax return is permissible as a non-speculative business loss, and eligible for set-off and carry forward, subject to restrictions under income tax law.

Applicability of Tax Audit for F&O Trading

Traders must determine if they fall under audit obligations under Section 44AB. The need for a tax audit depends on turnover and profit margins. If your gross turnover or total sales in F&O exceed ₹1 crore (or ₹10 crore requiring 6% digital receipts), a share market advisor or accountant will advise tax audit compliance. A trader reporting F&O loss in income tax return should assess turnover (sum of absolute gains and losses) when evaluating audit triggers, even if the overall income is negative.

Which ITR Form Should You Use to Report F&O Loss?

If you have income or loss from F&O trading, you should file ITR-3, especially if you are a sole trader. Although ITR-4 is meant for small businesses under the Presumptive Scheme, it doesn’t apply to F&O trading because there’s no fixed profit rate. Since F&O needs detailed reporting, ITR-3 is the correct form to use.

Situations Requiring Tax Audit Due to F&O Losses

Even if declaring a F&O loss in income tax return, traders must file a tax audit report if their total turnover exceeds ₹1 crore (₹10 crore with high digital payments). Additionally, under the old tax regime, strict documentation and audit compliance becomes crucial for carrying forward losses. Absence of audit when mandated can lead to disallowance of F&O loss in income tax return for set-off.

How to Report F&O Loss in Income Tax Return

Declaring Income and Loss from F&O in ITR

Reporting F&O loss in income tax return begins with categorizing it under “Income from Business or Profession, Non-Speculative Business.” Itemize your turnover, brokerage expenses, STT, stamp duty, and other trading expenses in ITR-3. These figures collectively determine your net profit or F&O loss in income tax return. 

Where to Report F&O Loss in the ITR Form

• Report F&O loss under “Income from Business or Profession – Non-Speculative Business” in Schedule BP of ITR-3.
  
• Enter total turnover, trading expenses, and net loss in this section.
  
• Use Schedule CFL to declare and carry forward any unadjusted F&O loss.
  
• Maintain proper documentation of expenses like brokerage and taxes.
  
• Ensure timely filing to claim set-off and carry-forward benefits of the F&O loss.

Steps to Properly Declare Turnover and Expenses

1. Compute total turnover (sum of positive and negative turnovers). 

2. Deduct trading expenses (brokerage, STT, bank charges, data feeds, etc.). 

3. Maintain an audit trail of expenses with invoices. 

4. Enter figures in Schedule BP, detailing turnover and expenses. 

5. Fill Schedule CFL to carry forward loss if applicable.

Set-Off and Carry Forward Rules for F&O Loss

Set-Off Against Other Income Heads

A non-speculative business loss, such as F&O loss in income tax return, can be set off against various income heads, including:

• Non-speculative and speculative business income,
  
• Salary income,
  
• Income from house property, and
  
• Other sources of income.

This flexibility helps traders lower their overall tax liability by adjusting the F&O loss against other incomes earned during the same financial year.

Carry Forward of Losses to Future Years 

Unutilized F&O loss in income tax return after set-off can be carried forward for up to 8 assessment years. For example, a F&O loss in FY 2024–25 (AY 2025–26) can be carried to AY 2026–27 through AY 2033–34. Each year’s F&O loss in income tax return must be listed in Schedule CFL, indicating year and amount. 

Time Limit and Conditions for Carry Forward

Losses must be declared in the correct ITR form, backed by tax audit if required. – Carry-forward requires that the ITR is filed by the due date. Late filings invalidate the carry-forward facility. – Under the old tax regime, carried forward losses may restrict eligibility for deductions, making planning crucial.

Common Mistakes to Avoid While Reporting F&O Loss 

Wrong ITR Form Selection

Choosing ITR-4 when ITR-3 is required can invalidate loss reporting, leading to rejection of F&O loss in income tax return. Always choose ITR-3 if engaged in regular F&O business.

Missing Tax Audit Requirements 

Inadequate documentation or failure to audit when turnover thresholds are exceeded nullifies eligibility to carry forward F&O loss in income tax return. Consult your share market advisor or a chartered accountant to verify the audit requirements. 

Incorrect Calculation of Turnover or Loss

Turnover for F&O isn’t just net profit—it’s the sum of all positive and negative turnover. Mislabeling turnover as only profitable transactions miscalculates taxable income and may disallow F&O loss in income tax return.

Example: How to Report F&O Loss Correctly

Trader A, under the old tax regime, had the following FY 2024–25 F&O activity: –

Gross profit/loss turnover –  ₹8 lakh (absolute positive and negative positions).

Expenses – Brokerage – ₹30,000,  STT –  ₹10,000, Other –  ₹5,000

Net F&O Loss: ₹8 lakh – ₹45,000 = ₹7,55,000 

Steps:

1. File ITR-3 by the due date.
   
2. Enter ₹8,00,000 under turnover in Schedule BP, ₹45,000 for expenses, resulting in ₹7,55,000 net loss.
   
3. In Schedule CFL, report ₹7,55,000 as F&O loss from FY 2024–25.
   
4. This loss can be used to reduce other income such as ₹12 lakh salary; only ₹4,45,000 of f&o loss in income tax return is utilized this year.
   
5. Balance ₹3,10,000 is carried forward via CFL for the next eight years.

Conclusion 

Accurate declaration of F&O loss in income tax return can notably lower your tax burden. Proper selection of ITR form, adherence to audit norms, and calculating true turnover prevent disallowance of losses. Leveraging set-off and carry-forward provisions enables traders to manage their cash flows efficiently. Understanding TCS vs TDS also helps avoid confusion in tax credits, ensuring smoother processing and accurate refunds in your ITR filing.

FAQs

Can F&O Loss be Set-Off Against Salary Income? 

Yes, F&O loss in income tax return being a non-speculative business loss, can be adjusted against any income head, including salary. Example: ₹2 lakh F&O loss can reduce a ₹10 lakh salary to ₹8 lakh taxable income, lowering your tax liability.

 Is Tax Audit Mandatory for Reporting F&O Loss? 

A tax audit under Section 44AB is required only if total business turnover exceeds ₹1 crore (or ₹10 crore with sufficient digital receipts). A share market advisor or CA can assess turnover levels, especially when filing F&O loss in income tax return. 

For How Many Years Can F&O Loss Be Carried Forward? 

F&O loss in income tax return can be carried forward for 8 assessment years. If declared in FY 2024–25, the last year for utilization is AY 2033–34. Note: Carry forward is valid only if the return is filed by the due date and in the correct form (ITR-3). 

Can F&O Loss be Adjusted Against Rental Income? 

Yes. Once listed under Schedule BP, F&O loss in income tax return can be set off against income from house property (rental income) or any other head in the same year. Alternatively, with partial utilization, the balance is carried forward as per CFL rules. 

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

Introduction

What is Form 10BA?

Paying rent can take up a large share of your monthly income, especially if you live in a metro or urban area. If your salary includes an HRA component, you can claim tax benefits under Section 10(13A). But if your salary doesn’t offer HRA, there’s still a way to claim tax relief on rent paid. The Income Tax Act, under the old tax regime, allows you to claim a deduction under Section 80GG, provided you file Form 10BA. 

Form 10BA of Income Tax Act is a declaration you need to file if you’re claiming a deduction for rent paid on residential accommodation, especially when you’re not receiving HRA. It’s meant for individuals under Section 80GG who pay rent but don’t get HRA from their employer.

Importance of Form 10BA for Claiming House Rent Deduction

Filing Form 10BA of Income Tax Act helps lower your taxable income if you pay rent but don’t receive HRA. It supports your claim under Section 80GG and ensures you stay compliant with income tax rules.

It also acts as a valid proof of rent paid, which is helpful during tax assessments, audits, or financial verifications. Just like businesses keep track of indirect tax records for transparency, maintaining accurate declarations through Form 10BA income tax keeps your personal tax filings clean and well-documented.

Who Needs to File Form 10BA?

Eligibility Criteria for Filing Form 10BA

You need to file Form 10BA of Income Tax Act if you’re paying rent but don’t receive HRA from your employer. This applies to both salaried and self-employed individuals. However, to claim a deduction under Section 80GG, you must meet all of the following conditions:

• No HRA in Salary: You don’t receive House Rent Allowance as part of your income.
• Rent Paid for Self-Occupied Residence: The house must be your primary place of stay, not a commercial space or a property you don’t live in.
• No Ownership at Work Location: You, your spouse, minor child, or HUF must not own any residential property in the city where you work or live.
• No Home Loan Deduction Claimed: You haven’t claimed deductions on a self-occupied property elsewhere.
• Rent Exceeds 10% of Total Income: The rent you pay should be more than 10% of your total income.
• Form Filing Requirement: You must file Form 10BA income tax to officially declare your eligibility for Section 80GG.

Applicable Scenarios: No HRA Received from Employer

Form 10BA income tax is meant for individuals who pay rent but don’t receive House Rent Allowance (HRA) as part of their salary. This is common in cases where your employer doesn’t include HRA in the salary structure, or if you’re self-employed, a freelancer, or working with an organization that doesn’t offer standard benefits. You can’t file Form 10BA of Income Tax Act if:

• You receive HRA from your employer
• You or your immediate family owns a house at your work location
• You’re already claiming deductions on a self-occupied property or home loan

Purpose of Filing Form 10BA

Claiming Deduction Under Section 80GG

Filing Form 10BA enables you to claim deductions under Section 80GG, a benefit available to those who pay rent without receiving HRA. The deduction amount depends on various factors like income level and rent paid, but without submitting this form, your claim won’t be valid.

Declaration of Rent Paid for Residential Accommodation

Through 10BA of Income Tax Act, you declare the amount of rent you paid, landlord’s details, and confirm that you’re not living in a property owned by you, your spouse, or your minor child in the city of employment.

Conditions to Claim Deduction Under Section 80GG

Income Limitations and Rent Payment Requirements

To claim a deduction under Section 80GG, certain limits and calculations apply. The deduction you can claim is the lowest of the following:

• ₹5,000 per month (₹60,000 annually)
• 25% of your adjusted total income
• Actual rent paid minus 10% of adjusted total income

Adjusted total income is calculated after excluding long-term capital gains (LTCG), short-term capital gains under Section 111A, income taxed under Sections 115A/115D, and all deductions from Section 80C to 80U (except 80GG itself). The calculation for deduction goes as follows:

• Adjusted total income: ₹7,20,000
• Monthly rent paid: ₹14,000
• Annual rent: ₹1,68,000

Calculation:

• ₹5,000 x 12 = ₹60,000
• 25% of ₹7,20,000 = ₹1,80,000
• ₹1,68,000 – 10% of ₹7,20,000 (₹72,000) = ₹96,000
• Eligible deduction = the least of the three = ₹60,000

Non-Ownership of Residential Property in Specified Location

To file Form 10BA of Income Tax Act and claim this deduction, you must not own a residential property at the location where you live or work. This condition applies not just to you, but also to:

• Your spouse
• Minor child
• Hindu Undivided Family (if applicable)

In addition, you shouldn’t be claiming tax benefits on a self-occupied property elsewhere. These checks ensure that the deduction under Form 10BA income tax is claimed only by those who genuinely need relief for rent paid.

Details Required in Form 10BA

Personal Information of the Taxpayer

You’ll need to enter your full name, PAN, address, and details of employment or business. Make sure these match your income tax profile to avoid discrepancies during processing.

Details of Rent Paid, Landlord’s Name, PAN, and Address

The form also requires:

• Monthly rent amount
• Mode of payment
• Name and address of your landlord
• PAN of the landlord (if annual rent exceeds ₹1 lakh)

Keeping these details ready before filling out Form 10BA income tax is helpful.

Step-by-Step Guide to Filing Form 10BA

How to File Form 10BA Online Through Income Tax Portal

Here’s how to file Form 10BA online:

1. Visit incometax.gov.in.
2. Log in using your PAN and password.
3. Go to the “e-File” section and choose “Income Tax Forms”.
4. Select “Form 10BA” from the drop-down.
5. Fill in the required details
6. Submit the form online with a digital signature (if applicable) or via OTP verification.

Once submitted, you can proceed to claim the deduction under Section 80GG while filing your Income Tax Return (ITR). Form 10BA must be filed before filing your ITR. For FY 2024–25,  the due dates are:

• Non-audit cases: 15 September 2025
• Audit cases: 30 September 2025

Checklist: Information and Documents Needed Before Filing

Before you begin, keep the following information and documents ready to ensure a smooth filing process:

1. Personal and Property Details:

• Your full name and PAN
• Address of rented property
• Rental duration and monthly rent paid
• Landlord’s name, address, and PAN (if applicable)

2. Documentation:

• Rent agreement mentioning rent terms and tenant/landlord details
• Rent receipts, preferably monthly or quarterly 
• Proof of payment
• Landlord’s PAN mandatory if rent exceeds ₹1,00,000 annually. If not available, obtain a written declaration
• Declaration of non-ownership confirming that no self-occupied residential property is owned by you, your spouse, minor child, or HUF at your place of work or residence.

Consequences of Not Filing Form 10BA

Denial of Section 80GG Deduction

Without filing Form 10BA, your deduction under Section 80GG may be rejected, even if you paid rent. This can impact your overall tax outgo and refund eligibility, especially under the old tax regime where such deductions matter.

Possible Penalties for False or Incorrect Declarations

Non-filing or incorrect filing of Form 10BA may result in several consequences, including:

• Increased Tax Liability
• Interest on Tax Shortfall
• Penalties for Misreporting
• Compliance Complications
• Impact on Future Filings

Recent Updates Related to Form 10BA

Changes in Filing Procedures and Format (Latest Rules)

In recent years, the Income Tax Department has streamlined the process. Form 10BA is now only accepted online via the portal. This move supports better tracking, limits misuse, and strengthens compliance, similar to how windfall tax disclosures are now expected to follow new reporting formats.

Best Practices for Filing Form 10BA

Maintaining Proof of Rent Payments

Always maintain a digital trail, including bank transfers, UPI records, and rent receipts.

Ensuring Accurate and Honest Declarations

Make sure all entries in Form 10BA of Income Tax Act, including the landlord’s PAN, rent amount, and property address, are complete and correct. Avoid rounding off or inflating figures. This level of transparency is also beneficial if you’re engaging with financial planners or stock market advisory professionals, where income and tax records are assessed closely.

Conclusion

Filing Form 10BA of Income Tax Act isn’t just a procedural step; it directly affects your eligibility for rent deductions under Section 80GG. Whether you’re self-employed or in a salaried job with no HRA, a timely and accurate filing helps lower your tax liability, especially under the old tax regime. Make sure to review rent documents and file early to avoid last-minute errors.

FAQs

1. Is Form 10BA mandatory every year?

Yes, if you’re claiming a deduction under Section 80GG, you need to file Form 10BA every financial year.

2. Can salaried employees also file Form 10BA?

Yes, if they are not receiving HRA from their employer and paying rent on their own.

3. What documents should be kept after filing Form 10BA?

Keep rent receipts, bank statements showing rent payments, landlord’s PAN, and the final 10BA form copy.

4. What is the deadline for submitting Form 10BA?

Form 10BA should be submitted before filing your ITR. So, if you’re planning to file ITR online before July 31, submit this form well in advance.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.