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Introduction

Role of NGOs in India

Non-governmental organisations (NGOs) play an important role in India’s development journey. They help improve lives by working in areas like education, healthcare, environmental awareness, women empowerment, and poverty reduction. Many NGOs also focus on advocacy, aiming to make society more inclusive. 

Since these organisations often depend on public donations and grants, proper financial management and favourable direct tax treatment becomes very important for their long-term work.

Importance of Income Tax Benefits for NGOs

Income tax benefits give NGOs more credibility and financial support. An NGO with approved tax exemption status can attract more donors, since people prefer donating when they can claim tax deductions. For the NGO itself, tax exemption helps reduce liabilities and direct more funds toward social impact.

Eligibility Criteria for NGOs to Avail Tax Benefits

Types of NGOs Eligible (Trusts, Societies, Section 8 Companies)

Different types of NGOs that can apply for tax exemptions include:

• Public charitable trusts
• Registered societies
• Section 8 companies under the Companies Act, 2013

All of these can get NGO donation tax exemption once they meet the legal requirements.

Mandatory Registrations Under Income Tax Act

To access NGO donation tax exemption benefits, the organisation must register under Section 12A or Section 12AB. Without this registration, donations to NGO tax exemption cannot be claimed by donors, and the NGO may lose its own tax benefits.

Key Income Tax Sections Relevant to NGOs

Section 12A: Registration for Tax Exemption

This section helps NGOs register so that their income from donations is exempt from tax. Without Section 12A registration, all donations and grants would be taxed.

Section 80G: Tax Benefits to Donors

When an NGO is registered under Section 80G, its donors can claim deductions under this section. This encourages individuals and corporates to donate more, as the donation to the NGO tax exemption reduces their taxable income.

Section 10(23C): Income Exemptions for Educational and Medical Institutions

Educational and medical institutions run by NGOs can also get NGO tax exemption under this section, provided they meet certain conditions.

Registration Process for Claiming Tax Benefits

How to Register Under Section 12A and 80G

The process of registration under Sections 12A and 80G follows the new guidelines introduced through the Finance Acts of 2020 and 2021. Under this, you first need to file Form 10A for new registration or re-registration (if your NGO was earlier registered under Section 12A, 12AA, or 80G). This re-registration has been applicable from 1st April 2021, under Section 12AB. Steps for filling the form are as follows:

• First, choose the legal structure (trust, society, or Section 8 company) and register your organisation with the appropriate authority.
• Collect all required documents.
• Fill out Form 10A accurately with details about your organisation’s objectives and activities.
• Submit the form online via the Income Tax Department portal.
• The tax authorities will review your application and may inspect your financial records.
• On approval, you will receive a registration certificate under Section 12A and 80G.

Documents Required for Registration

To complete this process successfully and avoid delays, keep the following documents ready:

• Trust Deed / Society Registration Certificate / Section 8 Company Certificate
• Memorandum of Association (MOA) and Articles of Association (AOA) (for Section 8 companies)
• PAN card of the NGO
• Form 10A (for 12A registration) and 10G (for 80G registration)
• Bank account statement
• Audited accounts for the last three years
• List of trustees / members / directors
• List of activities undertaken
• FCRA registration (if applicable)
• NGO Darpan ID (if applicable)

With a valid 12A and 80G registration, your NGO can maintain compliance with the tax laws and manage its financial affairs, including handling of professional tax and donor incentives, more effectively.

Conditions NGOs Must Fulfill to Retain Tax Benefits

Usage of Funds for Charitable Purposes Only

Funds must be used only for the purposes mentioned in the registration documents and align with the organisation’s stated charitable objectives. If used for personal or commercial gain, the NGO tax exemption may be cancelled.

Proper Maintenance of Books of Accounts

NGOs must maintain clear and accurate financial records. Just as companies dealing in stock market advisory services follow strict reporting, NGOs must do the same to meet audit and compliance requirements.

Tax Benefits for Donors Supporting NGOs

Deductions Available Under Section 80G

Donors can claim up to 50% or 100% deduction on donations under Section 80G, depending on the type of NGO and notification status.

How Donors Can Claim These Deductions

To claim a deduction under Section 80G, you need valid proof of donation:

• Always collect a proper donation receipt and Form 10BE from the NGO.
• Cross-check that the donation amount in Form 10BE matches your actual donation.
• Download Form 10BE from the Income Tax Department’s portal to ensure it is valid (manual forms are not accepted). The form should display the department logo and watermark.
• During ITR filing, provide all the details from Form 10BE accurately.
• If any errors appear in the donation certificate, request the NGO to issue a corrected version.

Donors should collect the 80G certificate from the NGO and provide it during income tax calculation on salary or while filing returns. This helps reduce their tax outgo.

Impact of New Income Tax Laws on NGOs

Recent Changes Affecting NGO Tax Exemptions

An NGO must be mindful of two main recent changes:

1. Two audit reports:

• Form 10B is required if your NGO’s total income exceeds ₹5 crore, or if it receives foreign contributions, or earns business income.
• Form 10BB is now mandatory for smaller NGOs with simpler operations under Sections 11 and 12.

2. Updated audit report details in Form 10B include:

• Your NGO’s 12A/12AB registration specific.
• Breakdown of corpus funding, voluntary donations, and their utilisation
• Compliance checks under Section 13 (e.g. no benefit to trustees)
• TDS verification and cross‑check with Form 26AS

Without these disclosures, approval risks delay or denial.

Re-registration Requirements Under New Rules

The government has extended re-registration deadlines to improve oversight:

• Provisional vs. Final: Organisations must register under Section 12AB, with provisional approval valid for 3 years and final registration for another 5 years. Booking renewal six months before expiry is mandatory to maintain tax benefits.
• New Deadline: For a certificate valid until 31 March 2026, NGOs should initiate renewal by 30 September 2025. Late renewal may lead to penalties or even cancellation.
• Form 10A continues to be the official way to apply for fresh registration or renewals.

These updates ensure that NGOs stay compliant, avoid disruptions in their NGO tax exemption, and maintain donor confidence in their financial integrity.

Common Challenges Faced by NGOs for Tax Compliance

Issues in Renewing Registrations

NGOs often struggle with renewing 12A and 80G registrations on time. Common reasons include gaps in document records, lack of clarity on new online procedures, and delays in gathering board resolutions or updated audited accounts.

Audit Requirements for NGOs

For NGOs exceeding ₹2.5 lakh in income (without 12A registration) or crossing higher thresholds under 12A, an audit report is mandatory under the Income Tax Act. Filing Form 10B or 10BB now requires detailed schedules that show the segregation of voluntary contributions, compliance with fund usage norms, and reconciliation with Form 26AS. 

Many NGOs face challenges in ensuring accuracy in these new disclosures. The audit requirements are now more aligned with corporate-style direct tax and professional tax audits, adding an additional layer of compliance work.

Best Practices for NGOs to Maximize Tax Benefits

Maintaining Transparency and Compliance

Good governance and transparent financial records increase credibility. They also make compliance with tax laws easier.

Timely Filing of Returns and Reports

NGOs should ensure timely filing of income tax returns and any related reports. This helps them avoid compliance issues and retain tax benefits.

Conclusion

The Importance of Compliance for Sustained Tax Benefits

Compliance is the foundation for sustaining tax benefits. Regular reviews, timely filings, and accurate documentation not only help maintain eligibility but also strengthen the credibility of the organisation. A disciplined approach ensures NGOs can continue their work without disruption and build lasting trust with donors and partners.

FAQs

What is the validity period of 80G and 12A registrations?

Currently, the validity is five years after which re-registration is required.

Can an NGO lose its tax benefits?

Yes, failure to meet compliance requirements can result in the cancellation of NGO tax exemption status.

Are all donations eligible for 80G deduction?

No, only donations made to NGOs registered under Section 80G are eligible for deduction.

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.

ERIs (E-Return Intermediary) act as a bridge between taxpayers and the Income Tax Department. An ERI can help you understand how to file ITR online and complete the process on your behalf.

What is an E-Return Intermediary?

An E-Return Intermediary (ERI) is an individual or entity authorized by the Income Tax Department to help taxpayers file their Income Tax Returns (ITRs) electronically. The main goal is to make ITR filing easy, accurate, and accessible to all.

The concept of ERIs was introduced to promote e-governance and increase voluntary tax compliance. These intermediaries are governed under Rule 12A of the Income Tax Rules, 1962.

Purpose and Importance of ERIs in Income Tax Filing

The digital transition in tax administration can be difficult for some users. Not everyone understands how to navigate online portals or keep up with tax law changes like TCS vs TDS, old tax regime vs new tax regime, or income reporting standards. ERIs provide trusted, trained support to ensure ITRs are filed accurately and timely.

They also help in:

• Avoiding penalties for late or incorrect filings.
  
• Explaining changes in tax laws.
  
• Offering extra services like stock market advisory and financial planning.

Who Can Become an E-Return Intermediary?

Eligibility Criteria for ERIs

To become an e-return intermediary income tax professional, you need to meet the eligibility criteria laid out by the Income Tax department. These include:

• Must be a resident Indian.
  
• Should be of sound mind and not declared insolvent or convicted for any offense involving fraud.
  
• Should have the required technical infrastructure like a secure internet connection, storage space, and software systems.
  
• Should have professional qualifications (like CA, CS, CMA, tax consultants, or advocates) or should be registered business entities providing financial services.

Authorized Entities for Registration

Entities allowed to register as ERIs include:

• Chartered Accountants (CAs)
  
• Company Secretaries
  
• Cost Accountants
  
• Tax Practitioners
  
• Lawyers specializing in tax laws
  
• Private firms or companies offering tax-filing solutions
  
• Non-profit organizations working in financial literacy

Some government-authorized platforms, such as NSDL and UTIITSL, and private players like ClearTax and TaxSpanner, operate as ERIs.

Functions and Role of an E-Return Intermediary

Assisting in Filing Income Tax Returns

The core function of an e-return intermediary is to assist taxpayers in how to file ITR online using authorized software or platforms linked to the Income Tax department. They collect required documents like PAN, Aadhaar, Form 16, investment proofs, etc., and fill in the details correctly before submitting the return.

They also:

• Advise clients on choosing the old tax regime or new regime.
  
• Calculate income, deductions, and tax payable.
  
• Generate ITR forms and file them on behalf of the taxpayer.

Providing Taxpayer Support and E-Verification Services

Once the return is filed, it must be verified using Aadhaar OTP, EVC (Electronic Verification Code), or sending a signed copy of ITR-V to CPC Bangalore. ERIs often provide e-verification services to ensure that the return process is complete.

Additionally, ERIs can help in:

• Filing revised returns.
  
• Rectifying errors.
  
• Responding to notices from the tax department.
  
• Uploading audit reports (if applicable).

Benefits of Using an E-Return Intermediary

Faster and Error-Free ITR Filing

Filing taxes can be confusing, especially with complex heads like capital gains, business income, or foreign assets. With an ERI’s help, errors are minimized, and the ITR is filed accurately.

ERIs also:

• Use authorized tax software that validates errors before submission.
  
• Ensure compliance with real-time Income Tax rules.
  
• Save time for salaried individuals and business professionals.

Professional Support for Taxpayers

Apart from tax filing, many ERIs offer personalized financial services such as:

• Investment planning
  
• Stock market advisory
  
• Guidance on selecting the correct tax regime
  
• Calculation of TCS vs TDS applicability
  
• Advising on deductions under 80C, 80D, etc.

For small business owners and professionals, ERIs often become long-term financial advisors.

Types of E-Return Intermediaries

Government Authorized vs Private ERIs

• Government-Authorized ERIs: These include official bodies such as NSDL, UTIITSL, or authorized PAN centers. Their services are regulated, often low-cost, and offer basic return filing.
  
• Private ERIs: These include fintech companies or tax platforms like ClearTax, Tax2Win, etc., which provide more comprehensive services, ranging from income tax filing to financial advice.

Individual Practitioners vs Corporate ERIs

• Individual ERIs: Chartered Accountants or tax consultants operating independently, often offering personalized support.
  
• Corporate ERIs: Registered companies with large infrastructure, offering software-based tax services, e-filing solutions, and automated processes for hundreds or thousands of clients.

How to Register as an E-Return Intermediary?

Step-by-Step Registration Process

Here’s a simple guide on how to register as an e-return intermediary:

1. Visit the Income Tax e-filing portal: Go to https://incometax.gov.in
   
2. Login or Register as a new user.
   
3. Go to My Account > Register as ERI.
   
4. Fill in required personal or business details.
   
5. Upload supporting documents (covered below).
   
6. Choose the software you will use for e-filing.
   
7. Submit the application.

The Income Tax department will verify your application and activate ERI credentials once approved.

Documents Required for ERI Registration

• PAN and Aadhaar (for individuals)
  
• Registration Certificate (for companies or firms)
  
• Address proof
  
• Copy of professional qualification (CA, CS, etc.)
  
• Undertaking to follow data security and confidentiality standards
  
• Agreement with software providers (if using third-party platforms)

Responsibilities and Compliance Requirements for ERIs

Maintaining Data Security and Privacy

ERIs are required to ensure that all taxpayer information is kept confidential and safe. They must:

• Use encrypted software for data storage.
  
• Restrict access to client data.
  
• Ensure that only authorized personnel handle tax filings.

This is particularly important with sensitive documents like Form 16, PAN, Aadhaar, and bank statements being shared.

Following Guidelines Issued by the Income Tax Department

ERIs must stay updated with all rules, circulars, and technical updates issued by the department. For instance, recent changes like:

• Digital signature mandates for certain taxpayers.
  
• New forms introduced in the Budget.
  
• Integration with Faceless Assessment systems.

Failure to comply can result in deactivation of ERI status or penalties.

Fees and Charges for E-Return Intermediary Services

Government Norms on Pricing

The government does not fix pricing for ERI services, except in the case of some government platforms that offer free or low-cost filing. However, guidelines suggest ERIs should offer fair, transparent pricing.

Typical Service Charges by Private ERIs

Charges vary based on:

• Type of income (salaried vs business)
  
• Volume of transactions
  
• Complexity (like capital gains, foreign income, etc.)

On average:

• Salaried ITR: ₹300 to ₹1000
  
• Business ITR: ₹1500 to ₹5000
  
• NRI ITRs or ITR with capital gains: ₹2000 and above
  
• Add-ons like investment reports or stock market advisory may be extra

Recent Updates Related to E-Return Intermediaries

New Compliance Rules and Technological Integrations

• The Income Tax Department has updated its systems to improve security for ERIs, including mandatory two-factor authentication.
  
• New tools allow real-time error checks while filing ITRs.
  
• Artificial Intelligence is being integrated for risk scoring and faster processing of returns.

Impact of Faceless Assessment on ERIs

The faceless assessment scheme has created more opportunities for ERIs to act as authorized representatives for taxpayers. ERIs can now:

• Help clients draft responses to faceless queries.
  
• Assist in submission of e-proceedings.
  
• Support clients in understanding demand notices or rectification orders.

Conclusion

An e-return intermediary bridges the gap between taxpayers and the Income Tax department, making return filing a stress-free task.

By offering support on how to file ITR online, assistance with e-verification, handling revised returns, or even providing stock market advisory services, ERIs make taxation easier for millions of Indians.

FAQs

Is it mandatory to file through an E-Return Intermediary?

No, it is not mandatory. Individuals can file their own ITRs via the official Income Tax e-filing portal. However, using an ERI helps reduce errors and saves time.

How do I verify if an ERI is authorized?

Visit the Income Tax e-filing portal and go to the “List of ERIs” section. You can search using the ERI’s name, registration number, or PAN to confirm if they are officially recognized.

Can ERIs help in filing revised returns?

Yes, ERIs can assist in filing revised returns, rectifying mistakes, or responding to tax department notices. They also help in ensuring compliance with changes in TCS vs TDS, or transitions between tax regimes.

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.

Overview of Budget 2025 Income Tax Changes

Key Announcements and Highlights

Summary of Major Tax Reforms

The Union Budget 2025 introduced changes aimed at expanding the tax base, offering incentives to middle-income earners, and promoting a stronger push toward digital tax filing systems. It introduced adjustments in income tax slabs, higher standard deductions, and minor tweaks to some exemptions under the old regime.

Impact on Different Income Groups

Salaried individuals saw higher standard deductions, while self-employed taxpayers received minor relief through revised presumptive taxation thresholds. Senior citizens benefited from relaxed TDS norms. For gig workers, clearer income categorization has been introduced, although further clarity is expected.

Changes to Tax Brackets and Rates (Old and New Regime)

The new regime slabs have been revised slightly to offer better progression between income ranges. Meanwhile, the old regime remains unchanged but continues to support those claiming multiple deductions. 

The revised slab rates under the new regime are as follows:

Income Tax Slabs	Income Tax Rates
Up to ₹4 lakh	NIL
₹ 4 lakh – ₹8 lakh	5%
₹8 lakh – ₹12 lakh	10%
₹12 lakh – ₹16 lakh	15%
₹16 lakh – ₹20 lakh	20%
₹20 lakh – ₹24 lakh	25%
Above ₹24 lakh	30%

Modifications to Tax Deductions and Exemptions

The limit for standard deduction has been raised by ₹25,000 to ₹75,000, while Section 80C remains capped at ₹1.5 lakh for those opting for the old regime. Some minor adjustments were made to allowances and rebates, especially under Section 87A, which states that from April 1, 2025, individuals with taxable income up to ₹12 lakh will pay zero tax. Earlier, the limit was ₹7 lakh. 

Comparison of Old and New Tax Regimes

Side-by-Side Comparison of Tax Slabs

Income Slab (₹)	Old Regime Tax Rate	New Regime Tax Rate (FY 2025-26)
0 – 2,50,000	Nil	Nil (up to ₹ 4 lakh)
2,50,001 – 4,00,000	5%	Nil
4,00,001 – 5,00,000	5%	5%
5,00,001 – 8,00,000	20%	5%
8,00,001 – 10,00,000	20%	10%
10,00,001 – 12,00,000	30%	10%
12,00,001 – 16,00,000	30%	15%
16,00,001 – 20,00,000	30%	20%
20,00,001 – 24,00,000	30%	25%
Above 24,00,000	30%	30%

The difference is also seen in the rebate allowed for taxpayers under both regimes. For FY2025-26 –

• Under the new regime, a rebate of up to ₹60,000 is available for individuals with income up to ₹12 lakh.
• Under the old regime, a rebate of up to ₹12,500 is available for individuals with income up to ₹5 lakh.

Analysis of Benefits and Drawbacks of Each Regime

The old regime offers more flexibility through deductions like 80C, HRA, and LTA. On the other hand, the new regime appeals to those with fewer investments or deductions. Your financial profile usually decides which one works better.

When choosing between the old and new tax regimes, understanding how deductions, rebates, and slab rates work can help you decide which one suits you better. Let’s take an example of a taxpayer earning ₹12,00,000 annually.

1. Calculating Taxable Income:

Details	Old Regime (FY 2025–26)	New Regime (FY 2025–26)
Gross Income	₹12,00,000	₹12,00,000
Standard Deduction	₹50,000	₹75,000
Section 80C Deduction	₹1,50,000	Not Applicable
Net Taxable Income	₹10,00,000	₹11,25,000

2. Determining The Tax Liability As Per Slab Rates:

Income Slab	Old Regime (FY 2025–26)	Income Slab	New Regime (FY 2025–26)
0 to ₹2.5L	Nil	0 to ₹4L	Nil
₹2.5L to ₹5L	5% of ₹2.5L = ₹12,500	₹4L to ₹8L	5% of ₹4L = ₹20,000
₹5L to ₹10L	20% of ₹5L = ₹1,00,000	₹8L to ₹12L	10% of ₹3.25L = ₹32,500
Above ₹10L	—	Above ₹12L	—
Total Tax Before Cess/Rebate	₹1,12,500		₹52,500

3. Rebate and Cess As Applicable:

Component	Old Regime (FY 2025–26)	New Regime (FY 2025–26)
Total Tax Before Cess/Rebate	₹1,12,500	₹52,500
Health & Education Cess (4%)	₹4,500	Not Applicable
Section 87A Rebate	Not Applicable	₹52,500
Final Tax Payable	₹1,17,000	₹0

In the old regime, even after using all major deductions, the taxpayer still pays over ₹1.17 lakh in tax. In contrast, the new regime, with updated slabs, ₹75,000 standard deduction, and an increased Section 87A rebate threshold (up to ₹12 lakh), results in zero tax liability. 

So, for incomes up to ₹12 lakh without major deductions, the new regime is more tax-efficient. However, it is important to analyze the best-suited regime for you based on your income, investments, and other assets.

Factors Influencing Regime Choice for Taxpayers

Choosing between the old and new tax regimes depends on several personal financial factors and a sound understanding of income tax concepts.

1. First, assess your income level; while the new regime offers lower rates for certain brackets, individuals with substantial deductions may save more under the old regime.
2. Next, consider the deductions and exemptions you typically claim. If you make use of deductions such as Section 80C, home loan interest, or medical insurance premiums, the old regime may help reduce your tax liability more effectively.
3. It’s also important to weigh simplicity versus savings. The new regime offers a simpler tax structure with fewer compliance requirements, but limits deductions. In contrast, the old regime allows more tax planning through exemptions, though it involves more paperwork; understanding such income tax basics will help in making the right choice.
4. Lastly, align your regime choice with your financial plans. If you intend to invest in tax-saving instruments or avail deductions in the coming years, the old regime may offer better long-term benefits.

Detailed Analysis of Tax Changes

Changes to Tax Brackets and Rates

New Tax Slabs for Different Income Levels

Budget 2025 Income Tax Expectations include a potential revision of tax slabs to offer better relief to the middle class. There may be more uniformity between the old and new systems.

Impact on Tax Liability for Various Income Brackets

If slabs are widened, your overall tax payable could reduce. Especially if you fall in the ₹7–15 lakh annual income range, changes may bring more savings.

Analysis of Changes in Marginal Tax Rates

The marginal tax rate refers to the rate charged on each additional rupee of income earned. Under the new regime for FY 2025-26, rates now progress more gradually: 5%, 10%, 15%, 20%, 25%, and 30%. This smoother structure avoids steep jumps, helping distribute tax liability more evenly across income levels. For those learning what is income tax, this shows how small adjustments in slab design can improve fairness, especially for middle-income taxpayers.

Modifications to Tax Deductions and Exemptions

Changes to Section 80C deductions

Under the new tax regime, Section 80C deductions, including investments in PF, PPF, ELSS, life insurance premiums, or tuition fees, are not available. These deductions, however, remain available under the old regime.

Updates to Section 87A rebate

For FY 2025–26, the Section 87A rebate under the new regime has been increased to ₹60,000 for incomes up to ₹12 lakh. In the old regime, it remains at ₹12,500 for incomes up to ₹5 lakh. This higher rebate under the new structure reduces tax liability for lower and middle-income taxpayers.

Changes to HRA and other deductions

Common deductions such as House Rent Allowance (HRA), Leave Travel Allowance (LTA), and interest on housing loans (Section 24) are not available under the new regime. Taxpayers who rely on these for reducing taxable income may still find the old regime more suitable.

Impact on standard deduction

The standard deduction in the new tax regime has been increased to ₹75,000 for salaried individuals and pensioners from FY 2025–26, compared to ₹50,000 under the old regime. This enhanced deduction offers some relief and can partly offset the loss of other deductions in the new regime.

Impact on Specific Taxpayers

Analysis for Salaried Individuals

With Budget 2025 now implemented, salaried individuals benefit from a higher standard deduction of ₹75,000 under the new tax regime. For many, this change improves take-home pay and supports better savings, even though several older exemptions are not available.

Analysis for Self-Employed Individuals

The budget has revised the presumptive taxation limits under Sections 44ADA and 44AE, which allow small businesses and professionals to pay tax on a fixed percentage of their income instead of maintaining detailed books. This offers more flexibility and simpler compliance for self-employed individuals and small business owners.

Analysis for Senior Citizens

The budget raised exemption limits and eased TDS norms for senior citizens. These updates reduce compliance burden and simplify tax filing for this group, while offering more room for tax savings.

Analysis for Gig Workers

For gig workers and freelancers, Budget 2025 provided formal recognition through e-Shram ID cards, a national gig worker registry, and access to PM-JAY healthcare coverage. While no new deductions were announced, these steps aim to bring the sector into the formal economy, with clearer definitions and better access to social and healthcare benefits. 

Gig workers continue to be subject to presumptive taxation (Section 44ADA) and must manage indirect tax under GST, in addition to a 10% TDS on professional services (Section 194J).

Tax Implications for Investments and Savings

Impact on Investments in Mutual Funds, Stocks, etc.

Budget 2025 specified that the debt mutual funds will now be taxed as short-term gains regardless of holding period, similar to bank FDs. The STT on equity intraday trades has also gone up from 0.025% to 0.03%, which could impact active traders. Investors should consult share market advisory services to adjust their post-tax strategies.

Tax Implications of Long-Term and Short-Term Capital Gains

The LTCG holding period is now uniformly 24 months across most asset classes. Indexation is limited to real estate and select infra bonds. LTCG on equity stays at 12.5% beyond ₹1.25 lakh, and STCG at 20%. This simplifies tax rules, but it changes the tax efficiency of some investments.

Impact on Retirement Savings Plans (NPS, PPF, etc.)

Under the old tax regime, the Public Provident Fund (PPF) annual contribution limit has been increased from ₹1.5 lakh to ₹2 lakh, with the tax-free status on maturity retained. Plus, contributions to the National Pension System (NPS) are now eligible for an extra ₹50,000 deduction under a new Section 80EED, over and above the existing ₹50,000 limit under Section 80CCD(1B) under the old tax regime.

Budget 2025 Implications and Future Outlook

Economic Impact of the Budget

Analysis of Potential Effects on Economic Growth

The tax reliefs and incentives announced in Budget 2025 are expected to boost consumer spending and private investment. These measures will help drive domestic demand and support business activity in the near term.

Assessment of Revenue Implications for the Government

Although some revenue loss is likely in the short term due to tax cuts, the government is aiming to offset this through improved compliance, widening of the tax base, and enhanced economic activity.

Future Predictions and Expectations

Potential Adjustments in Subsequent Budgets

The changes introduced in Budget 2025 lay the groundwork for future tax reforms. In the coming budgets, further simplification or expansion of tax benefits is likely as the government continues to refine the system.

Long-Term Implications of Tax Reforms

The current reforms point towards a continued push for digital processes, pre-filled returns, and enhanced taxpayer services. Over time, the government may also work towards moving closer to a more unified and simplified tax regime.

Conclusion

Budget 2025 brought several positive updates for taxpayers: higher standard deductions, revised slab rates, and greater rebates under the new regime. While the new structure benefits those with fewer deductions, the old regime still holds value for individuals leveraging tax-saving investments.

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.

Frequently Asked Questions (FAQs)

1. Will the 80C Limit Increase in 2025?

There is strong demand to raise the ₹1.5 lakh limit. Whether it happens depends on fiscal space and policy direction.

2. What Are the Highlights of Budget 2025 Income Tax Slab?

Expected highlights include revised tax brackets, higher standard deductions, and better tax relief for salaried and middle-income taxpayers.

3. What Is the Income Tax Relief for 2025?

Relief may come in the form of revised slabs, increased rebates, or new deductions. More clarity will emerge once the budget is announced.

Introduction

What is Form 10BE?

Form 10BE of Income Tax Act is a certificate issued by charitable institutions or NGOs to donors, confirming that a donation was received and qualifies for tax deduction under the Income Tax Act. 

It is necessary when someone wants to claim deductions under Section 80G (old tax regime) or Section 35 (under the old tax regime and conditionally under the new regime).

Why Form 10BE is Important for Donors and NGOs

Donors who want tax relief on their contributions must show proof. That’s where donation Form 10BE comes in; it serves as valid documentation for deductions in your ITR.

Who Needs to Issue Form 10BE?

Eligibility Criteria for Trusts, Societies, and Institutions

Any trust, NGO, society, or Section 8 company that is approved under Section 80G or Section 35 and receives eligible donations must issue Form 10BE of Income Tax to its donors.

Earlier, donors could claim deductions based on the donation receipt alone. However, under the updated rules, institutions are now required to submit Form 10BD, a detailed statement of donations, to the Income Tax Department and issue a donation Form 10BE to the individual donor.

Relation with Section 80G and Section 35 Deduction Claims

To claim tax deductions under Section 80G or Section 35, donors must now obtain Form 10BE income tax from the organisation they’ve contributed to; mere donation receipts are no longer accepted. The deadline to receive this form from the donee organisation is May 31 of the assessment year.

This change was made to improve transparency and also help charitable organisations stay compliant while reinforcing donor trust. It’s a must-have, especially if you’re learning how to file ITR online and looking to report deductions accurately.

Purpose of Filing and Issuing Form 10BE

Certification of Donations Received

Form 10BE income tax is issued to confirm that your organisation received a donation, the donor’s PAN was recorded, and the funds will be used for approved purposes.

Supporting Donors in Claiming Tax Benefits

This form supports donors during tax filing. Whether you’re filing under the old tax regime or the new, Form 10BE ensures the deduction is recognised by the tax department.

Details Contained in Form 10BE

Donor’s Name, PAN, and Donation Amount

Form 10BE of Income Tax Act serves as a donation certificate that helps both donors and tax authorities track contributions clearly. It includes the donor’s full name, Permanent Account Number (PAN), and address. Along with this, it records the total donation amount, type of donation (corpus, specific grants, general), and how the donation was made, whether through bank transfer, cheque, UPI, or cash.

The donation Form 10BE also captures the financial year in which the donation was received and the eligible section under which the donor can claim tax benefits, such as Section 80G(5)(vi) or various clauses under Section 35.

Institution Details and Unique Registration Number (URN)

The certificate includes the charitable institution’s name, PAN, address, and approval number and date under the relevant tax section. It also mentions the Unique Registration Number (URN) of the trust or institution, which confirms that it is validly registered to issue such certificates.

In addition, a Unique Identification Number (UIN) is generated for each donation, which strengthens the traceability of contributions and adds a layer of transparency for tax assessments.

Step-by-Step Process to Generate and Issue Form 10BE

Timeline and Due Date for Issuance

If you’re managing a registered charitable institution or trust, issuing Form 10BE of Income Tax Act is an annual obligation. This certificate must be generated and issued to donors by May 31 of the assessment year following the financial year in which the donation was received.

How to Generate Form 10BE Through the Income Tax Portal

To generate donation Form 10BE, your institution must first submit Form 10BD, which records all donation details. Here’s a simplified process:

• Log in to the Income Tax e-Filing portal using your institution’s credentials.
• Go to the ‘e-File’ tab and click on ‘Income Tax Forms’.
• Select and file Form 10BD by entering –
• Basic information about the organisation
• Donor details and donation amounts
• Verification and declaration
• Save the file in the prescribed CSV format, preview the filled form, and complete e-verification.
• Once Form 10BD is successfully filed, Form 10BE becomes available for download after 24 hours.

This process not only streamlines compliance but also enables better record-keeping for NGOs and religious trusts, helping you work seamlessly with your donors and any associated stock advisory company.

How to Download Form 10BE From Income Tax Site?

Login Process and Navigation Steps

• Go to the Income Tax Department portal and log in using your valid credentials.
• Navigate to the ‘e-File’ section and select ‘Income Tax Forms’ from the drop-down.
• Click on ‘View Filed Forms’ to see the list of forms your organisation has submitted.
• Locate the Form 10BD section and click ‘View All’.

Download and Verification of Form 10BE

• Once you’re on the “View Filed Forms” page:
• You’ll see an option to download Form 10BE PDF for each donation listed under Form 10BD.
• This option will be available 24 hours after filing Form 10BD.
• Always verify the donor name, PAN, donation amount, and unique identification number (UIN) generated for each donation to ensure accuracy.

Form 10BD Filing For Issuance Of Form 10BE

Importance of Filing Form 10BD Before Generating Form 10BE

Before issuing donation Form 10BE, you need to file Form 10BD, which reports donation transactions to the Income Tax Department.

Details Required in Form 10BD Submission

• Donor’s PAN
• Amount donated
• Mode of payment
• Section under which deduction is claimed

Only after this is filed can you issue a Form 10BE income tax certificate to donors.

Difference Between Form 10BD and Form 10BE

Form 10BD: Filing of Donation Details with Tax Department

Form 10BD is filed by charitable trusts and approved institutions to report all donations received in a financial year. It includes the donor’s PAN, donation amount, payment method, and more. Filing this form is mandatory before generating Form 10BE of Income Tax Act, and it supports deduction claims under Section 80G or Section 35.

Unlike processes like TCS vs TDS, which deal with collection or deduction at the source of income, Form 10BD focuses on post-receipt reporting by the institution.

Form 10BE: Issuance of Donation Certificate to Donors

Once Form 10BD is submitted, the institution can issue Form 10BE income tax to donors. This certificate contains the donor’s details, donation amount, financial year, and the institution’s registration info. It is necessary for donors to claim tax benefits, especially under the old tax regime.

To summarise:

• Form 10BD = Trust files donation data with the Income Tax Department
• Form 10BE = Trust gives donation certificate to each donor

No Form 10BD, no Form 10BE, and without Form 10BE, tax deduction claims may be rejected.

Consequences of Non-Issuance of Form 10BE

Impact on Donors’ Tax Deductions

If you don’t issue Form 10BE, donors may not be able to claim tax deductions, which could lead to mistrust or fewer donations next year.

Penalties and Loss of Trust Registration

Non-compliance can lead to scrutiny by tax authorities, possible penalties, and even loss of approval under Section 80G or 35. It may also raise concerns with any financial advisory company working with you.

Recent Updates Related to Form 10BE

CBDT Notifications and Procedural Changes

The Central Board of Direct Taxes (CBDT) has made it mandatory to e-file Form 10BD and Form 10BE through the Income Tax portal. Auto-validation of PANs and digital signature integration have also been added. For donors, these updates make it easier to verify donations while filing under tcs vs tds heads.

Best Practices for Issuing Form 10BE

Accurate Recording of Donations

Ensure that every donation is recorded correctly with complete donor details—name, PAN, address, amount, and mode of payment. This helps prevent discrepancies while filing Form 10BD and avoids errors in donation Form 10BE.

Timely Issuance and Proper Compliance

Institutions must issue Form 10BE of Income Tax to donors by May 31 of the following financial year. Delays can impact the donor’s ability to claim deductions under Section 80G or Section 35, especially if they’re filing under the old tax regime. Staying compliant not only builds trust but also ensures smooth donor communication and audit-readiness.

Conclusion

Form 10BE of Income Tax plays a vital role in maintaining transparency and encouraging more people to donate. When issued properly and on time, it helps both the institution and the donor meet compliance requirements and avail of tax benefits.

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.

FAQs

Is Form 10BE mandatory for all donations?

Yes, if your institution is registered under Section 80G or 35 and receives eligible donations, you must issue Form 10BE.

What happens if the donor does not get Form 10BE?

They may not be able to claim deductions for that donation in their ITR.

Can Form 10BE be corrected after issuance?

If any detail is wrong, you can file a correction through the portal, but it’s better to double-check before submission.

When should Form 10BE be issued?

It must be issued on or before May 31 of the assessment year following the year in which donations were received.

If you’re running a company in India and your tax calculations involve Minimum Alternate Tax (MAT), chances are you’ve come across Form 29B Income Tax. 

But what exactly is it, and why is it important?

Form 29B is a crucial document that ensures your company complies with MAT regulations under the Income Tax Act. It’s essentially a certificate issued by a chartered accountant (CA) confirming the correct computation of book profits and MAT liability.

Let’s break down what Form 29B Income Tax is all about, who needs to file it, and how you can go about it without getting tangled in tax jargon.

What is Form 29B?

Form 29B Income Tax is a report that must be certified by a CA and filed by companies to confirm that their MAT has been computed as per Section 115JB of the Income Tax Act. This form is crucial because it ensures that companies with high book profits pay a minimum tax, even if their tax liability as per normal provisions is lower due to various deductions.

Importance of Form 29B Under Income Tax Act

The government introduced MAT to prevent zero-tax companies—those who report high book profits but pay little to no tax. Filing Form 29B of Income Tax Act ensures transparency and compliance, making sure all applicable companies pay their fair share.

Applicability of Form 29B

Who Needs to File Form 29B?

If you’re running a company and your tax is being calculated under the MAT provisions, then filing Form 29B Income Tax is mandatory.

For instance, suppose your company has a profit of ₹1.2 crore, but after applying deductions and exemptions, your tax comes out to be negligible. Here, MAT ensures you still pay at least 15% of your book profit, and Form 29B confirms this has been computed correctly.

Threshold Limits and Specific Cases

Form 29B becomes applicable when your total income is computed under MAT, irrespective of turnover. Even foreign companies operating in India under certain conditions may be required to file Form 29B Income Tax.

Who Can Sign Form 29B?

Eligibility of Chartered Accountants

Only a practicing Chartered Accountant registered with ICAI can sign Form 29B Income Tax. The CA must examine your books of accounts and confirm the MAT computation.

Authorization and Verification Process

Before signing, the CA must verify:

• Audited financial statements
  
• Book profit computation under Section 115JB
  
• All relevant deductions, exemptions, and adjustments

Contents of Form 29B

Company and Financial Year Details

The form begins with basic information, including your company’s PAN, name, address, and the financial year for which it’s filed.

Computation of Book Profit Under MAT

This section includes detailed adjustments such as:

• Additions: like provision for tax, deferred tax
  
• Deductions: like income exempt under specific sections

Auditor’s Verification and Certification

This is where the CA certifies the accuracy of the figures provided, confirming that your company has complied with MAT rules.

Documents Required for Filing Form 29B

Here’s what you’ll need:

• Audited balance sheet and profit & loss statement
  
• Computation sheet showing book profit and MAT liability
  
• Tax audit report (if applicable)
  

All these help your CA validate the correctness of your tax calculation.

How to File Form 29B Online

Pre-requisites Before Filing

• Register your company on the Income Tax e-filing portal
  
• Appoint a CA and link their Digital Signature Certificate (DSC) on the portal

Step-by-Step Guide on Income Tax Portal

1. Login to the e-filing portal
   
2. Go to e-File > Income Tax Forms > File Income Tax Forms
   
3. Search for Form 29B Income Tax
   
4. Select the relevant assessment year
   
5. Upload the digitally signed form from your CA
   
6. Submit the form and retain the acknowledgment

You may also want to coordinate with a share advisory company if your firm’s finances involve complex investments or tax implications like tax on mutual funds.

What is Minimum Alternate Tax (MAT)?

Meaning and Purpose of MAT

MAT is the minimum amount of tax that companies must pay even if their taxable income is low due to deductions or incentives. This stops profitable companies from paying zero tax.

Applicability of MAT to Companies

Applicable to all companies, including foreign companies having a permanent establishment in India. As of FY 2024-25, MAT is levied at 15% (plus surcharge and cess) of book profits.

Consequences of Non-Filing of Form 29B

Penalties and Legal Implications

Failure to file Form 29B Income Tax can attract a penalty under Section 271J of ₹10,000. Also, it might raise red flags during assessment or audit.

Impact on MAT Credit Entitlement

If you don’t file the form, you may lose out on MAT credit, which could have been set off against future tax liabilities.

Conclusion

Filing Form 29B Income Tax isn’t just a box-ticking exercise—it ensures your company meets legal compliance under MAT provisions. Filing it timely and accurately saves you from penalties and helps maintain clean tax records.

And remember, understanding terms like tds in india or exemptions vs deductions may also give you better clarity when discussing tax strategy with your CA.

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.

FAQs

1. Is Form 29B mandatory for all companies?

No, Form 29B Income Tax is not mandatory for all companies. It’s required only if your company is liable to pay tax under the Minimum Alternate Tax (MAT) provisions as per Section 115JB of the Income Tax Act.

2. Can Form 29B be filed manually?

No, Form 29B cannot be filed manually. The Income Tax Department has made it mandatory to file it online through the official e-filing portal. The form must be digitally signed by a Chartered Accountant (CA) who has been formally authorized by your company on the portal.

3. What happens if Form 29B is not filed?

If you fail to file Form 29B Income Tax when it’s applicable, your company could face multiple issues:

• Penalty under Section 271J: The Income Tax Department may impose a penalty of ₹10,000 on the CA for furnishing incorrect or incomplete reports.
  
• Loss of MAT Credit: One of the biggest drawbacks is that you won’t be able to claim MAT credit in future years. This means if you overpaid MAT in a profitable year, you won’t be able to adjust it against future tax liabilities.
  
• Increased scrutiny: Not filing the form can trigger notices or audits from the tax department, which could delay your assessments or refunds.

4. Who can certify Form 29B?

Only a practicing Chartered Accountant (CA) who is registered with the Institute of Chartered Accountants of India (ICAI) can certify and file Form 29B Income Tax. This isn’t just a formality. The CA must carefully audit your books of accounts, calculate your book profits as per the Income Tax Act, and ensure that the MAT amount is correctly computed. Their certification is a declaration that your company has fulfilled its tax obligations under Section 115JB.

India has witnessed several high-profile income tax raids over the years, each revealing startling details about unaccounted wealth. 

Whether it’s film stars, politicians, or business tycoons, no one is above the law. 

If you’ve ever wondered what goes on during these raids or which was the biggest income tax raid in India, you’re in the right place. 

Let’s break it down in simple terms.

Significance of Income Tax Raids in India

Income tax raids are more than just dramatic headlines—they play a vital role in cracking down on black money and maintaining financial transparency. Every income tax raid in India is a clear message that hiding assets and evading taxes can lead to serious consequences.

Why Are Income Tax Raids Conducted?

Raids are usually carried out when the Income Tax Department suspects someone of hiding income, not reporting assets, or manipulating financial records. Often, tip-offs come from audits, whistleblowers, or unusual financial activity. For instance, an individual reporting income far less than their spending habits might raise suspicion.

Understanding Income Tax Raids

Meaning and Legal Basis for Raids

An income tax raid, officially known as a “search and seizure” operation under Section 132 of the Income Tax Act, is a legal tool that allows authorities to enter premises, search, and seize undisclosed assets. It’s not done randomly—there must be credible information.

Difference Between Survey and Raid

• A survey is more of a routine check and less intrusive. It’s conducted during business hours and is limited in scope.
  
• A raid, on the other hand, is intensive, can happen anytime, and allows the officers to seize documents, cash, jewellery, and digital evidence.

Top 10 Biggest Income Tax Raids in India

With that explainer out of the way, let’s take a closer look at some of the biggest income tax raids in India.

1. Raid on Jayalalithaa (1997)

This was one of the earliest massive raids on a politician. The IT department seized over ₹66 crore in assets, including hundreds of sarees and shoes.

2. Raid on Sahara India Pariwar (2014)

Over 100 locations were raided, and authorities allegedly uncovered thousands of crores in unaccounted cash and documents linking to political funding.

3. Raid on Tamil Nadu Politicians (2021)

This was one of the biggest income tax raids in India in terms of reach. Over 20 locations were targeted, exposing large sums of black money.

4. Raid on Dhirendra Krishna Shastri’s Properties

Spiritual leader Dhirendra Krishna Shastri’s premises were raided amid reports of disproportionate wealth.

5. Raid on Hero MotoCorp (2022)

This corporate raid exposed ₹1,000 crore in alleged bogus expenses and suspicious transactions.

6. Raid on BBC India Offices (2023)

A politically sensitive raid, where the IT department searched offices for possible tax violations following a controversial documentary release.

7. Raid on Perfume Trader Piyush Jain (2021)

Arguably the biggest income tax raid in India, this raid uncovered ₹196 crore in cash—so much that it took days to count it using machines!

8. Raid on Actor Vijay (2017)

The Tamil superstar was raided post his blockbuster earnings, with over ₹25 crore in unaccounted income reported.

9. Raid on Mining Companies in Karnataka (2011)

This raid exposed illegal mining operations and unreported income worth hundreds of crores, leading to major political consequences.

10. Raid on Real Estate Groups like Hiranandani (Various Years)

Multiple raids on real estate giants like Hiranandani revealed large-scale tax evasion and cash transactions over several years.

Details of Each Raid

Seizure Amounts and Assets Found

From suitcases full of cash to luxury watches, gold bars, and property documents—these raids unearthed it all. In the Piyush Jain raid alone, ₹196 crore in cash was found stuffed in cupboards and walls.

Impact on Individuals and Businesses

Many reputations were tarnished overnight. Businesses faced regulatory hurdles, and some even shut down temporarily. A few individuals were arrested or fined heavily.

Legal Consequences Following the Raids

Raids are followed by detailed investigations. If proven guilty, individuals can face hefty fines, interest on unpaid tax, and even jail time. Some cases also bring in debates around indirect tax evasion.

How Income Tax Raids are Carried Out

Procedure Followed by Authorities

• A team arrives with a search warrant.
  
• Premises are sealed, and people are not allowed to leave.
  
• All cash, valuables, and digital records are inspected.
  
• Everything is documented, signed, and video recorded.

Rights of Individuals During a Raid

You have the right to:

• Ask for identification.
  
• Witness the search.
  
• Get a copy of the panchnama (search document).
  
• Ensure a woman officer is present if female family members are involved.

Impact of Income Tax Raids on Society and Economy

Income tax raids act as a strong deterrent against tax evasion. When a major figure is caught, it encourages others to comply. They also help uncover sources of illegal income that bypass taxes like windfall tax or indirect tax.

Public reaction ranges from shock to support. The media often covers these cases with high drama, especially when it involves celebrities or corporate giants. Even your friendly stock investment advisor is likely watching these events closely for market impact.

Conclusion

If there’s one thing to learn from the biggest income tax raid in India, it’s that no amount of secrecy can hide wealth forever. From perfume traders to film stars, the IT department has left no stone unturned. Whether you’re a salaried individual or run a business, it pays to stay clean, file timely returns, and understand rules under the new vs old tax regime.

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.

FAQs

Who authorizes an income tax raid?

An Income Tax Commissioner or Director General, based on solid information, authorizes the raid under Section 132 of the IT Act.

What happens to the seized cash and properties?

They are inventoried, sealed, and taken into custody. The value is added to the person’s income, and penalties may follow.

Are raids conducted only on high-profile individuals?

Not always. While the biggest income tax raid in India stories often involve celebs or tycoons, raids also target mid-level businesses, doctors, builders, and more.

Are you holding money abroad or investing in foreign stocks? If yes, then you need to know how to report these foreign assets in your Indian income tax return (ITR).

Under the Indian tax system, a key element that comes into play while dealing with foreign income and taxation is the DTAA India (Double Taxation Avoidance Agreement). This agreement helps you avoid paying tax twice on the same income in India and a foreign country. 

Let’s break things down, step by step.

Growing Importance of Disclosing Foreign Assets

As more Indians are investing in international stocks, real estate, and opening foreign bank accounts, the Income Tax department has tightened rules around foreign asset disclosures. 

Why? To reduce tax evasion and bring transparency to global income and wealth.

If you’re a resident Indian, even your foreign income could be taxable here. So, reporting foreign assets is not just a formality—it’s legally mandatory. And yes, DTAA India can help reduce the tax burden in many cases, but it only applies when disclosures are accurate.

Legal Requirements Under Indian Income Tax Laws

The Income Tax Act, 1961, mandates Indian residents to report their global income and foreign assets in their tax returns. The Black Money (Undisclosed Foreign Income and Assets) Act, 2015, has further tightened the screws, imposing steep penalties for non-compliance.

One must file Schedule FA (Foreign Assets) in the ITR if foreign holdings exist. This is where DTAA India comes to your rescue, ensuring that the same income isn’t taxed again if you’ve already paid tax on it abroad.

Who Needs to Disclose Foreign Assets?

Resident vs Non-Resident Disclosure Rules

The rules differ based on your residential status:

• Resident and Ordinarily Resident (ROR): Must report all foreign assets and income.
  
• Resident but Not Ordinarily Resident (RNOR) & Non-Residents (NRI): Not required to report foreign assets unless income is earned or received in India.

So, if you’re an NRI who has a property abroad but no income in India, you don’t need to worry. But if you’ve returned to India and now qualify as ROR, you must disclose everything—bank accounts, investments, property, etc.

Types of Individuals Required to File Schedule FA

• Salaried employees with foreign stock options
  
• Freelancers receiving payments from foreign clients
  
• Indians with overseas mutual funds
  
• Students with foreign bank accounts
  
• Entrepreneurs with foreign subsidiaries
  

If you fall under any of these, you’re required to file Schedule FA—no exceptions.

What Constitutes Foreign Assets?

Types of Foreign Assets That Must Be Reported

Foreign assets cover a wide range of things. These include:

• Foreign bank accounts (savings, checking, etc.)
  
• Shares or mutual funds held in international stock markets
  
• Real estate properties abroad
  
• Foreign trusts, insurance policies, or pensions
  
• Cryptocurrencies held in international exchanges
  

Examples

Let’s say you invested in Apple shares via an international broker. Or you opened a bank account in Canada while studying and left ₹5,000 in it. Or maybe your employer gave you RSUs in a US-based company. All of these count as foreign assets and must be reported.

Understanding Schedule FA in ITR

Meaning and Purpose of Schedule FA

Schedule FA is a dedicated section in your Income Tax Return where you declare all your foreign assets and income. The aim is transparency. This is also where DTAA India helps—if you’ve paid tax abroad, you can claim credit here and avoid double taxation.

Key Sections to Be Filled in Schedule FA

• Foreign Bank Accounts
  
• Foreign Financial Interests (like mutual funds, stocks)
  
• Immovable Property
  
• Trusts
  
• Any Other Capital Asset
  

Step-by-Step Guide to Disclosing Foreign Assets in ITR

Which ITR Forms Require Schedule FA?

You need to fill Schedule FA if you’re filing:

• ITR-2 (used by individuals with income from capital gains or foreign income)
  
• ITR-3 (used by individuals with income from business or profession)
  

How to Correctly Report Different Types of Assets

1. Gather Information – Bank account numbers, asset value, country code, etc.
   
2. Convert to INR – Use prescribed conversion rates on the last day of the financial year.
   
3. Report Details – Mention when the asset was acquired and its closing balance.
   
4. Cross-check for DTAA – If you’ve paid foreign tax, claim it under DTAA India in Schedule TR.
   

Consequences of Non-Disclosure of Foreign Assets

Penalties Under Black Money Act

• ₹10 lakh penalty per undisclosed asset.
  
• Additional tax at 30% (plus surcharge and cess).
  
• Prosecution—Yes, this can lead to jail time of up to 10 years.
  

Legal Actions and Prosecution Risks

Ignoring Schedule FA can land you in legal trouble, especially during income tax scrutiny. Always remember: DTAA India will help you only if you report your assets truthfully.

Common Mistakes While Reporting Foreign Assets

Missing Minor Foreign Holdings

People often ignore foreign accounts with small balances, assuming they’re not important. Wrong. Even ₹1 abroad must be reported if you qualify as ROR.

Errors in Currency Conversion and Valuation

Always use RBI-approved rates and proper valuation methods. Don’t guess. Mistakes here could lead to wrong income tax calculation on salary and other taxable amounts.

Recent Updates and Changes Regarding Foreign Asset Disclosure

Latest Amendments Impacting Reporting Requirements

The government has recently updated the reporting format in Schedule FA to include cryptocurrency and foreign pension schemes.

CBDT Clarifications and Circulars

CBDT issued circulars making it clear that even dormant or inactive accounts abroad need to be reported. Better safe than sorry.

Best Practices for Accurate Foreign Asset Reporting

• Keep detailed records of all your foreign investments.
  
• Review foreign holdings annually.
  
• Consult a tax expert—especially someone with experience in direct tax and DTAA India provisions.
  
• Use licensed help or even a share market advisory if foreign equity is involved.
  

Conclusion

Disclosing your foreign assets is not just a legal obligation but also a smart way to stay compliant and stress-free. Use DTAA India benefits where applicable but never skip disclosures. When in doubt, take expert help. Accurate reporting is always better than facing penalties.

This simple but complete guide will help you confidently disclose foreign assets in your tax return. From understanding your residential status to using DTAA India benefits, you now know it all. Don’t forget to check for updates, and if needed, get help from experts in professional tax or share market advisory services.

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.

FAQs

Q1. Is it mandatory to report small foreign accounts?
Yes, even a dormant foreign bank account with a few dollars must be disclosed in Schedule FA.

Q2. What happens if I miss reporting a dormant foreign account?
Non-disclosure, even if unintentional, can attract hefty fines and legal action under the Black Money Act.

Q3. Can OCI/PIO holders be asked to disclose foreign assets?
Only if they qualify as ROR in India. If they’re NRIs or RNOR, they’re not required to disclose foreign assets in most cases.

The buzz surrounding the highly anticipated IPO of National Stock Exchange (NSE) refuses to fade.

Just days after SEBI chairman Tuhin Kanta made an important statement suggesting no obstacles remain for the IPO, NSE has filed for settlement in the pending co-location and dark fibre cases

Source: NDTV

According to reports, NSE has filed two applications with the SEBI to settle co-location and dark fibre cases and has offered to pay a massive Rs 1,300-Rs 1,400.

The amount offered by NSE to the SEBI is the highest amount offered by any entity till date in India to settle a case.

NSE Co-Location Scam: NSE’s co-location scam dates back to 2010. It involved certain brokers gaining unfair access to NSE’s trading systems through its co-location facility. Co-location basically allowed brokers to place their servers within or close to the exchange’s premises, which helped them get faster access to market data and order execution. 

When the allegations were out, SEBI imposed penalties on NSE, its former executives, and brokers. NSE was even barred from launching its IPO, and this event had a huge reputational damage.

Nevertheless, NSE’s recent efforts to address and resolve the co-location controversy mark a significant step towards restoring regulatory confidence — a move that clears the path for its much-awaited IPO.

Dark Fiber Case: Now this case dates back to 2015. The allegation here was firms used dark fiber to transmit data faster than competitors and created a more direct and low-latency route.

SEBI said that some brokers allegedly leased dark fiber lines between NSE and other locations without the knowledge or approval of NSE. Since the exchange is expected to offer a level playing field, SEBI’s 2022 order criticized NSE’s leadership for governance failures and imposed fines.

Now that NSE has proposed to settle the dark fiber case with a substantial payout, it signals a pragmatic resolution to a long-pending issue, further clearing regulatory hurdles.

NSE IPO: A Decade Long Wait

It’s almost a decade since NSE first filed its IPO in 2016 to raise Rs 10,000 crore. Since then, it has faced repeated delays due to regulatory issues, primarily the co-location scandal that raised serious concerns about its corporate governance. 

After SEBI rejected the draft prospectus in 2019, asking NSE to first resolve its issues, the company has taken several steps to address these concerns, including settling long-pending cases and improving its governance, technology, and compliance practices.

Amid all this, investor interest in NSE’s unlisted shares in the pre-IPO market remains robust. The share price of the unlisted NSE shares have spiked from Rs 1,800 in May 2025 to a lifetime high of Rs 2,300 at present.

NSE Unlisted Share Price – 1 year

Source: sharescart

Propelled by this rally, the market valuation of the company has surged past Rs 5.6 trillion, making it the fifth largest stock exchange in the world in terms of total market capitalisation.

The main question on everyone’s mind is whether the company will launch its IPO in 2025 or will it be delayed further?

All Eyes on NOC

According to reports, the long wait for the IPO may be nearing its end as market regulator SEBI is likely to give a No Objection Certificate (NOC) by the end of July 2025. 

The settlement process of the two cases we discussed above may be completed by mid-July. 

This matter is now handled by an internal committee and subsequently will go for approval of SEBI’s Market Regulation Department, which is responsible for regulation of exchanges, depositories and clearing corporations. The department will share its feedback on the settlement amount arrived based on the formula prescribed under the settlement rules. Thereafter, the matter will go to SEBIs High Powered Advisory Committee (HPAC) on Settlements.

After a go ahead from HPAC, a panel of whole-time members (WTM) will approve the settlement application. As co-location matters are currently pending before the Supreme Court, SEBI and NSE will make a plea before the Supreme Court, saying the issue is being resolved mutually, providing the details of the settlement terms. If allowed by the apex court the case will be withdrawn by SEBI.

The Process After that

NSE is likely to initiate the process for IPO immediately after the case is withdrawn and NoC is issued. 

While investors may be thinking that the company will come out with its IPO soon after this, it will actually take 4-5 months for preparing the draft red herring prospectus (DRHP), as every quarterly number will have to be audited numbers. And then, around 2-3 months may be required for routine queries to merchant bankers.

According to people close to the matter, NSE listing may be possible by the last quarter of the current financial year, if all that we discussed above goes smoothly.

Conclusion

Going by the latest timelines, the IPO of NSE is possible in 2025 but later in the year, around November or December.

If you’re looking to participate in India’s exciting growth story, NSE is definitely a platform worth considering.

While an IPO is on the horizon, it’s crucial to note that approval from SEBI is still pending.

Moreover, due diligence is essential. Wait for the full details of the potential IPO, including SEBI’s decision, valuation, and plans before deciding if NSE aligns with your investment goals.

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.

Shares of IndiaMART InterMESH, India’s leading online B2B marketplace, jumped over 5.5% on Wednesday, June 25, following a bullish outlook from Nuvama Institutional Equities. 

The domestic brokerage firm upgraded the stock from ‘reduce’ to ‘buy’, citing the company’s entry into a new demand upcycle, supported by improving platform metrics and proactive management initiatives.

Source: Moneycontrol

In early trade, the stock was seen trading at ₹2,632.50, up 5.5% on the NSE, indicating strong investor interest following the upgrade.

Double Upgrade and Bullish Price Target

Nuvama gave IndiaMART a double upgrade, revising its recommendation from ‘reduce’ to ‘buy’. It also increased the target price from ₹2,100 to ₹3,800, implying a significant 52% upside from the current market price (CMP) of ₹2,500.

Source: Moneycontrol

Nuvama highlighted that IndiaMART is trading at a one-year forward P/E of 28x, notably below its historical average of 45x since listing. 

The brokerage anticipates a potential re-rating in valuation as the company’s growth outlook strengthens. 

It has introduced FY28 estimates and rolled forward its valuation to Q1FY28. By raising the target multiple to 35x, Nuvama arrived at a revised target price of ₹3,800 and subsequently upgraded the stock rating to ‘buy’.

Source: Mint

Company Overview

Before we explore the details further, let’s first understand what the company is all about.

IndiaMART InterMESH is India’s largest online B2B marketplace, connecting buyers with suppliers across a wide range of industries. The company enables small and medium enterprises (SMEs) to expand their reach digitally by offering lead generation, subscription-based services, and customer engagement tools. 

Known for its extensive supplier database and verified listings, IndiaMART plays a crucial role in digital commerce for Indian businesses. Its asset-light model, recurring revenues, and focus on technology-driven growth have made it a key player in India’s e-commerce ecosystem.

New Demand Cycle Driven by Platform Changes and Marketing Push

According to the brokerage, IndiaMART is entering a new demand cycle, driven by improved traffic, a rise in unique business enquiries, and ultimately a growth in net subscriber additions.

The management’s efforts such as platform enhancements and increased investment in marketing and branding to draw in buyers are expected to boost unique business enquiries, which will subsequently drive growth in net new subscriber additions.

Subscriber Churn and Metric Recovery

IndiaMART has been facing elevated churn in its silver subscriber segment for nearly two years. As a result, unique enquiries per paid supplier per quarter had dropped to 106 in Q1FY24, well below the long-term average of 130 and the pre-Covid benchmark.

However, the metric has shown steady improvement, rising to 125 in Q4 FY25. Nuvama appreciated the company’s approach of patiently addressing churn rather than aggressively pushing gross additions to offset losses.

Source: Economic Times/Moneycontrol

Revenue Upside Despite Margin Pressure

Alongside the rating upgrade, Nuvama also raised earnings estimates by approximately 9–10% for FY26E and FY27E, largely due to higher anticipated revenue growth. However, the brokerage also noted a lower profitability outlook, which it believes will not significantly affect investor sentiment.

Nuvama anticipates a recovery in collection growth, which is expected to drive overall revenue expansion. The brokerage believes this normalisation is unlikely to impact investor sentiment, noting that historically, the stock’s performance has shown little correlation with margin improvements, as investors have typically regarded higher margins as temporary.

Source: Economic Times/Moneycontrol

ARPU Growth and Monetisation Potential

Nuvama highlighted that Average Revenue Per User (ARPU) growth is already in place, laying a strong foundation for monetisation and sustainable growth. The brokerage expects that as traffic and business enquiries rise, they will lead to increased subscriber addition, which will then result in the acceleration of collection growth.

Conclusion

In summary, IndiaMART’s recent surge follows Nuvama’s upgraded outlook, driven by expectations of a new demand cycle, improved platform engagement, and subscriber growth. While the company continues to face challenges in subscriber churn and profitability, steady improvements in key metrics and ARPU growth have caught investor attention. 

With internal initiatives focused on long-term sustainability, IndiaMART remains a significant player in the evolving digital B2B landscape in India.

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.