Income Tax Amendments for ICAI CA Inter May 25 exams
We all know how important amendments are for CA exams—especially in Income Tax, where they can carry 20-30 marks in the CA Inter Tax paper. Missing out on these updates can cost you valuable marks! In this blog, we’ll cover all the Direct Tax amendments relevant for the May 2025 exams, ensuring you stay fully updated. This is particularly crucial for students who appeared in the Jan 2025 attempt, as they would have studied under the old Finance Act. Now, with the Finance Act 2024 in effect, it’s essential to align your preparation with the latest tax provisions, deductions, exemptions, capital gains rules, and TDS/TCS changes.
This blog is also useful for CMA Inter students appearing in the June 2025 exams, as the tax syllabus for CMA is largely aligned with CA Inter. If you’re preparing for either exam, make sure you go through these updates carefully to stay ahead and maximize your score!
Table of Contents
| Persons | Total income (in ₹) | Rate of Tax |
|
Individual/HUF/ AOP/ BOI/ Artificial Juridical Person (Under default tax regime) 115BAC |
Upto ₹ 3,00,000 | Nil |
| ₹ 3,00,001 to ₹ 7,00,000 | 5% | |
| ₹ 7,00,001 to ₹ 10,00,000 | 10% | |
| ₹ 10,00,001 to ₹ 12,00,000 | 15% | |
| ₹ 12,00,001 to ₹ 15,00,000 | 20% | |
| Above ₹ 15,00,000 | 30% |
| Persons | Total income (in ₹) | Rate of Tax |
|
Individual (As per the normal provisions of the Act under the optional tax regime) NPoA |
Upto ₹ 2,50,000 or ₹ 3,00,000 or ₹ 5,00,000 | Nil |
| ₹ 2,50,001/ ₹ 3,00,001, as the case may be, to ₹ 5,00,000 | 5% | |
| ₹ 5,00,001 to ₹ 10,00,000 | 20% | |
| Above ₹ 10,00,000 | 30% |
| Persons | Total income (in ₹) | Rate of Tax |
| HUF/AOP/BOI/ Artificial Juridical Person (As per the normal provisions of the Act under the optional tax regime) | Upto ₹ 2,50,000 | Nil |
| ₹ 2,50,001 to ₹ 5,00,000 | 5% | |
| ₹ 5,00,001 to ₹ 10,00,000 | 20% | |
| Above ₹ 10,00,000 | 30% |
| Persons | Total income (in ₹) | Rate of Tax |
| Firm/LLP/local authority | 30% | |
| Persons | Total income (in ₹) | Rate of Tax |
| Co-operative Society (not opting for the provisions of section 115BAD or section 115BAE) | Upto ₹ 10,000 | 10% |
| ₹ 10,001 to ₹ 20,000 | 20% | |
| Above ₹ 20,000 | 30% |
| Persons | Total income (in ₹) | Rate of Tax | |||||||||
| Company (not opting for the provisions of section 115BAA/115BAB) |
|
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| 111A | Tax on short-term capital gains on transfer of equity shares and units of equity oriented fund on which STT is chargeable |
| @15% if transfer takes place before 23.7.2024 and @ 20% if transfer takes place on or after 23.7.2024. | |
| In case of resident individuals and HUF, the short-term capital gain shall be reduced by the unexhausted basic exemption limit and the balance shall be taxed at 15% or 20% |
| 112A | Tax on long-term capital gains on certain assets |
| Any long-term capital gains exceeding ₹ 1,25,000 on transfer of equity shares or units of an equity oriented fund shall be liable to tax @10% on such capital gain where the transfer takes place before 23.7.2024 and @12.5% on capital gains where transfer takes place on or after 23.7.2024 | |
| Resident individuals and HUF, the long-term capital gain shall be reduced by the unexhausted basic exemption limit and the balance shall be taxed at 10% or 12.5%, as the case may be. |
| 112 | Long-term capital asset | |||||
| In case of transfer took place before 23.7.2024 | ||||||
|
||||||
| In case of transfer took place on or after 23.7.2024 | ||||||
|
| Under the default tax regime | ||
| Individual/ HUF/ AOP (other than an AOP consisting of only companies as members) / BOI/ Artificial juridical person | ||
| (i) | Where the total income (including dividend income and capital gains chargeable to tax u/s 111A, 112 and 112A) > ₹ 50 lakh but is ≤ ₹ 1 crore | 10% |
| (ii) | Where the total income (including dividend income and capital gains chargeable to tax u/s 111A, 112 and 112A)> ₹ 1 crore but is ≤ ₹ 2 crore | 15% |
| (iii) | Where the total income (excluding dividend income and capital gains chargeable to tax u/s 111A, 112 and 112A)> ₹ 2 crore | 25% |
| Rate of surcharge on the income-tax payable on the portion of dividend income andcapital gains chargeable to tax u/s 111A, 112 and 112A | Not exceeding 15% | |
| (iv) | Where the total income (including dividend income and capital gains chargeable to tax u/s 111A, 112 and 112A) > ₹ 2 crore in cases not covered in (iii) above | 15% |
| Under the optional tax regime as per the normal provisions of the Act | ||
| Individual/ HUF/ AOP (other than an AOP consisting of only companies as members)/ BOI/ Artificial juridical person | ||
| (i) | Where the total income (including dividend income and capital gains chargeable to tax u/s 111A, 112 and 112A) > ₹ 50 lakh but is ≤ ₹ 1 crore | 10% |
| (ii) | Where the total income (including dividend income and capital gains chargeable to tax u/s 111A, 112 and 112A)> ₹ 1 crore but is ≤ ₹ 2 crore | 15% |
| (iii) | Where the total income (excluding dividend income and capital gains chargeable to tax u/s 111A, 112 and 112A)> ₹ 2 crore but is ≤ ₹ 5 crore | 25% |
| Rate of surcharge on the income-tax payable on the portion of dividend income and capital gains chargeable to tax u/s 111A, 112 and 112A | Not exceeding 15% | |
| (iv) | Where the total income (excluding dividend income and capital gains chargeable to tax u/s 111A, 112 and 112A)> ₹ 5 crore | 37% |
| Rate of surcharge on the income-tax payable on the portion of dividend income and capital gains chargeable to tax u/s 111A, 112 and 112A. | Not exceeding 15% | |
| (v) | Where the total income (including dividend income and capital gains chargeable to tax u/s 111A, 112 and 112A) > ₹ 2 crore in cases not covered in (iii) and (iv) above | 15% |
| In case of an AOP of only companies as members | ||
| (i) | Where the total income > ₹ 50 lakh but is < ₹ 1 crore | 10% |
| (ii) | Where the total income > ₹ 1 crore | 15% |
| Firm/Limited Liability Partnership/Local Authorities | ||
| Where the total income > ₹ 1 crore | 12% | |
| Co-operative societies (other than a co-operative society opting for section 115BAD or section 115BBE) | |
| Total income > ₹ 1 crore but is ≤ ₹ 10 crore | 7% |
| Total income is > ₹ 10 crore | 12% |
| Domestic company (other than a domestic company opting for section 115BAA or section 115BAB) | |
| Total income > ₹ 1 crore but is ≤ ₹ 10 crore | 7% |
| Total income is > ₹ 10 crore | 12% |
| Foreign company | |
| Total income > ₹ 1 crore but is ≤ ₹ 10 crore | 2% |
| Total income is > ₹ 10 crore | 5% |
A standard deduction of ₹ 50,000 or the amount of salary, whichever is lower, is to be provided to the employees if the assessee exercises the option of shifting out of the default tax regime provided under section 115BAC(1A).
However, if the assessee is paying tax under default tax regime provided under section 115BAC(1A), standard deduction of ₹ 75,000 or the amount of salary, whichever is lower, is to be provided to the employees.
Remuneration to a working partner in excess of prescribed limits - Any remuneration paid to a working partner, authorised by a partnership deed and falling after the date of the deed in excess of the following limits:
| Book Profit | Quantum of deduction |
| On the first ₹ 6 lakh of book profit or in case of loss | ₹ 3,00,000 or 90% of book profit, whichever is higher |
| On the balance of book profit | 60% of book profit |
Example - A firm has paid ₹ 8,50,000 as remuneration to its partners for the P.Y.2024-25, in accordance with its partnership deed, and it has a book profit of ₹ 10 lakhs. What is the remuneration allowable as deduction?
Period of holding [Section 2(42A)]
[In case transfer takes place before 23.7.2024]
| STCA | LTCA | |
|
Security (other than unit) listed in a recognized stock exchange Unit of equity oriented fund/unit of UTI Zero Coupon bond |
≤12 months | >12 months |
|
Unlisted shares Land or building or both |
≤24 months | >24 months |
|
Unlisted securities other than shares Other capital assets |
≤36 months | >36 months |
[In case transfer takes place on or after 23.7.2024]
| STCA | LTCA | |
|
Security listed in a recognized stock exchange Unit of equity oriented fund/UTI Zero Coupon bond |
≤12 months | >12 months |
|
Other capital assets
|
≤24 months | >24 months |
Note – It is to be noted that as per section 50AA, capital gains arising from transfer of the following assets would always be capital gains arising from transfer of short term capital assets irrespective of the period of holding of such assets:
In case of buy back of shares effected before 1.10.2024 by domestic companies:
In case of buyback of shares (whether listed or unlisted) before 1.10.2024 by a domestic company, additional income-tax@20% (plus surcharge @12% and cess@4%) is leviable in the hands of the company. Consequently, the income arising to the shareholders in respect of such buyback of shares by the domestic company is exempt under section 10(34A), since the domestic company is liable to pay additional income-tax on the buyback of shares.
So .. Tax Payable by company ( 20% + 12% + 4% ) and Tax Payable by shareholder ( Exempt u/s 10(34A) )
In case of buy back of shares effected on or after 1.10.2024 by domestic companies:
In case of buyback of shares (whether listed or unlisted) on or after 1.10.2024 by a domestic company, the sum paid by a domestic company for purchase of its own shares would be treated as dividend and taxable under the head “Income from Other Sources” in the hands of shareholders. No deduction for expenses would be available against such dividend income.
Consequently, as per section 46A, value of consideration received by a shareholder on buy back of shares by a domestic company would be Nil and the difference between the cost of acquisition and the value of consideration received by the shareholder will result into capital loss. The same can be set off and carried forward as per the applicable set-off & carry forward provisions of the Act.
So .. Tax Payable by company ( No tax as now shareholder will pay ) and Tax Payable by shareholder ( under the head IOS taxable income "Consideration Received without any exp" & under the head CG claim loss )
Below is the summary showing the indexation benefit available to different types of long-term capital assets which are transferred before 23.7.2024 -
| Long-term capital assets which are transferred before 23.7.2024 | Indexation benefit |
|
Bonds or debentures |
No |
|
Capital indexed bonds issued by the Government |
Yes |
|
Sovereign Gold Bond issued by the RBI under the Sovereign Gold Bond Scheme, 2015 |
Yes |
|
Depreciable assets Unit of a specified mutual fund acquired on or after 1.4.2023 Marked linked debentures |
N.A. since it will be short term capital gain |
|
Equity share in a company on which STT is paid both at the time of acquisition and transfer Unit of equity oriented fund or unit of business trust on which STT is paid at the time of transfer |
No |
|
Other long-term capital assets |
Yes |
Consequent to the amendment made by the Finance (No. 2) Act, 2024 in section 48, NO INDEXATION BENEFIT is allowable on long-term capital gains arising on transfer of any capital assets taking place on or after 23.7.2024.
Computation of tax on LTCG on transfer of land or building or both on or after 23.7.2024
A resident individual or HUF, while computing tax on LTCG on transfer of land or building or both, has the option to take the benefit of indexation under section 112 in respect of long-term capital gains arising on transfer of land or building or both which is acquired before 23.7.2024 and transferred on or after 23.7.2024. Accordingly, LTCG on transfer of such land or building or both are subject to lower of tax @ 12.5% (on LTCG computed without indexation benefit) or @ 20% (on LTCG computed with indexation benefit).
It may be noted that this benefit to a resident individual or HUF is to be given only while computing tax on LTCG under section 112 on transfer of land or building or both and not while computing Income under the head “Capital Gains” which would form part of gross total income / total income. Thus, for computing income under the head “Capital Gains” to be included in gross total income, indexation benefit is not to be given even in case of resident individual / HUF transferring land or building or both on or after 23.7.2024 which was acquired before 23.7.2024.
Guidelines u/s 10(10D) of the Income-tax Act, 1961 [Circular No. 15/2023 dated 16.08.2023]
Policy issued before 1.4.2023 - Section 10(10D) provides for exemption of the sum received under a life insurance policy, including the sum allocated by way of bonus on such policy subject to the condition that the annual premium does not exceed 10% of actual capital sum assured
Policy issued on or after 1.4.2023 - Section 10(10D) provides for exemption of the sum received under a life insurance policy, including the sum allocated by way of bonus on such policy subject to the condition that the annual premium does not exceed 10% of actual capital sum assured and the amount of premium or aggregate of premium payable on such life insurance policies does not exceed ₹ 5,00,000
Exemption in case of death of a person - In case any sum is received on the death of a person, exemption u/s 10(10D) would be available irrespective of the annual premium payable of the LIP.
Example 1:
| LIP | A |
| Date of issue | 1.4.2013 |
| Annual premium | 6,00,000 |
| Sum assured | 60,00,000 |
| Consideration received as on 01.11.2023 on maturity | 70,00,000 |
| Note – The assessee did not receive any consideration under any other eligible LIPs in earlier P.Y. preceding the P.Y.2024-25. | |
Example 2:
| LIP | A |
| Date of issue | 1.4.2023 |
| Annual premium | 5,00,000 |
| Sum assured | 50,00,000 |
| Consideration received as on 01.11.2033 on maturity | 52,00,000 |
| Note – The assessee did not receive any consideration under any other eligible LIPs in earlier P.Y. preceding the P.Y.2033-34. | |
Example 3:
| LIP | A |
| Date of issue | 1.4.2023 |
| Annual premium | 6,00,000 |
| Sum assured | 60,00,000 |
| Consideration received as on 01.11.2033 on maturity | 70,00,000 |
| Note – The assessee did not receive any consideration under any other eligible LIPs in earlier P.Y. preceding the P.Y.2033-34. | |
Example 4:
| LIP | A | B |
| Date of issue | 1.4.2023 | 1.4.2023 |
| Annual premium | 3,00,000 | 2,00,000 |
| Sum assured | 30,00,000 | 20,00,000 |
| Consideration received as on 01.11.2033 on maturity | 32,00,000 | 21,00,000 |
| Note – The assessee did not receive any consideration under any other eligible LIPs in earlier P.Y. preceding the P.Y.2033-34. | ||
Example 5:
| LIP | A | B |
| Date of issue | 1.4.2023 | 1.4.2023 |
| Annual premium | 4,50,000 | 5,50,000 |
| Sum assured | 45,00,000 | 55,00,000 |
| Consideration received as on 01.11.2033 on maturity | 52,00,000 | 60,00,000 |
| Note – The assessee did not receive any consideration under any other eligible LIPs in earlier P.Y. preceding the P.Y.2033-34. | ||
Example 6:
| LIP | A | B | C |
| Date of issue | 1.4.2023 | 1.4.2023 | 1.4.2023 |
| Annual premium | 1,00,000 | 3,50,000 | 6,00,000 |
| Sum assured | 10,00,000 | 35,00,000 | 60,00,000 |
| Consideration received as on 01.11.2033 on maturity | 12,00,000 | 40,00,000 | 70,00,000 |
| Note – The assessee did not receive any consideration under any other eligible LIPs in earlier P.Y. preceding the P.Y.2033-34. | |||
Example 7:
| LIP | X | A | B | C |
| Date of issue | 1.4.2022 | 1.4.2023 | 1.4.2023 | 1.4.2023 |
| Annual premium | 5,50,000 | 1,00,000 | 3,50,000 | 6,00,000 |
| Sum assured | 55,00,000 | 10,00,000 | 35,00,000 | 60,00,000 |
| Consideration received as on 01.11.2032 on maturity | 62,00,000 | |||
| Consideration received as on 01.11.2033 on maturity | 12,00,000 | 40,00,000 | 70,00,000 | |
| Note – The assessee did not receive any consideration under any other eligible LIPs in earlier P.Y. preceding the P.Y.2033-34, except LIP X in P.Y. 2032-33. | ||||
Example 8:
| LIP | X | A | B | C |
| Date of issue | 1.4.2023 | 1.4.2024 | 1.4.2024 | 1.4.2024 |
| Annual premium | 4,50,000 | 1,00,000 | 1,50,000 | 6,00,000 |
| Sum assured | 45,00,000 | 10,00,000 | 15,00,000 | 60,00,000 |
| Consideration received as on 01.11.2033 on maturity | 50,00,000 | |||
| Consideration received as on 01.11.2034 on maturity | 12,00,000 | 18,00,000 | 70,00,000 | |
| Note – The assessee did not receive any consideration under any other eligible LIPs in earlier P.Y. preceding the P.Y.2034-35, except LIP X in P.Y. 2033-34. | ||||
Example 9:
| LIP | X | A | B | C |
| Date of issue | 1.4.2023 | 1.4.2024 | 1.4.2024 | 1.4.2024 |
| Annual premium | 2,50,000 | 2,00,000 | 2,50,000 | 6,00,000 |
| Sum assured | 25,00,000 | 20,00,000 | 25,00,000 | 60,00,000 |
| Consideration received as on 01.11.2033 on maturity | 30,00,000 | |||
| Consideration received as on 01.11.2034 on maturity | 24,00,000 | 38,00,000 | 70,00,000 | |
| Note – The assessee did not receive any consideration under any other eligible LIPs in earlier P.Y. preceding the P.Y.2034-35, except LIP X in P.Y. 2033-34. | ||||
Example 10:
| LIP | X | Y | A | B | C |
| Date of issue | 1.4.2023 | 1.4.2023 | 1.4.2024 | 1.4.2024 | 1.4.2024 |
| Annual premium | 2,00,000 | 2,00,000 | 2,00,000 | 3,00,000 | 6,00,000 |
| Sum assured | 20,00,000 | 20,00,000 | 20,00,000 | 30,00,000 | 60,00,000 |
| Consideration received on surrender as on 1.7.2033 | 12,00,000 | ||||
| Consideration received as on 01.11.2034 on maturity | 24,00,000 | ||||
| Consideration received as on 01.11.2035 on maturity | 24,00,000 | 36,00,000 | 70,00,000 | ||
| Note – The assessee did not receive any consideration under any other eligible LIPs in earlier P.Y. preceding the P.Y.2035-36, except LIP “X” and “Y”. | |||||
| LIP | Situation | Income chargeable to tax during the previous year in which such sum is received |
| (i) | where the sum is received for the first time under the LIP during the previous year (first previous year) | A-B, where A = the sum or aggregate of sum received under the LIP during the first previous year; and B = the aggregate of the premium paid during the term of the LIP till the date of receipt of the sum in the first previous year that has not been claimed as deduction under any other provision of the Act. |
| (ii) | where the sum is received under the LIP during the previous year subsequent to the first previous year (subsequent previous year) | C-D, where C = the sum or aggregate of sum received under the LIP during the subsequent previous year; and D = the aggregate of the premium paid during the term of the LIP till the date of receipt of the sum in the subsequent previous year not being premium which – (a) has been claimed as deduction under any other provision of the Act; or (b) is included in “B” or “D” in any of the previous year(s). |
In the case of income in the nature of family pension: A deduction of a sum equal to 33-1/3 per cent of such income or ₹ 15,000 (in case of option regime) or ₹ 25,000 (in case of default regime), whichever is less, is allowable.
Set-off and Carry Forward & Set-off of losses
(a) If the assessee exercises the option of shifting out of the default tax regime provided under section 115BAC(1A): In any assessment year, if there is a loss under the head “Income from house property”, such loss will first be set-off against income from any other head to the extent of ₹ 2,00,000 during the same year. The unabsorbed loss will be carried forward to the following assessment year to be set-off against income under the head “Income from house property”.
(b) If the assessee pays tax at concessional rate u/s 115BAC: The loss under the head “Income from house property” would not be allowable to be set-off against income under any other head. The unabsorbed loss cannot be carried forward to the following assessment year.
Question :
Mr. A, aged 35 years, submits the following particulars pertaining to the A.Y.2025-26:
| Particulars | ₹ |
| Income from salary (computed) | 4,00,000 |
| Loss from let-out property | (-) 2,20,000 |
| Business loss | (-) 1,00,000 |
| Bank interest (FD) received | 80,000 |
Compute the total income of Mr. A for the A.Y.2025-26, assuming that
(i) He has exercised the option of shifting out of the default tax regime provided under section 115BAC(1A).
(ii) He pays tax under the default tax regime.
(1) Applicability of TDS under section 194BA
Any person responsible for paying to any person any income by way of winnings from online games during the financial year is required to deduct tax @30% on the net winnings in a person’s user account as computed in prescribed manner, at the end of the F.Y.
(2) TDS on withdrawal during the financial year
In case there is withdrawal from user account during the F.Y., tax would be deducted at the time of such withdrawal on net winnings comprised in such withdrawal. In addition, tax would also be deducted on the remaining amount of net winnings in the user account as computed in prescribed manner at the end of the F.Y.
(3) Net winnings wholly in kind or partly in cash and partly in kind
Where the net winnings are wholly in kind or partly in cash and partly in kind but the part in cash is not sufficient to meet the liability of deduction of tax in respect of whole of the net winnings, the person responsible for paying shall, before releasing the winnings, ensure that tax has been paid in respect of the net winnings.
(4) Meaning of certain terms
| S.No. | Term | Meaning |
| (i) | Online gaming intermediary | An intermediary that offers one or more online games. |
| (ii) | User | Any person who accesses or avails any computer resource of an online gaming intermediary. |
| (iii) | User account | Account of a user registered with an online gaming intermediary. |
(5) Power of the CBDT to issue guidelines
In case of any difficulty arises in giving effect to the provisions of this section, the CBDT is empowered to issue guidelines, with the approval of the Central Government, for the purpose of removing the difficulty.
Every guideline issued by the CBDT shall be laid before each House of Parliament, and shall be binding on the income-tax authorities and on the person liable to collect tax.
Accordingly, the CBDT has, vide circular No. 5/2023 dated 22.5.2023, issued the following guidelines:
Question 1: There are a large number of gamers who play with very insignificant amount and withdraw also very small amount. Deducting tax at source under section 194BA for each insignificant withdrawal would increase compliance for tax deductor. Can there be relaxation to ease compliance ?
Answer: Tax may not be deducted on withdrawal on satisfaction of all of the following conditions, namely:
(i) net winnings comprised in the amount withdrawn does not exceed ₹ 100 in a month;
(ii) tax not deducted on account of this concession is deducted at a time when the net winnings comprised in withdrawal exceeds ₹ 100 in the same month or subsequent month or if there is no such withdrawal, at the end of the financial year; and
(iii) the deductor undertakes responsibility of paying the difference if the balance in the user account at the time of tax deduction under section 194BA is not sufficient to discharge the tax deduction liability.
Question 2: When the net winnings is in kind how will tax deduction under section 194BA operate?
Answer: At the outset, it may be clarified that where money in user account is used to buy an item in kind and given to user then it is net winnings in cash only and the deductor is required to deduct tax at source under section 194BA accordingly.
However, there could be a situation where the winning of the game is a prize in kind. In that situation provision of section 194BA(2) will operate.
According to this where the net winnings are wholly in kind or partly in cash, and partly in kind but the part in cash is not sufficient to meet the liability of deduction of tax in respect of whole of the net winnings. In these situations, the person responsible for paying, shall, before releasing the winnings, ensure that tax has been paid in respect of the net winnings. In the above situation, the deductor will release the net winnings in kind after the deductee provides proof of payment of such tax (e.g., Challan details etc.).
In the alternative, as an option to remove difficulty if any, the deductor may deduct the tax under section 194BA and pay to the Government.
Question 3: How will the valuation of winnings in kind required to be carried out?
Answer: The valuation would be based on fair market value of the winnings in kind except in following cases:-
(i) The online game intermediary has purchased the winnings before providing it to the user. In that case the purchase price shall be the value for winnings.
(ii) The online game intermediary manufactures such items given as winnings. In that case, the price that it charges to its customers for such items shall be the value for such winnings.
It is further clarified that GST will not be included for the purposes of valuation of winnings for TDS under section 194BA.
| Section 194H | @5% till 30.09.2024. With effect from 01.10.2024, tax has to be deducted @2%. |
| Section 194IB | |
| Section 194M | |
| Section 194DA | |
| Section 194G |
Question
Examine whether TDS provisions would be attracted in the following cases, and if so, under which section. Also specify the rate of TDS applicable in each case. Assume that all payments are made to residents.
| Particulars of the payer | Nature of payment | Aggregate of payments made in the F.Y.2024-25 | |
| 1. | Mr. Ganesh, an individual carrying on retail business with turnover of ₹ 2.5 crores in the P.Y.2023-24 | Contract Payment for repair of residential house | ₹ 5 lakhs |
| Payment of commission to Mr. Vallish for business purposes | ₹ 80,000 in November 2024 | ||
| 2. | Mr. Rajesh, a wholesale trader whose turnover was ₹ 95 lakhs in P.Y. 2023-24. | Contract Payment for reconstruction of residential house (made during the period January-March, 2025) | ₹ 20 lakhs in January, 2024, ₹ 15 lakhs in Feb 2025 and ₹ 20 lakhs in March 2025. |
| 3. | Mr. Satish, a salaried individual | Payment of brokerage for buying a residential house in March, 2025 | ₹ 51 lakhs |
| 4. | Mr. Dheeraj, a pensioner | Contract payment made during October-November 2024 for reconstruction of residential house | ₹ 48 lakhs |
Rate of TCS in case of collection by an authorized dealer/ seller of an overseas tour programme package
| S. No. | Amount and purpose of remittance | Rate of TCS |
| (i) | Where the amount is for purchase of an overseas tour programme package | 5% till ₹ 7 lakhs, 20% thereafter |
| (ii) | Where the amount is remitted outside India - | No TCS upto ₹ 7 lakhs |
| (a) for the purpose of education or medical treatment | 5% of the amt or agg. of amts in excess of ₹ 7 lakh | |
| If amount remitted is out of a loan obtained from any financial institution as defined in section 80E, for the purpose of pursuing any education | 0.5% of the amt or agg. of amts in excess of ₹ 7 lakh | |
| (b) where the amount is remitted for the purpose other than mentioned in (a) above | 20% of the amt or agg. of amts in excess of ₹ 7 lakh |
Question 1: Whether payment through overseas credit card would be counted in LRS?
Answer: No TCS shall be applicable on expenditure through international credit card while being overseas till further order.
Question 2: Whether the threshold of ₹ 7 lakh, for TCS to become applicable on LRS, applies separately for various purposes like education, health treatment and others? For example, if remittance of ₹ 7 lakh under LRS is made in a financial year for education purpose and other remittances in the same financial year of ₹ 7 lakh is made for medical treatment and ₹ 7 lakh for other purposes, whether the exemption limit of ₹ 7 lakh shall be given to each of the three separately?
Answer: It is clarified that the threshold of ₹ 7 lakh for LRS is combined threshold for applicability of the TCS on LRS irrespective of the purpose of the remittance. Thus, in the given example, upto ₹ 7 lakh remittance under LRS during a financial year shall not be liable for TCS. However, subsequent ₹ 14 lakh remittance under LRS shall be liable for TCS in accordance with the TCS rates applicable for such remittance. TCS rates would be applicable as under:-
| Remittances | Rate of TCS |
| First ₹ 7 lakh remittance under LRS during the financial year 2024-25 for education purpose (or for that matter any purpose) | No TCS |
| Remittances beyond ₹ 7 lakh under LRS during the financial year 2024-25 | TCS at 0.5% (if it is for education purpose financed by loan from a financial institution), 5% (if it is for education or medical treatment) and 20% (if it is for other purposes) |
Question 3: Whether the threshold of ₹ 7 lakh, for TCS to become applicable on LRS, applies separately for each remittance through different authorised dealers? If not, how will authorised dealer know about the earlier remittances by that remitter through some other authorised dealer?
Answer: It is clarified that the threshold of ₹ 7 lakh for LRS is qua remitter and not qua authorised dealer. Since the facility to provide real time update of remittance under LRS by remitter is still under development by the RBl, it is clarified that the details of earlier remittances under LRS by the remitter during the financial year may be taken by the authorised dealer through an undertaking at the time of remittance. If the authorised dealer correctly collects the tax at source based on information given in this undertaking, he will not be treated as "assessee in default". However, for any false information in the undertaking, appropriate action may be taken against the remitter under the Act.
It is further clarified that same methodology of taking undertaking from the buyer of overseas tour program package may be followed by the seller of such package.
Question 4: There is threshold of ₹ 7 lakh for remittance under LRS for TCS to become applicable while there is another threshold of ₹ 7 lakh for purchase of overseas tour program package where reduced rate of 5% of TCS applies. Whether these two thresholds apply independently?
Answer: Yes, these two thresholds apply independently. For LRS, the threshold of ₹ 7 lakh applies to make TCS applicable. For purchase of overseas tour program package, the threshold of ₹ 7 lakh applies to determine the applicable TCS rate as 5% or 20%.
Question 5: A resident individual spends ₹ 3 lakh for purchase of overseas tour program package from a foreign tour operator and remits money which is classified under LRS. There is no other remittance under LRS or purchase of overseas tour program during the financial year. Whether TCS is applicable?
Answer: ln case of purchase of overseas tour program package which is classified under LRS, TCS provision for purchase of overseas tour program package shall apply and not TCS provisions for remittance under LRS. Since for purchase of overseas tour program package, the threshold of ₹ 7 lakh for applicability of TCS does not apply, TCS is applicable and tax is required to be collected by the seller. ln this case the tax shall be required to be collected at 5% since the total amount spent on purchase of overseas tour program package during the financial year is less than ₹ 7 lakh. The TCS should be made by the seller.
Question 6: There are different rates for remittance under LRS for medical treatment/education purposes and for other purposes. What is the scope of remittance under LRS for medical treatment/education purposes?
Answer: As per the clarification by the RBl, remittance for the purposes of medical treatment shall include,-
(i) remittance for purchase of tickets of the person to be treated medically overseas (and his attendant) for commuting between lndia and the overseas destination;
(ii) his medical expense; and
(iii) other day to day expenses required for such purpose.
Education Remittance for purpose of education shall include,-
(i) remittance for purchase of tickets of the person undertaking study overseas for commuting between lndia and the overseas destination;
(ii) the tuition and other fees to be paid to educational institute; and
(iii) other day to day expenses required for undertaking such study.
Question 7: Whether purchase of international travel ticket or hotel accommodation on standalone basis is purchase of overseas tour program package?
Answer: The term 'overseas tour program package' is defined as to mean any tour package which offers visit to a country or countries or territory or territories outside lndia and includes expenses for travel or hotel stay or boarding or lodging or any other expenditure of similar nature or in relation thereto.
It is clarified that purchase of only international travel ticket or purchase of only hotel accommodation, by in itself is not covered within the definition of 'overseas tour program package'. To qualify as 'overseas tour program package', the package should include at least two of the followings:
(i) international travel ticket,
(ii) hotel accommodation (with or without food)/boarding/lodging,
(iii) any other expenditure of similar nature or in relation thereto.
Ruchika Saboo
An All India Ranker (AIR 7 - CA Finals, AIR 43 - CA Inter), she is one of those teachers who just loved studying as a student. Aims to bring the same drive in her students.
Ruchika Ma'am has been a meritorious student throughout her student life. She is one of those who did not study from exam point of view or out of fear but because of the fact that she JUST LOVED STUDYING. When she says - love what you study, it has a deeper meaning.
She believes - "When you study, you get wise, you obtain knowledge. A knowledge that helps you in real life, in solving problems, finding opportunities. Implement what you study". She has a huge affinity for the Law Subject in particular and always encourages student to - "STUDY FROM THE BARE ACT, MAKE YOUR OWN INTERPRETATIONS". A rare practice that you will find in her video lectures as well.
She specializes in theory subjects - Law and Auditing.
Yashvardhan Saboo
A Story teller, passionate for simplifying complexities, techie. Perfectionist by heart, he is the founder of - Konceptca.
Yash Sir (As students call him fondly) is not a teacher per se. He is a story teller who specializes in simplifying things, connecting the dots and building a story behind everything he teaches. A firm believer of Real Teaching, according to him - "Real Teaching is not teaching standard methods but giving the power to students to develop his own methods".
He cleared his CA Finals in May 2011 and has been into teaching since. He started teaching CA, CS, 11th, 12th, B.Com, M.Com students in an offline mode until 2016 when Konceptca was launched. One of the pioneers in Online Education, he believes in providing a learning experience which is NEAT, SMOOTH and AFFORDABLE.
He specializes in practical subjects – Accounting, Costing, Taxation, Financial Management. With over 12 years of teaching experience (Online as well as Offline), he SURELY KNOWS IT ALL.
"Koncept perfectly justifies what it sounds, i.e, your concepts are meant to be cleared if you are a Konceptian. My experience with Koncept was amazing. The most striking experience that I went through was the the way Yash sir and Ruchika ma'am taught us in the lectures, making it very interesting and lucid. Another great feature of Koncept is that you get mentor calls which I think drives you to stay motivated and be disciplined. And of course it goes without saying that Yash sir has always been like a friend to me, giving me genuine guidance whenever I was in need. So once again I want to thank Koncept Education for all their efforts."
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"I cleared my foundation examination in very first attempt with good marks in practical subject as well as theoretical subject this can be possible only because of koncept Education and the guidance that Yash sir has provide me, Thank you."
