Category: Personal Finance

In 2025, the Income Tax Department of India is rolling out a powerful backend surveillance system that automatically verifies your claims with external data sources in real time. It’s called income tax cross-verification and it could impact every salaried individual, freelancer, or investor filing under the old tax regime.

What Is Income Tax Cross-Verification?

Income tax cross-verification refers to the automated matching of your claimed deductions with data received from external reporting agencies. Your PAN and Aadhaar are now the anchors for this ecosystem.

The system pulls data from:

• Banks – Fixed deposits, interest income, loan EMIs
  
• Insurance companies – Premiums paid for LIC or term policies
  
• Employers – Form 16, salary components like HRA and allowances
  
• Government databases – Investment declarations, EPF contributions, tuition fees
• mParivahan – Vehicle ownership and loan data for EVs
  
  

This ensures that what you claim on your ITR aligns with what third parties report to the tax department, in real time.

Why the Tax Department Is Enforcing Cross-Verification in 2025

This push toward data-driven tax compliance is part of India’s broader digital transformation under initiatives like:

• Faceless Assessment 2.0
  
• Real-time reporting via AIS (Annual Information Statement)
  
• Expansion of TIS (Taxpayer Information Summary)

Objectives:

• Detect inflated or duplicate deduction claims
  
• Reduce refund fraud and manual scrutiny
  
• Improve taxpayer accountability
  
• Encourage voluntary, correct disclosure

Key Compliance Changes Taxpayers Must Know in 2025

As per the old tax regime, taxpayers must now comply with a stricter and more structured filing framework:

1. Break Down Every Deduction

Gone are the days of claiming ₹ 1.5L under Section 80C without detail. You must now itemise your investments, such as:

• ₹50,000 – ELSS mutual fund
  
• ₹60,000 – LIC premium
  
• ₹40,000 – PPF deposit
  

Omitting this detail or submitting rough totals will delay your refund or invite automated queries.

2. Updated Documentation Requirements for Common Deductions

You’re now expected to submit or retain a wider range of documents for verification, including:

– HRA (House Rent Allowance)

Taxpayers claiming HRA exemption must now provide comprehensive details:

• Place of Work
• Actual HRA Received
• Actual Rent Paid
• Basic Salary and Dearness Allowance
• 50% or 40% of Basic Salary, depending on whether the city is metro or non-metro.
  

– Section 80C Tax Deductions

• LIC policy bonds
• ELSS fund statements with folio numbers 
• PPF passbook entries
  

– Section 80D Deductions

• Name of the Insurance Company
• Policy or Document Number

– Loan Deductions (80E, 80EE, 80EEA, 80EEB)

• Name of the Lender
• Bank Name
• Loan Account Number
• Date of Loan Sanction
• Total Loan Amount
• Loan Outstanding as on 31st March
  

3. Live Mismatch Alerts Through AIS/TIS

The Income Tax portal now uses real-time discrepancy detection. If your claimed amount:

• Doesn’t match AIS records
  
• Exceeds limits without proof
  
• Overlaps with employer-filed returns
  

You may receive a notice under Section 143(1) or be prompted to revise your ITR.

What Happens If Your Claims Are Flagged?

If any part of your return doesn’t match the cross-verified data:

• Missing HRA or loan details can lead to a rejection of the deduction
  
• Incomplete returns may face delays or scrutiny
  
• Ensure all required disclosures to avoid compliance issues
  

Best Practices for Cross-Verification Compliance for 2025

• Cross-check your Form 26AS, AIS and TIS before filing
  
• Maintain a folder of all ITR documentation required
  
• Avoid “guesstimate” entries; only claim what you can prove
  
• Get a pre-filing review done by a tax expert if needed
  
• Ensure 100% compliance with tax filing compliance in India regulations
  

Final Thoughts

Income tax cross-verification is the future of how taxes will be filed and verified in India. With digital audits, instant alerts and real-time validation becoming the norm, your best strategy is preparation and precision.

If your numbers don’t match the system, the system will know. File clean. File confidently.

Explore more expert insights on tax compliance and filing:

• Income Tax Filing 2025: New Tax Rules, Refund Process & More
• Tax Implications for Indian Investors in U.S. Stocks
• Goods and Services Tax (GST): Types of GST (CGST, SGST, IGST & UTGST)

In this blog, we break down the types of Goods and Services Tax (GST), explain their applicability and explore the GST rates in India, ensuring you’re well-informed about one of the cornerstones of Indian taxation.

What is Goods and Services Tax (GST)?

The Goods and Services Tax (GST) is an indirect tax that is charged on the supply of goods and services depending on their destination. It aims to eliminate the escalating impact of taxes and establish a uniform national market.

In India, the Central and State Governments impose GST on the same transaction, but it is divided into separate elements. This is known as the dual model. This guarantees a fair split of revenue between the Centre and the States and the preservation of transparency.

Types of GST in India

Here are the types of GST in India you should know:

1. Central Goods and Services Tax (CGST)

Central Goods and Services Tax (CGST) is imposed by the Central Government on intra-state transactions when goods and services are sold within the same state. For example, if a manufacturer in Maharashtra sells goods to a retailer in Maharashtra, CGST is applicable.

The revenue from CGST goes directly to the central exchequer.

2. State Goods and Services Tax (SGST)

State Goods and Services Tax (SGST) is imposed by the State Government on the same intra-state supply of goods and services. Using the above example, SGST will also be levied alongside CGST.

The SGST collected is credited to the respective state government where the transaction occurs.

3. Integrated Goods and Services Tax (IGST)

Integrated Goods and Services Tax (IGST) is charged on inter-state transactions when goods or services move from one state to another or are imported into India.

For instance, if a trader in Delhi sells goods to a buyer in Karnataka, IGST is applicable. It is collected by the Central Government, which later apportions it between the Centre and the destination state.

4. Union Territory Goods and Services Tax (UTGST)

Union Territory Goods and Services Tax (UTGST) is applicable when transactions occur within Union Territories (without a legislature), such as Chandigarh or Lakshadweep.

It works alongside CGST in the same manner as SGST applies with CGST in states.

GST Rates in India and GST Slabs

The GST rates in India are structured into multiple GST slabs to cater to various categories of goods and services:

GST Slab	Description
0%	Essential items like fresh vegetables, milk
3%	Gold
5%	Common use items like packaged food
12%	Processed food, computers
18%	Most services, home appliances
28%	Luxury items and sin goods

These slabs aim to ensure that the taxation burden is equitably distributed based on the necessity and luxury value of goods and services.

How GST is Calculated: An Example

Let’s say you purchase a refrigerator in Mumbai for ₹30,000.

Since this is an intra-state transaction:

• CGST @ 9% = ₹2,700
  
• SGST @ 9% = ₹2,700
  
• Total GST = ₹5,400
  
• Final Price = ₹35,400
  

If the same item is bought from Delhi and delivered to Mumbai, IGST @ 18% = ₹5,400 would be charged instead of CGST + SGST.

Read more: Understanding Tax Implications for Indian Investors

Key Benefits of GST in India

The main advantages of GST in India are:

• No Double Taxation: GST removes the cascading effect of multiple taxes, reducing the overall tax burden.
  
• Transparent & Simple: A fair structure makes taxation easier to understand and more predictable.
  
• Business-Friendly: Smooth input credit and standardised rules simplify operations across states.
  
• Formal Economy Growth: Encourages businesses to register and comply, reducing the informal sector.
  
• Higher Tax Collection: A broader tax base improves compliance and government revenue.

Final Thoughts

Every business owner, entrepreneur and consumer should know how Goods and Services Tax (GST) functions. India has progressed toward a more transparent, unified and efficient tax system with CGST, SGST, IGST and UTGST constituting the foundation of this system.

GST has set the groundwork for a more structured and growth-oriented economy by removing tax-on-tax, allowing seamless credit flow and harmonising India with world tax standards. Understanding how GST works helps you to remain compliant, maximise expenses and make more intelligent financial choices, whether you run a small business or oversee major operations.

This comprehensive guide covers everything you need to know about Income Tax Filing 2025, including new tax rules, the latest updates in income tax e-filing and how to ensure a smooth income tax return verification.

What’s New in Income Tax Filing 2025?

As we step into Assessment Year 2025-26, several updates aim to simplify and incentivise the filing process. These updates are especially relevant for individuals, salaried employees and small businesses.

Key changes include:

Revised Tax Slabs under the New Regime: The new tax regime is now the default for all taxpayers unless you specifically opt for the old one. It offers lower tax rates but does not allow most exemptions or deductions. Here’s a quick overview of the slabs under the new regime:

• Income up to ₹3,00,000: Nil
• ₹3,00,001 – ₹7,00,000: 5%
• ₹7,00,001 – ₹10,00,000: 10%
• ₹10,00,001 – ₹12,00,000: 15%
• ₹12,00,001 – ₹15,00,000: 20%
•  Above ₹15,00,000: 30%

Under this regime, a rebate under Section 87A is available for taxable income up to ₹7,00,000, effectively resulting in zero tax liability for many.

Old vs. New Regime: Which One to Choose?

Taxpayers can still opt for the old regime if they want to claim exemptions such as HRA, LTA, standard deduction, home loan interest and deductions under Sections like 80C (investments), 80D (health insurance) and more. The old regime is often beneficial for those with multiple investments or deductions, while the new regime favours those looking for a simpler, no-exemptions approach with lower slab rates.

When doing your income tax filing in 2025, it’s crucial to evaluate both regimes using a tax calculator or professional advice before making your choice.

• Standard Deduction Retained:
  A standard deduction of ₹50,000 is available under both regimes, offering relief to salaried individuals and pensioners.
• Pre-filled ITRs:
  The government has enhanced automation in income tax e-filing. Your ITR form now comes pre-filled with data from Form 26AS, AIS (Annual Information Statement) and TIS (Taxpayer Information Summary).
• Improved Portal Experience:
  The Income Tax portal now offers faster load times, better dashboards and integrated help options.

These changes aim to make Income Tax Filing 2025 more accurate and hassle-free, especially for those opting for digital filing.

How to File ITR in 2025: Step-by-Step Process

Filing your income tax return can seem overwhelming, but the steps are clear once you break it down.

Here’s how to file ITR in 2025:

• Gather Key Documents:
  Collect Form 16, interest certificates, capital gains statements and investment proofs.
  
• Log In to the Portal:
  Head to (incometax.gov.in), register or log in using your PAN and password.
  
• Select the Right ITR Form:
  Choose from ITR-1 to ITR-7 depending on your income sources.
  
• Use Pre-filled Data:
  Most fields will already be filled in — just verify and update if needed.
  
• Choose Your Tax Regime:
  Old or new — based on your deductions and financial planning.
  
• Compute and Pay Taxes:
  The portal auto-calculates dues. If taxes are pending, pay via the e-pay tax service.
  
• Submit and E-Verify:
  Filing is not complete until your income tax return verification is done.
  

If you’re a salaried employee or a small business owner, understanding this flow is crucial for successful income tax filing 2025.

Income Tax Return Verification: The Final & Mandatory Step

One of the most misunderstood parts of income tax filing is that filing the return is not the final step. The IT Department only begins processing your ITR after successful verification.

Here’s how you can verify your return:

• Aadhaar OTP (most popular and fastest)
• Net banking login
• Bank account EVC (Electronic Verification Code)
• Demat account verification
• Digital Signature Certificate (DSC) – required for firms or audit cases

You must complete the income tax return verification within 30 days of filing, or your return will be marked invalid, requiring you to re-file.

Income Tax Filing 2025: Refund Process

If you’ve paid more taxes than required, you’re entitled to a refund after income Tax Filing 2025.

Here’s what to know:

• Processing Time:
  Refunds typically take 7–45 days post-verification, depending on the volume and accuracy of your return.
  
• Bank Account Requirements:
  Ensure your account is pre-validated on the e-filing portal and linked to your PAN.
  
• Track Refund Status:
  Visit the portal or TIN-NSDL to check your refund status in real-time.
  
• Grievance Redressal:
  If delayed, you can raise a grievance through the portal, responses are usually prompt.
  

Being accurate during filing and completing verification early ensures quicker refunds and minimal delays.

Why Income Tax E-Filing is the Smarter Choice in 2025

Gone are the days of paper forms and in-person visits to tax consultants. The government has invested heavily in making income tax e-filing fast, reliable and accessible to all taxpayers.

Benefits of E-filing include:

• Convenience of filing from anywhere
• Auto-filled data saves time and reduces errors
• Faster return processing and refunds
• Safe, encrypted platforms with real-time updates
• Easy access to previous filings and tax records

In fact, more than 90% of taxpayers are expected to use income tax e-filing for their Income Tax Filing 2025.

Final Thoughts

As tax rules become more streamlined and digital tools evolve, Income Tax Filing 2025 is shaping up to be the most efficient filing season yet. With smart integrations, faster refunds and simplified ITR forms, taxpayers have much to benefit from, provided they plan ahead.

Ensure your documents are in place, choose the right tax regime, file on time and most importantly, don’t skip income tax return verification. If you’re unsure, consult a tax advisor or CA to avoid errors and optimise your filing.

The sooner you file, the sooner you can get your refund.

This guide breaks down capital gains taxation, dividend tax, compliance requirements and strategies to optimise tax efficiency under Indian and U.S. tax laws.

1. Taxation on Capital Gains

When an Indian resident sells U.S. stocks, the tax treatment depends on the holding period:

a. Short-Term Capital Gains (STCG)

• If held for less than 24 months, gains are classified as short-term capital gains.
• Taxed as per the investor’s income tax slab in India.
• No capital gains tax is levied in the U.S. for Indian investors.

b. Long-Term Capital Gains (LTCG)

• If held for 24 months or more, gains are categorised as long-term capital gains.
• Taxed at 12.5% under Indian tax laws.
• No capital gains tax in the U.S. for non-resident Indians (NRIs).

2. Taxation on Dividends

Dividends from U.S. stocks are taxed in both the U.S. and India:

a. Withholding Tax in the U.S.

• The U.S. government imposes a flat 25% withholding tax on dividends for Indian investors.

For example:

• You earn $100 in dividends
• America takes $25 (25%)
• You bring $75 to India
• If your Indian tax rate is 30%, instead of paying $30 on the full $100, you can subtract the $25 you already paid to America, so you only pay $5 more to India.

b. Taxation in India

• Dividends from foreign stocks are taxable in India as per the investor’s income tax slab.
• However, DTAA tax credits can be claimed to avoid double taxation.
• Indian investors can deduct the U.S. tax paid (up to 25%) from their Indian tax liability.

3. Tax Reporting & Compliance Requirements

Proper tax reporting and compliance are crucial when investing in U.S. stocks. Non-compliance can lead to penalties under Indian tax laws.

a. Liberalised Remittance Scheme (LRS) Compliance

• Investments in U.S. stocks must be made under the Liberalised Remittance Scheme (LRS).
• Annual remittance limit: $250,000 per financial year.
• A 5% TCS (Tax Collected at Source) applies on remittances exceeding ₹7 lakh per financial year (Limit is Rs.10 lakhs from FY 2025-26).

b. Disclosure in Income Tax Returns (ITR)

• Foreign assets and income must be disclosed under Schedule FA of ITR.
• Non-disclosure can attract penalties under the Black Money (Undisclosed Foreign Income and Assets) Act, 2015.

c. FEMA Regulations

• Investors must comply with Foreign Exchange Management Act (FEMA) regulations while investing abroad.
• Non-compliance can lead to penalties and restrictions on future investments.

4. Double Taxation Avoidance Agreement (DTAA) Benefits

The India-U.S. DTAA ensures that Indian investors do not pay taxes twice on the same income. Leveraging this agreement effectively can significantly reduce tax burdens.

• Investors can claim a tax credit on dividend income already taxed in the U.S.
• To claim DTAA benefits, investors must file Form 67 in India.

5. Estate Tax Considerations

U.S. estate tax laws apply to foreign investors holding assets in the U.S. Planning ahead can help mitigate potential tax liabilities.

• The U.S. imposes an estate tax on foreign investors’ assets held in the U.S.
• If the total U.S. asset value exceeds $60,000, an estate tax of up to 40% may be levied.
• Indian investors should consider estate planning strategies, such as holding assets through an entity, to mitigate estate tax risk.

6. How to Optimise Tax Efficiency?

Tax optimisation strategies can help investors maximise their returns while ensuring compliance with Indian and U.S. tax laws.

a. Choose Tax-Efficient Investment Structures

• Investing through a GIFT City entity may provide better tax optimisation for HNIs and UHNIs.
• ETFs may offer better tax benefits compared to direct stock dividends.

b. Use DTAA Effectively

• Always declare foreign tax paid to avoid double taxation.

c. Consult a Tax Advisor

• Given the complexity of global taxation, professional tax planning helps structure investments for maximum efficiency.

7. How 9Point Capital Can Help

Understanding tax-efficient international investments can be complex. 9Point Capital specialises in structured investments for Indian investors, helping them optimise tax efficiency and compliance when investing in U.S. stocks and ETFs.
Through strategic investments and expert guidance, we help investors navigate taxation while maximising returns.

Conclusion

Investing in U.S. stocks is a powerful way for Indian investors to diversify globally, but taxation must be carefully managed. Capital gains are taxed only in India, while dividends face double taxation unless DTAA benefits are claimed. Proper tax planning ensures compliance and efficiency.