Library / Income-tax Act, 2025: The Professional's Master Guide

How to Use This Guide

Each chapter follows the same pattern:

The law in plain words, with the new section number and the old 1961 section in brackets.
Illustrations with real numbers. Every calculation is shown step by step and numbered through the book for easy reference.
Key point boxes for the issues that most often go wrong in practice.
Practice notes for client work, audits, due diligence and compliance.

The guide is arranged in eight parts and a set of appendices:

Part A, Foundations: the new structure, transition, Tax Year, residence and exempt income.
Part B, Heads of Income: salaries, house property, business or profession, capital gains and other sources.
Part C, Total Income and Tax: clubbing, losses, deductions, rates, regimes, HUFs, firms, AOPs and non-profit organisations.
Part D, Corporate Tax Matters: company regimes, MAT, dividends, buyback, losses, start-ups, tax provisioning, sector issues, GST and Ind AS.
Part E, Mergers and Acquisitions: amalgamation, demerger, slump sale, conversions and share deals.
Part F, International Taxation: non-residents, treaties, withholding, foreign tax credit, NRIs, transfer pricing and anti-avoidance.
Part G, Compliance and Disputes: TDS and TCS, salary TDS, advance tax, returns, assessment, search, appeals, recovery, penalties and forms.
Part H, Comprehensive Case Studies: sixteen complete computations covering salaried taxpayers, professionals, firms, senior citizens, traders, start-ups, mergers, NRIs, trusts, transfer pricing, company regime choice, small traders, TDS defaults, multiple capital gains, returning NRIs and HUF partition.

Key point

The 2025 Act is mainly a rewrite and renumbering. Most rules you know continue with new numbers. Learn the new numbers and terms, and focus on the real changes flagged in each chapter.

All illustrations use Tax Year 2026-27 rates unless stated otherwise. Confirm current figures with the Act, the Rules and any later notification before advising a client.

Contents

Page

PART A: FOUNDATIONS 10

1. The Big Picture 10

2. Transition: Frequently Asked Questions 16

3. Tax Year (Section 3) 17

4. Residential Status (Section 6) 19

5. Scope of Total Income and Deemed Accrual (Sections 5, 7 and 9) 23

6. Heads of Income and Exempt Income 25

PART B: HEADS OF INCOME 29

7. Salaries (Sections 15 to 19) 29

8. Income from House Property (Sections 20 to 25) 38

9. Profits and Gains of Business or Profession (Sections 26 to 66) 42

10. Capital Gains (Sections 67 to 91, 196 to 198) 57

11. Income from Other Sources (Sections 92 to 95) 66

12. Taxation of Investment Products 70

13. Property Transactions: A Practical Guide 72

PART C: TOTAL INCOME, TAX LIABILITY AND SPECIAL ENTITIES 74

14. Clubbing and Unexplained Income (Sections 96 to 106) 74

15. Set Off and Carry Forward of Losses (Sections 108 to 121) 77

16. Deductions (Sections 122 to 154) 79

17. Tax Rates, Regimes and Rebate for Individuals 84

18. Tax Planning for Individuals and Families 87

19. Taxation of Senior Citizens 89

20. Retirement and Succession Planning 91

21. Taxation of Hindu Undivided Families 93

22. Firms, LLPs, AOPs and BOIs 95

23. Non-Profit Organisations (Sections 332 to 355) 97

24. Co-operative Societies 99

PART D: CORPORATE TAX MATTERS 101

25. Taxation of Companies: Rates, Regimes and MAT 101

26. Other Corporate Tax Matters 106

27. Sector Specific Tax Issues 111

28. Income Tax and GST 113

29. Income Tax and Ind AS 114

PART E: MERGERS, ACQUISITIONS AND BUSINESS REORGANISATION 116

30. Mergers and Acquisitions 116

PART F: INTERNATIONAL TAXATION 125

31. Taxation of Non-Residents and Tax Treaties 125

32. Non-Resident Individuals and NRIs 133

33. Transfer Pricing (Sections 161 to 173) 135

34. Anti-Avoidance Rules 142

PART G: COMPLIANCE, ASSESSMENT AND DISPUTES 145

35. TDS and TCS (Sections 392 to 397) 145

36. TDS on Salary (Section 392) 153

37. Advance Tax, Interest and Fees 155

38. PAN and Return of Income (Sections 262 to 267) 157

39. Tax Audit (Section 63) 160

40. Handling Income Tax Notices 162

41. Digital Compliance and Faceless Procedures 164

42. Assessment and Reassessment 166

43. Search, Survey and Block Assessment 170

44. Appeals and Dispute Resolution 172

45. Collection, Recovery and Refunds 174

46. Penalties 175

47. Forms Under the Income-tax Rules, 2026 178

PART H: COMPREHENSIVE CASE STUDIES 179

48. Case Study 1: Salaried Taxpayer with Property and Investments 179

49. Case Study 2: Professional with Books of Account 181

50. Case Study 3: Partnership Firm and its Partners 183

51. Case Study 4: Senior Citizen Selling a House 184

52. Case Study 5: F&O Trader with Salary 186

53. Case Study 6: Start-up Company, Section 140 and MAT 187

54. Case Study 7: Merger of Group Companies 188

55. Case Study 8: Non-Resident Individual 189

56. Case Study 9: Educational Trust 190

57. Case Study 10: Transfer Pricing Adjustment and Secondary Adjustment 191

58. Case Study 11: Company Regime Choice over Five Years 192

59. Case Study 12: Small Trader under the Presumptive Scheme 193

60. Case Study 13: Correcting a TDS Default 194

61. Case Study 14: Several Capital Assets Sold in One Year 195

62. Case Study 15: Returning NRI and the RNOR Window 196

63. Case Study 16: Partition of an HUF 197

APPENDICES 198

Appendix A: Section Mapping, 1961 Act to 2025 Act 198

Appendix B: Compliance Calendar for Tax Year 2026-27 200

Appendix C: Practice Questions with Answers 201

Appendix D: Common Mistakes Checklist 208

Appendix E: Digest of Landmark Rulings 209

Appendix F: Glossary 213

Appendix G: Rates and Thresholds at a Glance (Tax Year 2026-27) 215

Appendix H: Year-end Tax Checklists 216

Appendix I: Specimen Formats 217

Appendix J: Selected Sections of the Income-tax Act, 2025 219

Appendix K: Depreciation Rates (Written Down Value Method) 223

Appendix L: Cost Inflation Index 224

References 225

Table of Cases 226

Index 228