Page 12 - Banking Finance September 2025

ROUNDUP

revenue leakage from fake deduction
schemes. Sources indicate that several
tax professionals may also be involved
in orchestrating these bogus claims,
which the department is keen to dis-
mantle through evidence-based ac-
tion.
Ò»©­ GST collection rises in July

but net revenue growth
slows
India's Goods and Services Tax (GST)
collections rose 7.5% year-on-year to
Rs. 1.96 lakh crore in July 2025, the
Parliament panel recommends penalty-free TDS re-
Finance Ministry reported. However,
fund after due date net tax collections grew by just 1.7%
A parliamentary panel led by BJP MP Baijayant Panda has suggested that due to a sharp rise in domestic refunds.
taxpayers should be allowed to claim TDS refunds even after the Income The gross GST mop-up includes Rs.
Tax Return (ITR) due date, without incurring penalties. The 31-member 1.43 lakh crore from domestic sources
panel, reviewing the draft Income Tax Bill 2025, submitted a detailed 4,575- and the rest from imports.
page report to the Lok Sabha. While gross domestic collections grew
It also endorsed continued tax exemptions on anonymous donations received 6.7%, net domestic collections de-
by religious-cum-charitable trusts, warning that any reversal could harm not- clined-likely for the first time since the
for-profit groups. The new bill proposes to replace the six-decade-old In- pandemic-because of a significant in-
come Tax Act, 1961, and introduces a unified "tax year," replacing the ear- crease in refunds. Meanwhile, import-
lier "assessment" and "previous" year terms. related GST rose 9.7%, but export re-
funds also surged by 20%. Analysts at-
Notably, the bill exempts anonymous donations to purely religious trusts from
taxation, but donations to trusts with mixed religious and charitable func- tribute the slower domestic collection
tions-such as those running hospitals or schools-will remain taxable. The rec- growth to weaker consumption, par-
ticularly in urban markets.
ommendations aim to simplify tax processes while ensuring fairness for re-
ligious and social institutions. Auto sales-a major GST contributor-
also showed sequential decline. June's
retail vehicle sales rose just 4.84% YoY
Nationwide I-T raids ex- (Section 10(13A)), education loans but fell 9.44% compared to May, ac-
(80E), home loans (80EE), and electric
pose bogus deduction net- vehicles (80EEB). cording to the Federation of Automo-
bile Dealers Associations (FADA). The
works The Central Board of Direct Taxes trend may signal broader caution in
The Income Tax Department has (CBDT) said even employees of MNCs, consumer spending patterns.
launched a nationwide crackdown on public sector enterprises, academic
fraudulent deduction claims across In- institutions, and entrepreneurs are SC clears state-level green
dia, targeting 150 locations. The op- under scrutiny for unjustified claims.
eration focuses on individuals and insti- Authorities have begun examining digi- nod for mid-sized build-
tutions falsely claiming exemptions tal and financial records, warning that ings
under various sections of the I-T Act, penalties and prosecution could follow. The Supreme Court has allowed stalled
including those for donations, health This initiative is part of a broader move construction projects between 20,000
insurance (Section 80D, 80DDB), HRA
to ensure tax compliance and prevent and 1,50,000 square metres-including

BANKING FINANCE | SEPTEMBER | 2025 | 11