Knowledge Update May'25
- adritas
- Jan 12, 2025
- 14 min read
Table of Contents
Economy
Direct Tax
Indirect Tax
Significant Judgements
Personal Finance
Emerging Trends of AI in key sectors
What’s Buzzing?
Management Lesson
Economy
World Bank lowers India’s FY26 growth forecast to 6.3%
On 23rd April, the World Bank lowered India’s growth forecast for the current fiscal by 4 percentage points to 6.3% amid global economic weakness and policy uncertainty. In its previous estimate, the World Bank had projected India’s growth at 6.7% for the fiscal year 2025-26. In India, growth in FY25 disappointed because of slower growth in private investment and public capital expenditures that did not meet targets, the World Bank said in its twice-yearly regional outlook.
“In India, growth is expected to slow from 6.5% in FY25 to 6.3% as in FY26 as the benefits to private investment from monetary easing and regulatory streamlining are expected to be offset by global economic weakness and policy uncertainty,” said its South Asia Development Update, Taxing Times.
On 22nd April, the IMF (International Monetary Fund) also lowered India’s GDP forecast for this fiscal to 6.2% from its January estimates of 6.5%.
“Private consumption is expected to benefit from tax cuts, and the improving implementation of public investment plans should boost government investment, but export demand will be constrained by shifts in trade policy and slowing global growth,” it said.
Can India-US trade deal show the path to other countries?
The upcoming India-US Bilateral Trade Agreement (BTA) is expected to become a model for India's future trade negotiations with other developed nations. The deal marks a major shift in India's trade strategy, as it aims to use trade as a tool to acquire advanced technologies, speed up industrial growth, and strengthen its position in the global economy.
The agreement is closely aligned with India's "Make in India" and "Atmanirbhar Bharat" (self-reliant India) initiatives. These programmes focus on boosting domestic production and reducing dependency on imports. As part of the BTA, India is likely to reduce tariffs on some American agricultural and food products. This will give American exporters more access to the Indian market and provide Indian consumers with a wider range of food items.
In return, India will benefit by importing advanced US technologies in critical areas like defence, clean energy, and high-end manufacturing. The agreement also includes regulatory cooperation, digital trade standards, and intellectual property rights enforcement, aiming to establish a transparent, rules-based environment that promotes cross-border investments and business predictability.
The country is also projected to grow at a healthy 6.3 per cent in the financial year 2025-26, backed by strong macroeconomic fundamentals.
Direct Tax
Income Tax Department monitoring financial transactions with AI
The Income Tax Department has continuously been expanding the scope of monitoring tax evasion. Tax officials have scaled up the use of Artificial Intelligence (AI) and data analytics to enhance tax compliance and detect discrepancies in financial behaviour.
Banks, mutual funds, companies, registrars and other financial institutions give the ‘Statement of Financial Transaction (SFT)’ report to the department every year, which contains information about high value transactions. Now this data is being combined with Income Tax Return (ITR), TDS, GST, and foreign transactions — and this is how it is being decided whether there is any irregularity in your income and expenses.
AI tools are used to perform comparative analysis of a taxpayer’s current and previous years’ Income Tax Returns (ITRs). By identifying patterns and detecting significant deviations or inconsistencies in income disclosures, deductions claimed, or sources of income, the system is capable of flagging potential cases of under-reporting or tax evasion.
Along with this, now most of the assessments are becoming ‘faceless’ i.e. taxpayers do not need to meet officers face to face – the entire work is being done online and through the system. In this, with the help of AI, the selection process of cases is becoming fairer and more transparent.
The Department is likely to have more power in the new Income Tax Bill to be implemented from 2026. Now, if the authorities suspect tax evasion through some digital means, they can check social media accounts, emails, banking apps, trading platforms, and even online investment platforms by the addition of the new legal term “virtual space”.
With the advent of AI, the tax system has now become predictive, anti-evasive and extremely accurate.
New Measures by Income Tax Department to Investigate Cash Transactions
The Central Board of Direct Taxes (CBDT) has directed organizations like banks, post offices, cooperatives, financial technology companies, and mutual fund companies to share detailed information about high-value transactions made during the financial year. This information must be submitted by 31st May of the following financial year.
The Income Tax Department monitors these transactions through statements called Statement of Financial Transaction (SFT).
Specified Financial Transactions - Reporting Requirements
Nature of Transaction | Value of Transaction | Reporting Person / Specified Person |
Cash payment for the purchase of bank drafts or pay orders or banker's cheques. | If the aggregate payment is Rs. 10 lakhs or more in a financial year. | Bank or Co-operative Bank |
Cash deposits/withdrawals in one or more current accounts of a person | If the aggregate amount is Rs. 50 lakhs or more in a financial year | Bank or Co-operative Bank |
Cash deposits in one or more accounts (other than a current account and time deposit) of a person | If the aggregate amount is Rs. 10 lakhs or more in a financial year | Bank or Co-operative Bank; Post Master General |
Receipt of cash payment for the sale, by any person, of goods or services of any nature | If the amount is more than Rs. 2 lakhs | Any person liable for tax audit under Section 44AB |
Payment in cash for one or more credit cards issued to that person | If aggregate payment is Rs. 1 lakh or more in a financial year | Bank or Co-operative Bank or any company/institution issuing credit card |
Payment in any mode (other than cash) for one or more credit cards issued to that person | If aggregate payment is Rs. 10 lakhs or more in a financial year | Bank or Co-operative Bank or any company/institution issuing credit card |
Receipt from any person for acquiring bonds or debentures and shares issued by the company or institution | If the aggregate amount is Rs. 10 lakhs or more in a financial year | Company or institution issuing bonds or debentures |
Receipt from any person for acquiring units of one or more schemes of a Mutual Fund | If the aggregate amount is Rs. 10 lakhs or more in a financial year | Mutual Fund Trustee or other authorized person |
Purchase or sale by any person of immovable property | If transaction value or Stamp Valuation is Rs. 30 lakhs or more | Inspector-General / Registrar / Sub-Registrar under Registration Act, 1908 |
Indirect Tax
Instructions to streamline GST Registration
The CBIC on April 17, 2025 issued a circular easing the GST registration process for applicants. The Board recognised the difficulties being faced by the applicants for registration, mainly on account of nature of clarifications sought by the officers with respect to the information required to be submitted during registration. While the Board has emphasised on the prevention of registration using fraudulent forms for passing on ITC without any supply, it has also acknowledged that the genuine registrants are being harassed.
The board observed that avoidable and unwarranted clarifications are also being sought by the officers leading to delay in registration as well as rejection of the applications.
In this regard, the CBIC has issued an indicative list of documents that are to be sought by the officers. Additional Documents are not necessary except in cases where these documents are incomplete or do not give a clearer picture:
a. Documents relating to Principal Place of Business (PPoB) alongwith the ones mentioned in Form GST REG-01:
i. Owned Premises: Latest Property Tax Receipts or Municipal Khata or Electricity Bill Copy. Similar Bills like Water Bills must not be requested.
i. Rented Premises: Valid Rent/Lease Agreement. Documents like PAN, Aadhar, photograph of lessor inside the property is not required.
ii. Premises not covered above: Consent Letter in Plain Paper by the concerned owner of the premises.
iii. Located in SEZ: Documents/Certificates issued by the Government. Additional documents not required.
b. Documents in respect of constitution of business:
i. Where Applicant is one of the Partners: Partnership Deed for proof of constitution. Additional Documents like Udhyam, MSME, Shop Establishment Certificates, Trade License etc. need not be sought.
ii. Applicant is Society/Trust/Club/Government Dept/Local Authority: Registration Certificate/Proof of Constitution
CBIC has also advised the Principal Chief Commissioners to closely supervise the registration process on a timely basis within their zone and sufficient staff should be posted to ensure timely disposal of registration applicants. Instructions for taking action against the deviating officers have also been issued.
Changes regarding GSTR-1/1A and GSTR-3B
The GST Network has issued an advisory intimating GST registered taxpayers about the new changes in GSTR-3B and GSTR-1/1A that it has brought about. The changes are to take place from April 2025. GSTR-1 is filed by the sellers summarising all outward supplies. It is also important because it is the basis on which GSTR-2B i.e. the statement of input tax credit of the buyers is generated. GSTR-3B is used to declare and discharge the GST liabilities for a particular tax period.
The details of the changes made therein are:
GSTR-3B:
Table 3.2 of form GSTR-3B auto-populates from the corresponding inter-state supplies declared in GSTR-1/1A. Now on these data will be made non-editable and the GSTR-3B shall be filed with the auto populated values only.
To modify or amend the data in GSTR-3B, GSTR-1/1A must be amended first.
GSTR-1/1A:
Table-12 has been bifurcated into two tables namely B2B and B2C to report the summary of supplies HSN wise separately in the corresponding table.
Manual entry of HSN will not be allowed and will be allowed to only select from the drop-down provided.
Significant Judgements
New flat not taxable under income tax rules, says Mumbai Tribunal
Anil Pitale V/s Income Tax Appellate Tribunal, Mumbai.
The recent judgment involved a case where a homeowner, Anil Pitale, exchanged his flat, originally purchased in 1997-98, for a newly developed flat in December 2017. The assessing officer had previously considered the difference in stamp duty value between the new and old flats as taxable income.
In a significant ruling, the Mumbai ITAT has determined that homeowners who exchange their old flats for new ones during redevelopment projects will not incur income tax liabilities. The decision clarifies that such exchanges do not fall under Section 56 of the Income Tax Act, which governs income from other source, rather it might be subject to capital gains tax rules, where the assessee may be eligible for a deduction of the cost of the new flat under Sec. 54 of the Act. If this is the case, the assessee will not have any tax liability arising from these transactions.
Unregistered status of a partnership firm prevents its partners from suing another partners for recovery of dues: Supreme Court
Sunkari Tirumala Rao & Ors. vs. Penki Aruna Kumari
The dispute arose over the recovery of ₹30 lakhs, claimed by the petitioners (plaintiffs) in their capacity as partners of an unregistered partnership firm. The defendant, also a partner in the firm, contested the suit's maintainability under Section 69 of the Indian Partnership Act, 1932, which restricts legal actions by unregistered firms or their partners.
The Trial Court ruled the suit as maintainable, reasoning that since business operations hadn’t commenced, Section 69 did not apply. The High Court of Andhra Pradesh overturned this ruling, holding that the suit was barred under Section 69(1), since it was filed by one partner against another in an unregistered firm. The Supreme Court upheld the High Court’s decision, emphasizing that:
Section 69(1) prohibits partners of an unregistered firm from suing each other over contract-based disputes.
The correct legal recourse would have been a suit for dissolution and rendition of accounts, as permitted under Section 69(3).
The Supreme Court dismissed the petition, confirming that the suit was not maintainable. It reiterated that the registration of a partnership firm is crucial for enforcing rights arising from partnership contracts.
Personal Finance
Thumb Rules to get started
Rule of 72
What it tells you: How long it takes to double your money at a given rate of return.
Formula: 72 ÷ annual return (%) = years to double
Rule of 114
It estimates how long it will take for your investment to triple.
Formula: Time to triple= 114/Interest Rate %
Rule of 144
It estimates the time it takes for an investment to quadruple in value at a given annual interest rate.
Formula: Time to quadruple= 144/Interest Rate %
100 minus Age Rule
Purpose: To decide how much of your portfolio should be in equities.
Formula: 100 – your age = % in equities
Emergency Fund Rule
The Emergency Fund Rule is a personal finance thumb rule that helps you stay financially safe during unexpected events like job loss, medical emergencies, or major repairs.
The rule says: Emergency Fund = 6 × Monthly Expenses
This means you should keep 6 months' worth of your essential living expenses in a liquid and safe place (like a savings account, liquid mutual fund, or fixed deposit).
Why 6 Months?
6 months (or more) if you:
Are self-employed or a freelancer, or
Have dependents (family, kids, EMIs, etc.), or
Have variable or unstable income
The Emergency Fund should be kept at:
Savings account – Highly liquid, but lower returns
Liquid mutual funds – Slightly better returns, quick withdrawal
Sweep-in FD – Auto FD with flexibility of withdrawal
Keep it accessible, not locked, and separate from your regular spending money.
Succession Planning – Different options
Estate planning is more than just writing a will—it's about making sure your wealth, property, and possessions are passed on as you intend, in line with Indian laws. A well-thought-out plan can ease the process for your loved ones, helping avoid confusion, disputes, and unnecessary stress. Here are the essential components to consider when putting together an estate plan in India:
Will: A will is typically the cornerstone of any estate plan. It is a legal declaration that specifies how your assets will be distributed after your death. A well-drafted will should be clear, up-to-date, and ideally signed in the presence of two witnesses. While registration is not mandatory, doing so can help reduce likely disputes. A will should cover most, if not all, of your self-acquired assets
and can be revised over time to reflect changing circumstances.
Gift deed (if transferring assets during your lifetime): A gift deed is a legal instrument used to transfer movable or immovable property during your lifetime without monetary exchange. This can help avoid potential disputes later, but should be executed with care, as gifts are irrevocable.
Trust deed: A trust is a legal structure through which assets are managed by a trustee for the benefit of one or more beneficiaries.
This is especially useful for families with minor children, differently abled dependents, or complex wealth structures.
Nomination forms: Nominations help facilitate a smooth transfer of specific financial assets—such as bank deposits, insurance policies, and mutual funds—after your passing. Note that nominees are custodians, not legal heirs. The nomination does not override the will but ensures temporary, practical access to assets until legal matters are settled.
Power of Attorney: A Power of Attorney lets you designate
someone to act on your behalf in financial, legal, or property matters. This is particularly useful for NRIs or elderly individuals who may face mobility challenges.
Emerging trends of AI in Key sectors
FMCG:
GenAI for Product R&D and Formula Design: Nestlé, Mars, Campbell’s, PepsiCo are some Consumer Package Goods (CPG) that are using a GenAI platform Tastewise to validate new product ideas. This platform uses a proprietary AI and a dataset of food consumption to provide insights of real-life consumption.
AI+Satellite+ESG: Nestlé uses AI and satellite imagery to analyse and identify the areas where they can optimise their operations by improving waste management, minimising carbon footprint, monitoring deforestation, contributing a more sustainable supply chain.
BFSI:
Algorithmic Trading: Companies such as Renaissance Technologies and Two-Sigma use AI based algorithms to process historical trading data and execute trades within milliseconds.
AI-Driven Risk Assessment & Fraud Detection: Banks like JPMorgan Chase use AI to scan millions of transactions and identify ones with anomalies like sudden large withdrawal from an unusual location and flags them for review.
HealthCare:
The Brigham and Women’s Hospital in Boston is actively involved in Digital Phenotyping Research that can be used to passively monitor mental health from typing speed, tone, sleep and phone usage to predict depression, anxiety and schizophrenia episodes and early signs of bipolar disorder.
Enhanced patient care system has been launched by Charnock Hospitals, Kolkata which equips beds of the hospitals with a continuous monitoring for heart rate, respiration rate, temperature etc. by an AI powered system.
OTT:
Advanced Monetization Strategies: Platforms like HBO Max use AI algorithms to analyse user behaviour, market trends, competitor strategies, and content performance metrics to inform monetization decisions and strategies. This data-driven approach enables platforms to understand user willingness to pay, segment audiences based on their subscription preferences.
What’s Buzzing?
Donald Trump to ease tariffs on auto parts, offers relief on US carmakers
To boost domestic manufacturing and address trade imbalances, the US Govt had imposed a 25% import tariff on auto components. This move hit suppliers of auto-components worldwide. US carmakers were also hard-hit as the announcement would lead to a levy of layers of import duties on parts used for manufacturing and assembling cars domestically.
Various industry groups comprising dealers, suppliers and majorly all automakers had shown concerns over the jeopardizing effect of the tariffs on the US automotive industry. Following the warnings, Trump has now shown his openness to softening the impact of tariffs on carmakers by reducing the import tariffs on auto-components.
Additionally, they are also poised to get a reimbursement on import duties they have paid on import of foreign auto-parts. This is expected to ease the tariffs on the car-components from having a compounding effect due to other levies such as those on steel and aluminium components. Also, this will be helpful in mitigating the impact of tariffs on automakers, suppliers and consumers.
As per BBC, Trump is expected to announce this in his Michigan rally, which is home to key automotive manufacturers like Ford, GM, Stellantis and over 1000 auto-suppliers.This report comes just before the tariffs were set to take full effect on May 3.
However, the tariff on import of vehicles would remain the same and it has not been included in the “reciprocal tariff”. That means, the vehicles would still face a 25% tariff on their imports into the US. If put in simpler words, this revised approach would lower duties on foreign parts used in domestically produced cars while keeping tariffs the same on fully imported vehicles.
Gold vs Silver
Gold has crossed the 1-Lakh mark per 10 grams and is on a record-breaking spree in 2025. Since the beginning of 2025, gold prices have been setting new all-time highs. Over the last 1-year, gold has gained roughly around 50%. This surge can be attributed to the recurring Trump-Powell power struggle, US-China Tariff War and the Weakening Dollar against major currencies.
Gold has been used as a hedge against financial crisis, currency devaluations and inflationary pressures. Almost 90% of the gold demands comes from the Central Banks and investors. Gold is widely accepted globally, making it easy to sell. The prices have remained steady over long periods. Culturally too, gold is immensely important to Indians. Therefore, apart from the geopolitical grounds, these factors are responsible for gold prices to soar higher.
But, with the price of gold touching the clouds, investors are now shifting to silver. Silver has also crossed the 1-lakh mark per kilogram. Although more volatile than gold, it is still an affordable option. Silver is used both in the tech-industry (solar panels, electronics, and medical devices) and as a store of value. Around 20% of the world’s silver goes into renewable projects and the future of the tech-industry looks promising.
Traditionally, the ratio of value of gold vs silver is 70:1. Presently it is trading at around 100:1. This indicate that either the value of gold will come down or the value of silver will increase. This scenario makes a good case for making investment in silver.
Gold prices rally in the first 100 days of Trump 2.0, while dollar retreats
Management Lesson
“The Woodcutter’s Dilemma” – A Lesson in Efficiency vs. Effort
Once upon a time in a small village, a young man approached an experienced woodcutter for a job. The old man handed him an axe and said, “Let’s see how many trees you can cut in a day.”
On the first day, the young man worked hard and cut down 10 trees.
Impressed, the old man said, “Great work! Keep it up.”
The next day, the young man came early and worked even harder, but managed only 7 trees.
He was puzzled, so he pushed himself more the following day — swinging harder, faster, longer. Still, he could cut down only 5 trees.
Frustrated, he went to the old woodcutter and said,
“I do not understand. I am working harder every day, but cutting fewer trees!”
The old man asked,
“When was the last time you sharpened your axe?”
The young man paused. “Sharpen? I did not have time for that—I was too busy cutting trees!”
The old man smiled and replied,
“That is your mistake. A dull axe requires more effort and gives less result. Take time to sharpen your tools. That is how you work smarter, not harder.”
Moral of the story: “Sharpen your axe” — In business or leadership, do not get so caught up in doing the work that you forget to improve how you work. Take time to reflect, strategize, upskill, and optimize systems. That is how great managers lead high-performance teams.
You can direct your queries or comments to the authors here.
Disclaimer: The material herein is provided for informational purposes only. The information should not be viewed as professional, legal or other advice. Professional advice should be sought prior to actions on any of the information contained herein. CKA is not responsible for any matter concluded by any person based on the contents of this article.
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