By News18
Lesser-Known Income Tax Rules In 2025: The income tax filing season 2025 is going on, with more than 79 lakh ITRs have already been filed so far. The deadline is September 15, 2025. Though most taxpayers rely on tax experts to file their ITRs, knowing key income tax rules come in handy to save taxes throughout the year and avoid any tax notices.
Here are 20 surprising income tax rules that every Indian taxpayer should know in 2025.
1. Gifts from friends above Rs 50,000 are taxable
If you receive more than Rs 50,000 in gifts (cash or kind) in a year from someone who is not a relative, you will have to pay tax on the entire amount. However, gifts from relatives like parents, siblings, spouse, or children are fully tax-free, even if the amount is in lakhs.
2. Paying rent to your parents? You can claim HRA
If you live in a house owned by your parents and pay them rent via bank transfer or cheque, you can claim HRA (House Rent Allowance) in your salary. Just make sure they declare this rent as income in their return.
3. Loan or repayment in cash above Rs 20,000 is not allowed
You cannot take or repay any loan or deposit of Rs 20,000 or more in cash, even from friends or relatives. This is strictly not allowed under Sections 269SS and 269T of the Income Tax Act, 1961. If you do, the entire amount may be taxed and penalties applied. It means 100% penalty.
So, as per I-T rules, any such transaction above Rs 20,000 much be made digitally.
4. Paying more than Rs 2 lakh in cash is illegal in most cases
If you try to buy anything – a bike, land, or jewellery – and pay more than Rs 2 lakh in cash, you are violating income tax rules (Section 269ST). The seller can be penalised the entire amount.
5. Gold or jewellery purchase over Rs 2 lakh needs PAN
Whether you pay by cash or card, if you’re buying jewellery worth more than Rs 2 lakh, you must provide your PAN card. Many jewellers insist on it for legal compliance.
6. Tuition fees for your kids are eligible under 80C
You can claim tax deduction up to Rs 1.5 lakh under Section 80C for tuition fees paid for up to 2 children, even if they’re studying in private schools or colleges. However, it is only allowed under the old tax regime.
7. Scholarship income is completely tax-free
Any scholarship received by a student for educational purposes is fully exempt from tax – no matter how large the amount.
8. Money earned by your minor child gets added to your income
If your minor child earns money from fixed deposits or savings accounts, that income is taxed as your income. However, you get an exemption of Rs 1,500 per child per year (up to 2 kids).
Once the child turns 18, the income will not have to be merged with your income.
9. Freelancers and professionals can claim 50% income as expense
If you’re a self-employed professional (like a writer, CA, doctor, or lawyer), you can declare 50% of your gross income as expenses without keeping bills – under the Presumptive Taxation Scheme (Section 44ADA).
10. You can claim deduction on home loan interest even if you rent it out
If you’ve taken a home loan and the house is not self-occupied but rented, you can still claim a deduction of up to Rs 2 lakh on the interest paid under Section 24(b).
11. Donations in cash above Rs 2,000 are not eligible for deduction
If you donate more than Rs 2,000 in cash to a charity or NGO, you will not get a tax deduction under Section 80G. Always donate via cheque, UPI, or net banking.
12. You can file a revised or updated ITR within 3 years
Made a mistake in your ITR? Missed out on income or deductions? You can now file an updated return under Section 139(8A) within 3 years of the original filing year, but with interest and extra tax.
13. Agricultural income is tax-free, but can impact your slab rate
Agricultural income is exempt from tax, but if your non-agriculture income is more than the basic exemption limit (Rs 5,000), agri income is added to determine your tax slab rate.
For example, if someone’s annual salary is Rs 15 lakh and agricultural income is Rs 4 lakh, then his or her slab rate will be decided based on (Rs 15 lakh + Rs 4 lakh), and then agriculture income will be removed after determining the tax slab to calculate final tax liability.
14. Capital gains tax applies even on sale of old gold or jewellery
If you sell gold, diamonds, watches, or other valuables and make a profit, you’ll have to pay capital gains tax. These are considered capital assets.
15. You can form a Hindu Undivided Family (HUF) to save tax
If you have inherited property or common family income, forming an HUF can help you save tax. An HUF gets its own PAN and enjoys separate tax slabs and deductions like Section 80C.
16. Health insurance paid for senior citizen parents gives extra tax benefit
If you pay for your parents’ health insurance and they are over 60, you can claim an extra Rs 50,000 deduction under Section 80D, even if they are not financially dependent on you.
17. Rent paid in cash above Rs 5,000 per month may not be accepted
If you’re claiming HRA and paying rent in cash over Rs 5,000 per month, the income tax department may ask for the landlord’s PAN and a rent agreement.
18. Large cash deposits and withdrawals are monitored
Banks report these to the income tax department:
Cash deposits over Rs 10 lakh/year in savings accounts
Cash deposits/withdrawals over Rs 50 lakh/year in current accounts
Credit card bill payments over Rs 1 lakh in cash
19. TDS applies on large cash withdrawals
If you withdraw over Rs 1 crore in a year from your bank account, the bank will deduct TDS (tax deducted at source) at 2%. If you haven’t filed ITR in the last 3 years, the limit drops to Rs 20 lakh.
20. Income from inherited assets is taxable
If you inherit money, land, or property, the inheritance itself is not taxed. But any rent, interest, or capital gains you earn from it later are fully taxable.