The New Income Tax Bill 2025: A Paradigm Shift in India's Taxation Landscape

The Indian taxation system is undergoing a historic transformation. With the introduction of the Income Tax Bill 2025, the Government of India aims to replace the six-decade-old Income Tax Act of 1961. This move is not just a legislative change but a fundamental shift towards simplification, transparency, and digitalization. Presented by Finance Minister Nirmala Sitharaman, the new bill and the accompanying Union Budget 2025-26 proposals focus heavily on providing relief to the middle class, reducing litigation, and making tax compliance a "hassle-free" experience for every citizen.

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1. Key Objective: Simplifying the Complex

The primary motive behind the 2025 Bill is to reduce the complexity of the existing law. The 1961 Act had become a labyrinth of over 3 lakh words, hundreds of provisos, and confusing explanations.

• Concise Language: The new bill aims to reduce the word count by nearly 50%, removing redundant provisions and using plain English to ensure that even a common taxpayer can understand the rules.

• Trust-Based Taxation: The government is shifting from a "scrutiny-first" approach to a "trust-based" model, where 99% of returns will be accepted based on self-assessment without manual intervention.

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2. Revised Tax Slabs (New Tax Regime) for FY 2025-26

The most celebrated part of the 2025 reforms is the significant relief provided to salaried individuals. The New Tax Regime (the default regime) has been restructured to put more disposable income into the hands of the middle class.

The New Slabs at a Glance:

Annual Income (INR)	Tax Rate (%)
Up to ₹4,00,000	Nil
₹4,00,001 – ₹8,00,000	5%
₹8,00,001 – ₹12,00,000	10%
₹12,00,001 – ₹16,00,000	15%
₹16,00,001 – ₹20,00,000	20%
₹20,00,001 – ₹24,00,000	25%
Above ₹24,00,000	30%

The Impact: * Zero Tax up to ₹12 Lakh: Thanks to the enhanced rebate under Section 87A (increased to ₹60,000), individuals earning up to ₹12 lakh annually will effectively pay zero income tax under the new regime.

• Salaried Benefit: With a standard deduction of ₹75,000, a salaried employee can earn up to ₹12.75 lakh without paying a single rupee in tax.

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3. Major Structural Changes in the Bill

The Income Tax Bill 2025 introduces several technical changes that align Indian laws with international standards:

• Concept of 'Tax Year': The bill replaces the old terms "Previous Year" and "Assessment Year" with a single, simplified term: "Tax Year". This refers to the financial year (April 1 to March 31) in which income is earned and reported.

• Two Self-Occupied Properties: Previously, only one house property could be claimed as self-occupied with "Nil" annual value. The new bill allows taxpayers to claim two self-occupied properties as tax-free, even if they are located in different cities.

• Updated Returns: The time limit to file an "Updated Return" (ITR-U) has been extended from 2 years to 4 years, giving taxpayers more time to correct errors and avoid penalties.

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4. TDS and TCS Rationalization

To reduce the compliance burden on small businesses and individuals, the threshold limits for Tax Deducted at Source (TDS) have been significantly increased:

• Interest on Deposits: The TDS threshold for interest earned (other than on securities) has been raised from ₹40,000 to ₹50,000 for general citizens, and for senior citizens, it has been doubled to ₹1,00,000.

• Rent Payments: The annual limit for TDS on rent has been increased from ₹2.4 lakh to ₹6 lakh, providing major relief to small tenants and landlords.

• Foreign Remittance (TCS): The threshold for Tax Collected at Source (TCS) on foreign remittances under the Liberalized Remittance Scheme (LRS) has been raised from ₹7 lakh to ₹10 lakh.

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5. Focus on Digital Economy & Influencers

Recognizing the rise of the digital creator economy, the bill brings clarity to social media earnings:

• Brand Collaborations: Income from brand endorsements and social media promotions will now be treated as "Profits and Gains of Business or Profession" (PGBP).

• TDS on Influencers: Payments exceeding ₹50,000 in a year for professional services (including brand collaborations) will attract a 10% TDS under section 194J.

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6. Relief for Senior Citizens and Pensioners

• Family Pension Deduction: The standard deduction for family pensioners has been increased from ₹15,000 to ₹25,000.

• No ITR for Super Seniors: Senior citizens above 75 years, whose income consists only of pension and interest from the same bank, continue to be exempt from filing returns if the bank deducts the necessary tax.

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7. Old vs. New Tax Regime: The Transition

The government is clearly pushing taxpayers toward the New Tax Regime. While the Old Regime still exists and allows deductions (like 80C, 80D, HRA), it has not seen any major slab changes. For most middle-income earners who do not have heavy investments, the New Regime now offers much higher savings—up to ₹80,000 to ₹1,10,000 in tax savings for those in the ₹12–25 lakh income bracket.

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Conclusion

The Income Tax Bill 2025 is a landmark step in India’s journey toward becoming a Viksit Bharat (Developed India). By doubling the tax-free limit for the middle class and simplifying the legal language, the government is fostering an environment of ease of living and ease of doing business. While the new laws bring more data-driven scrutiny to catch evaders, they offer a smoother, faster, and more rewarding experience for the honest taxpayer.

As the law prepares to fully replace the 1961 Act by April 2026, taxpayers should start planning their finances to leverage these new exemptions and simplified processes. 

Guide to Capital Gains Tax on Shares in India (FY 2025-26)

 Investing in the Indian stock market involves understanding how your profits are taxed. The taxation on shares depends primarily on the type of shares (listed vs. unlisted) and the holding period (how long you kept them before selling). Following the major reforms in 2024, the tax structure has been simplified for the current assessment year.

1. Short-Term Capital Gains (STCG)

If you sell listed equity shares within 12 months of purchase, the resulting profit is treated as a Short-Term Capital Gain.

Following the significant changes introduced in the 2024 Union Budget and maintained through 2025, here is the updated breakdown of how your share investments are taxed.

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1. Short-Term Capital Gains (STCG)

If you sell your equity shares within a specific "short" timeframe, the profit is treated as STCG.

• Holding Period: For listed equity shares, if the holding period is 12 months or less, the gain is considered short-term.

• Tax Rate: STCG on listed shares (where Securities Transaction Tax or STT is paid) is taxed at a flat rate of 20%.

• Exemption: There is no basic exemption limit specifically for STCG. The entire profit is taxable, regardless of the amount, unless your total annual income (including these gains) is below the basic income tax exemption limit (e.g., ₹3 lakh under the New Tax Regime).

Note: For unlisted shares, the holding period to qualify as "short-term" is 24 months or less, and the gains are taxed according to your applicable income tax slab rate.

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2. Long-Term Capital Gains (LTCG)

If you hold your investments for a longer duration, you benefit from a lower tax rate and a specific tax-free threshold.

• Holding Period: For listed equity shares, if held for more than 12 months, the gain is considered long-term.

• Tax Rate: LTCG is taxed at a flat rate of 12.5%.

• Exemption Limit: You enjoy a tax exemption on the first ₹1.25 lakh of aggregate long-term capital gains in a financial year. Tax is only calculated on the amount exceeding this limit.

• Indexation: No indexation benefit is available for listed equity shares. This means you cannot adjust the purchase price for inflation.

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Comparative Summary Table

Feature	Short-Term Capital Gains (STCG)	Long-Term Capital Gains (LTCG)
Holding Period	12 months or less	More than 12 months
Tax Rate	20%	12.5%
Exemption Limit	Nil	₹1.25 Lakh (per year)
Applicable Section	Section 111A	Section 112A
Surcharge & Cess	Surcharge + 4% Health & Education Cess	Surcharge + 4% Health & Education Cess

. Important Rules to Remember

The "Grandfathering" Clause

For shares purchased before January 31, 2018, a "grandfathering" rule applies. This ensures that any gains made up to that date remain tax-exempt. When you sell such shares, the "cost of acquisition" is considered to be the higher of the actual purchase price or the Fair Market Value (FMV) as of January 31, 2018 (provided the FMV is not higher than the actual sale price).

Set-off and Carry Forward

• STCG Losses: Can be set off against both STCG and LTCG.

• LTCG Losses: Can only be set off against LTCG.
• If you cannot set off your losses in the current year, you can carry them forward for up to 8 assessment years.

Securities Transaction Tax (STT)

The specialized tax rates (20% for STCG and 12.5% for LTCG) only apply if the shares are sold on a recognized stock exchange in India and STT has been paid on the transaction.

Capital Gain Tax Exemptions in India: A Complete Guide for 2026

 

When you sell an asset like a house, gold, or stocks for a profit, the government typically wants a piece of that "gain." However, the Indian Income Tax Act offers several legitimate "escape routes" to minimize or even zero out this tax liability.

As of 2026, following the major shifts from the 2024 and 2025 Union Budgets, here is your updated guide to capital gain tax exemptions.

Capital Gain Tax Exemptions in India: A Complete Guide for 2026

1. The ₹1.25 Lakh "Free Pass" (Section 112A)

If you invest in the stock market or equity mutual funds, you don't pay tax on the first ₹1.25 lakh of your Long-Term Capital Gains (LTCG) in a financial year.

• The Rule: The asset must be held for more than 12 months.

• Tax Rate: Gains exceeding ₹1.25 lakh are taxed at a flat 12.5% (indexation is not available for equity).

2. Reinvesting in a New Home (Section 54)

Sold your old house to buy a new one? You can claim an exemption on the LTCG.

• Timeline: Buy a new house within 1 year before or 2 years after the sale, or construct one within 3 years.

• The "Two-House" Bonus: If your capital gains are below ₹2 crore, you can buy two residential houses and still claim the exemption (this is a once-in-a-lifetime benefit).

• The Cap: The maximum exemption you can claim is capped at ₹10 crore.

3. Saving Tax Without Buying a House (Section 54EC)

If you don't want to lock your money in real estate, you can invest in specific Government-notified bonds (like NHAI, REC, PFC, or IRFC).

• Timeline: You must invest within 6 months of selling your property (land or building).

• Lock-in: You must keep the money in these bonds for 5 years.

• Investment Limit: Max ₹50 lakh per financial year.

4. Selling Other Assets to Buy a House (Section 54F)

If you sell gold, commercial property, or plots of land and use that money to buy a residential house, you can claim an exemption.

• The Catch: Unlike Section 54, you must reinvest the entire sale proceeds (not just the profit) to get a full exemption. If you invest only part of the proceeds, the exemption is proportionate.

• Limit: This is also capped at a reinvestment value of ₹10 crore.

Comparison of Key Exemption Sections (FY 2025-26)

Feature	Section 54	Section 54F	Section 54EC
Asset Sold	Residential House	Any asset except a house	Land or Building
Reinvestment In	Residential House	Residential House	Tax-Saving Bonds
Who can claim?	Individuals & HUF	Individuals & HUF	All Taxpayers
Exemption Cap	₹10 Crore	₹10 Crore	₹50 Lakh
Holding Period	> 24 Months	> 24 Months	> 24 Months

🏠 Frequently Asked Questions (FAQs)

1. What is the "3-Year Lock-in Rule"?

To prevent people from simply "flipping" houses to save tax, the government mandates that you hold your new house for at least 3 years.

• The Penalty: If you sell the new house before 3 years, the tax exemption you claimed earlier will be revoked. The exempted amount will be added back to your income (or reduce the cost of your new house) and taxed in the year you sell it.

2. Can I buy a house first and sell my old one later?

Yes! You can claim an exemption even if you bought the new house up to 1 year before selling the old one. This is helpful for people who find their dream home before they find a buyer for their current property.

3. What if I can't find a new house before the Tax Filing deadline?

If the July 31st deadline (ITR filing) is approaching and you haven't bought a house yet, you must deposit the gains into a Capital Gains Account Scheme (CGAS) in a public sector bank.

• This keeps your money "earmarked" for a house, allowing you to claim the exemption in your tax return today. You then have 2 years (to buy) or 3 years (to build) to use that money.

4. Can I invest in a commercial property to save tax?

No. Sections 54 and 54F specifically require reinvestment in residential house property within India. Investing in a shop, office, or plot of land (without building a house on it) will not qualify you for these exemptions.

5. Is it true I can buy two houses?

Yes, but with conditions:

• Your total Capital Gains must be below ₹2 crore.

• You can only use this "two-house" benefit once in your lifetime.

• If you do this, you cannot use the "two-house" rule ever again, even if your gains are small in the future.

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Summary Table for Your Readers

Question	Answer
New House Lock-in	3 Years
Max Exemption Limit	₹10 Crore (Sections 54 & 54F)
Bonds Lock-in	5 Years (Section 54EC)
Can NRIs claim this?	Yes, similar rules apply to NRIs.

 

The Era of Transparency: Understanding Faceless Assessment 2.0 in 2026

The Indian Taxation landscape has undergone a massive transformation. Gone are the days of visiting the Income Tax office and interacting with Assessing Officers in person. With the implementation of Faceless Assessment 2.0, the government has fully integrated Artificial Intelligence (AI) and Data Analytics to make tax scrutiny more objective and transparent.

What is Faceless Assessment 2.0?

Faceless Assessment 2.0 is the advanced version of the original scheme launched in 2020. It eliminates the physical interface between the Taxpayer and the Income Tax Department. The entire process—from the selection of the case to the final assessment order—is handled by a central electronic unit.

Key Features of the 2.0 Version

1. AI-Driven Case Selection: Cases are no longer picked manually. Advanced algorithms analyze the Annual Information Statement (AIS) and Taxpayer Information Summary (TIS) to flag discrepancies.

2. Dynamic Jurisdiction: Your case might be assessed by a team in Chennai while you are based in Delhi. This "randomized allocation" ensures there is no local bias or vested interest.

3. Team-Based Review: Instead of a single officer, a "Unit" reviews the case. This includes Assessment Units, Verification Units, Technical Units, and Review Units, ensuring a multi-layered check.

4. Video Conferencing Rights: If a taxpayer disagrees with a draft order, they have the right to request a hearing via video conferencing, making the process 100% digital.

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Why is it Trending in 2026?

The 2.0 version is making headlines because of its speed and accuracy. With the integration of the "Insight Portal," the department now has a 360-degree view of a taxpayer’s financial life, including:

• High-value credit card spends.

• Foreign travel data.

• Share market and crypto transactions.

• Property registrations.

Important Note: Under Faceless 2.0, if you receive a notice (u/s 143(2)), you must respond electronically through the 'e-filing' portal. Ignoring these notices can now lead to automated penalties.

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Benefits for the Taxpayer

• Efficiency: Faster disposal of cases compared to the old manual system.

• Transparency: Every communication is timestamped and recorded on the portal.

• Ease of Compliance: You can respond to notices from the comfort of your home or office.

• Reduced Corruption: No physical meeting means no scope for unfair practices.

Conclusion

Faceless Assessment 2.0 is a bold step toward a "Honoring the Honest" tax system. For taxpayers, the mantra for 2026 is simple: Accuracy in Disclosure. As long as your ITR matches your financial footprint recorded in the AIS, the faceless system is a boon that saves time and effort.

Is Your Income Tax Portal Showing a "Red Flag"? Check Your AIS/TIS Before You Get a Notice.

 Do you think the Income Tax Department only knows about the salary or business income you declare in your ITR? Think again.

With the implementation of AIS (Annual Information Statement) and TIS (Taxpayer Information Summary), the department now tracks almost every major financial transaction you make. From your credit card bills to your share market trades, everything is recorded.

Recently, many taxpayers have received messages about "High Value Transactions" or discrepancies. If you ignore these, you might receive a defective return notice or a demand for pending tax.

Here is why you need to login to the tax portal and check your AIS today.

What exactly is AIS/TIS?

Think of AIS as your "Financial Report Card". Banks, post offices, property registrars, and stock exchanges report your transactions to the Income Tax Department. The department compiles this data into the AIS.

• AIS: Detailed statement of all financial transactions.

• TIS: A summarized version used for tax calculation.

5 High-Value Transactions That Trigger Alerts

If you have done any of the following, the department is definitely watching:

1. Cash Deposits: Depositing more than ₹10 Lakhs in a savings account or ₹50 Lakhs in a current account in a year.

2. Fixed Deposits (FDs): Opening FDs aggregating to more than ₹10 Lakhs.

3. Credit Cards: Paying a credit card bill of ₹1 Lakh+ in cash or ₹10 Lakhs+ via cheque/online in a year.

4. Property Purchase/Sale: Buying or selling immovable property worth ₹30 Lakhs or more.

5. Share Market & Mutual Funds: Investing more than ₹10 Lakhs in shares, mutual funds, or bonds.

The Danger of "Mismatch"

The problem starts when the data in your AIS does not match the income you declared in your Income Tax Return (ITR).

Example: Your AIS shows you earned ₹50,000 interest from a Fixed Deposit. But in your ITR, you only declared ₹10,000. Result: The system will flag this as "Under-reporting of Income," and you may receive a notice under Section 133(6) or 143(1).

What Should You Do Now?

As a tax consultant, I advise my clients to do a "Mid-Year AIS Check" in December:

1. Login: Go to the Income Tax e-filing portal.

2. Navigate: Go to Services > Annual Information Statement (AIS).

3. Verify: Check if the transactions shown belong to you.

4. Submit Feedback: If you see a wrong entry (e.g., a duplicate entry or a transaction that isn't yours), you can submit feedback online to correct it. Do not ignore errors, or the department will assume they are true.

Conclusion

In the era of "Face-less Assessment," transparency is your best defense. Don't wait for a notice to arrive. Proactively checking your AIS/TIS ensures you stay compliant and stress-free.

Found a transaction you don't recognize? If your AIS shows data that is incorrect or if you have received a message regarding high-value transactions, contact me immediately. We need to reply to the department before it turns into a scrutiny case.

Contact:7005428094

Sourav Saha | Tax Consultant

Title: Missed the 15th December Advance Tax Deadline? Here is How Much Penalty You Have to Pay. Date: December 15, 2025 Category: Income Tax / Compliance

 

Today, December 15th, was the deadline for paying the 3rd installment of Advance Tax for the Financial Year 2025-26.

If you are a freelancer, a business owner, or a salaried individual with significant income from other sources (like capital gains or rent), you were supposed to deposit 75% of your total estimated tax liability by today.

Did you miss it? Don't panic. It happens. However, the Income Tax Department does charge a fee for this delay. Here is a simple breakdown of what happens next and how you can fix it.

1. First, check if you were even liable to pay?

Not everyone has to pay Advance Tax. You are safe if:

• Your total tax liability for the year is less than ₹10,000.

• You are a Senior Citizen (60+ years) and do not have any income from a business or profession.

If you fall into these categories, relax. The 15th December deadline does not apply to you.

2. The Penalty: Understanding Section 234C

If you were liable to pay but missed the deadline, the Income Tax Department levies interest under Section 234C.

• The Rule: You must have paid at least 75% of your total tax by Dec 15th.

• The Interest Rate: 1% per month.

• The Period: For the December installment, interest is calculated for 3 months.

Why 3 months? Even if you pay tomorrow (Dec 16th), the government assumes a deferment for the whole quarter. So, the interest is fixed for this period.

3. Real-Life Example: How much will it cost?

Let’s say your total estimated tax for the year is ₹1,00,000.

• Target: By Dec 15, you should have paid 75% = ₹75,000.

• Scenario: You forgot to pay anything. You paid ₹0.

• Shortfall: ₹75,000.

The Calculation: Interest = Shortfall × 1% × 3 Months Interest = ₹75,000 × 1% × 3 Interest Payable = ₹2,250

So, missing today's deadline effectively cost you ₹2,250 extra.

4. What should you do now?

If you missed the deadline, here is my advice as a Tax Consultant:

1. Pay Immediately: Even though Section 234C interest (for 3 months) is now unavoidable for the December quarter, paying the tax now will save you from further interest under Section 234B which kicks in after March 31st.

2. Recalculate: December is a good time to re-check your estimated income. If your profit is lower than expected, your tax liability decreases, and so does the interest.

3. Prepare for March: The final installment (100% of tax) is due on March 15th. Mark your calendar now so you don't pay interest twice.

Conclusion

Paying taxes on time isn't just a duty; it’s a smart financial habit. The interest penalties under sections 234A, 234B, and 234C can add up to a significant amount if ignored.

Confused about the Challan? If you want to pay your tax now but don't know how to calculate the exact amount or which Challan to use (ITNS 280), feel free to contact me. I can help you file it correctly to minimize your penalties.

Contact:7005428094

Sourav Saha | Tax Consultant

Blog Title: GSTR-9 & 9C Deadline Alert: Why You Must File Before 31st December (FY 2024-25)

 As we approach the end of the year, business owners are busy planning for the New Year. However, there is one critical compliance deadline that cannot be ignored. The due date for filing the GST Annual Return (GSTR-9) and the Reconciliation Statement (GSTR-9C) for the Financial Year 2024-25 is 31st December 2025.

Many taxpayers treat this as just "another form," but in reality, GSTR-9 is your final opportunity to rectify any errors made in your monthly returns (GSTR-1 and GSTR-3B) during the year. Missing this deadline or filing incorrect data can lead to heavy penalties and departmental notices.

1. Who Needs to File?

Before you panic, let’s clarify the applicability based on your Aggregate Annual Turnover for FY 24-25:

• Turnover up to ₹2 Crore: Filing GSTR-9 is optional (Exempt), but highly recommended if you need to correct data.

• Turnover above ₹2 Crore: Mandatory to file GSTR-9.

• Turnover above ₹5 Crore: Mandatory to file both GSTR-9 (Annual Return) and GSTR-9C (Reconciliation Statement).

2. Why is GSTR-9 Critical? (It’s Your Last Chance!)

Once the GSTR-9 is filed, the data for that financial year is locked. You cannot revise GSTR-9. This return allows you to:

• Declare Unreported Sales: If you missed reporting any invoice in GSTR-1/3B, declare it now and pay the tax with interest to avoid notices.

• Reconcile ITC: Match the Input Tax Credit (ITC) claimed in your books versus what appears in GSTR-2B. If you have claimed excess ITC, reverse it now to avoid a demand notice later.

3. The GSTR-9C Trap: Books vs. Portal

For businesses with a turnover above ₹5 Crore, GSTR-9C acts as a bridge between your Audited Financial Statements and your GST Returns.

• If your Balance Sheet shows a different turnover than your GST return, the Tax Officer will ask for an explanation.

• Filing GSTR-9C requires a deep technical analysis to explain these differences validly.

4. Essential Checklist Before You File

Don't just click "Submit." Ensure you have checked these 4 points:

• [ ] RCM Liability: Have you paid tax on all Reverse Charge Mechanism expenses (like GTA, Legal Fees)?

• [ ] ITC Reversal: Have you reversed ITC on goods lost, stolen, or given as free samples?

• [ ] HSN Summary: Ensure the HSN-wise summary matches your total turnover.

• [ ] Tax Payment: Any additional tax liability appearing in GSTR-9 must be paid via Form DRC-03 immediately.

5. Consequences of Missing the Deadline

If you miss the 31st December 2025 deadline:

• Late Fees: You will be liable to pay a late fee per day for every day of delay.

• Blocked Portals: Continuous non-compliance can lead to E-way bill blocking.

• Notices: The department automatically tracks non-filers after the due date.

Conclusion

The GST portal often faces server issues during the last week of December due to heavy traffic. Do not wait until December 31st. The best time to file is NOW.

Review your books, reconcile your data, and file a clean Annual Return to ensure a hassle-free business year ahead.

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Need Professional Help?

Filing GSTR-9 & 9C requires precise reconciliation. If you are confused about ITC mismatch or need help finalizing your GST Audit, I am here to help.

Contact Sourav Saha (Tax Consultant) 📍 Agartala, Tripura 📞 7005428094