Important Changes in Tax Proposals in Budget 2025

1. In new tax regime, tax rate slabs of NIL, 5%,10%, 15%, 25% and 30% have been widened with spacing of 4 lacs ranging from 4 lacs to 24 lacs as compared to earlier spacing of 3 lacs form 3 lacs to 15 lacs.

2. Eligibility of Rebate under section 87A increased from 7 lacs to 12 lacs and rebate of 60,000 shall be available on income up to 12 lacs. Thus tax shall be reduced to NIL under new tax regime, if income is up to 12 lacs

3. Rebate u/s 87A shall not be available for income taxed at special rates of tax like tax on short term or long term capital gain

4. Registration of trust already granted shall not be cancelled only because application for registration of trust is not complete.

5. *Period of renewal of registration for Trusts* having income below Rs. 5 crores increased from 5 years to 10 years

6. Limit of *substantial contribution* for imparting benefit to the contributor by the trust increased from 50 thousands for relevant previous to Rs. 1 lakh. Also aggregate cap for substantial contribution prescribed at Rs. 10 lacs. Further relative of contributor or concerns in which contributor or relative has substantial interest shall no longer rank with contributor himself.

7. *ULIPs issued after 01-02-2021* enjoy exemption if premium is less than Rs.2,50,000/- These ULIPs have been treated as capital asset and taxable ULIPs to be treated as equity oriented fund and thus shall be treated as long term capital assets after 12 months holding and taxable @ 12.5% without indexation.

8. Period of incorporation for 100% tax benefit on eligible *startups* extended from 01-04-25 to 01-04-30

9. *TDS Limits* increased as under:

i. TDS limit on *rent* increased from Rs. 2.40 lacs in FY to Rs. 50,000 per month

ii. TDS limit on *professional/ technical services* increased from 30,000 to 50,000 

iii. TDS limit of *brokerage/commission* increased from Rs. 15000 to Rs. 20000

iv. TDS limit for *Interest* increased from Rs. 5000 to Rs. 10000

10. No *TCS on traders of forest produce* (other than timber/tendu leaves) who do not obtain forest produce under forest lease. Also TCS rate on forest produce reduced from 2.5% to 2%.

11. *TCS on sellers of goods* @ 0.1% abolished because TDS is already applicable at buyer side.

12. Uniform *Time limit for completion of penalty proceedings* i.e. 6 months from end of quarter of completion of connected proceedings/receipt of appeal order to be followed.

13. *Higher TDS/TCS for non filer* deductees/collectees abolished.

14. *Salary limits* for inclusion of benefits/perqs. To be revised by prescribing through rules


15. Exemption on *NSS Withdrawal* allowed.

16. *Annual Value exemption for 2 houses* granted for self occupied house as well as not occupied house due to any reason. Condition of non occupation due to employment, business or profession elsewhere done away.

17. No *prosecution* to be launched for delayed payment of TCS.

18. Assessing officer empowered to levy *penalty* with approval of Joint Commissioner for TDS non compliance, loan/deposits in cash for Rs.20000 and above, certain transactions in cash for Rs. 2lacs and above.

19. Processing period of application for *immunity from penalty* increased from 30 days to 3 months.

20. Time Period of filing *updated return* increased from 24months from the end of assessment year to 48 months. Accelerated tax and interest after 24 months shall be 60% till 36 months and 70% thereafter.

21. *Pre-deposits* for appeal before first appellate authority against GST penalty only orders fixed at 10% of penalty and further 10% for appeal before GSTAT.

22. *Track and Trace mechanism* being introduced for certain goods by unique identification marking.

23. Supply of goods warehoused in *SEZ/FTZ* not to be treated as supply.

24. No reduction of output tax liability to be allowed to supplier on *credit notes* unless ITC has been reversed by registered recipient.

25. Amendment brought to defeat *Supreme Court Judgment in Safari Retreats* regarding ITC blocking on goods/services used in construction.

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