Get ready! A brand-new Income Tax Act is coming next week!

Business and Investment Opportunities, Startup, Taxation and Statutary Compaliances News

But before it lands, here are the top 10 Direct Tax Highlights of Budget 2025 that you need to know:

1] No Income Tax up to ₹12 Lakhs: Big relief for the middle class! If your income is up to ₹12 lakhs, you won’t pay any income tax under the new tax regime. This is thanks to a combination of revised slabs and increased rebate under Section 87A. Remember, this rebate doesn’t apply to capital gains or special income.

2] Revised Income Tax Slabs: The income tax slabs have been revamped with wider ranges, making the tax calculation simpler. The 30% tax rate now applies to income above ₹24 lakhs in the new tax regime.

3] Higher TDS Limits: Several TDS thresholds have been increased, including rent u/s 194-I (now ₹6 lakhs p.a.), interest on other than securities u/s 194A for senior citizens (₹1 lakh), and professional/technical services u/s 194J (50k).

4] Easier Updated Returns: Missed filing your return? No worries! You now have 4 years (instead of 2) to file an updated return, encouraging voluntary compliance i.e. ITR-U for FY 21-22 can now be filed even after 31-3-25.

5] Trust Registration Simplified: Small charitable trusts and institutions will benefit from a longer registration period (10 years instead of 5) and minor application issues won’t lead to registration cancellation.

6] Startup Boost: The period for incorporating startups to avail 100% income tax exemption u/s 80-IAC benefits has been extended to April 1, 2030. Great news for the startup ecosystem!

7] TCS Rationalization:
– No TCS on Education Loans: If you’re funding your education through a loan from a specified financial institution u/s 80E, no TCS will be collected on remittances.
– Threshold for collecting TCS on remittance under the LRS scheme of RBI & for overseas tour has been increased to 10lacs in a year. Also, TCS on Sale of Goods u/s 206C(1H) will be omitted from 1-4-25
– No prosecution in delay in payment of TCS: u/s 276BB if tax paid to central government by the due date of quarterly statements u/s 206C (3).

8] Arms-Length Price Simplified: A new scheme will determine the arms-length price for a block of 3 years for TP assessments, reducing duplicate compliance by the assessee as well as the department.

9] Processing period of application seeking immunity from penalty and prosecution u/s 270AA has been increased to 3months from the end of the month in which application is received by AO

10] 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.

Stay tuned for more updates on the new Income Tax Act next week!

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