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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