February 01, 2025
Changes in Personal Income Tax
New Personal Income Tax Regime (Proposed)
Total Income (₹) | 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% |
Rebate & Marginal Relief (New Tax Regime)
Resident individuals with total income up to ₹12,00,000 will not pay tax due to the increased rebate.
Marginal relief applies to income slightly above ₹12,00,000.
Tax Calculation with Rebate Benefits
Income (₹) | Tax (Present) | Tax (Proposed) | Benefit of New Slabs (₹) | Rebate Benefit (₹) | Total Benefit (₹) | Final Tax Payable (₹) |
8,00,000 | 30,000 | 20,000 | 10,000 | 20,000 | 30,000 | 0 |
9,00,000 | 40,000 | 30,000 | 10,000 | 30,000 | 40,000 | 0 |
10,00,000 | 50,000 | 40,000 | 10,000 | 40,000 | 50,000 | 0 |
11,00,000 | 65,000 | 50,000 | 15,000 | 50,000 | 65,000 | 0 |
12,00,000 | 80,000 | 60,000 | 20,000 | 60,000 | 80,000 | 0 |
16,00,000 | 1,70,000 | 1,20,000 | 50,000 | 0 | 50,000 | 1,20,000 |
20,00,000 | 2,90,000 | 2,00,000 | 90,000 | 0 | 90,000 | 2,00,000 |
24,00,000 | 4,10,000 | 3,00,000 | 1,10,000 | 0 | 1,10,000 | 3,00,000 |
50,00,000 | 11,90,000 | 10,80,000 | 1,10,000 | 0 | 1,10,000 | 10,80,000 |
Changes in TDS & TCS
Changes in TDS/TCS Rates
Section of the Act | Present TDS/TCS Rate | Proposed TDS/TCS Rate |
Section 194LBC - Income in respect of investment in securitization trust | 25% (Individual/HUF) & 30% (Others) | 10% |
Sub-section (1) of section 206C (i) TCS on timber or any other forest produce (not being tendu leaves) obtained under a forest lease & (ii) TCS on timber obtained by any mode other than under a forest lease | 2.5% | 2% |
Sub-section (1G) of section 206C – TCS on remittance under LRS for education (financed by loan from financial institution) | 0.5% after Rs. 7 lakhs | Nil |
Changes in TDS/TCS Thresholds
Section of the Act | Present TDS/TCS Threshold (Rs) | Proposed TDS/TCS Threshold (Rs) |
193 - Interest on securities | Nil | 10,000/- |
194A - Interest other than Interest on securities | (i) 50,000/- (Senior Citizen) (ii) 40,000/- (Others) when payer is bank, cooperative society, post office (iii) 5,000/- in other cases | (i) 1,00,000/- (Senior Citizen) (ii) 50,000/- (Others) when payer is bank, cooperative society, post office (iii) 10,000/- in other cases |
194 – Dividend (for an individual shareholder) | 5,000/- | 10,000/- |
194K - Income in respect of units of mutual fund/specified company | 5,000/- | 10,000/- |
194B - Winnings from lottery, crossword puzzle, etc. | Aggregate exceeding 10,000/- during financial year | 10,000/- per single transaction |
194BB - Winnings from horse race | 10,000/- | 10,000/- |
194D - Insurance commission | 15,000/- | 20,000/- |
194G - Income by way of commission, prize, etc. on lottery tickets | 15,000/- | 20,000/- |
194H - Commission or brokerage | 15,000/- | 20,000/- |
194-I - Rent | 2,40,000/- per financial year | 50,000/- per month or part of month |
194J - Fee for professional or technical services | 30,000/- | 50,000/- |
194LA - Income by way of enhanced compensation | 2,50,000/- | 5,00,000/- |
206C(1G) - Remittance under LRS and overseas tour package | 7,00,000/- | 10,00,000/- |
Other Direct Tax Changes (Budget 2025)
Category | Proposal | Details |
Encouraging Voluntary Compliance | Extension of time to file updated return | Time limit extended from 24 to 48 months; additional tax increased (60% for 24-36 months, 70% for 36-48 months). |
Crypto-asset reporting | Entities dealing in crypto must report transactions; VDA definition aligned. | |
Simplified annual value of self-occupied property | Considered nil if occupied or unoccupied due to valid reasons. | |
Reducing Compliance Burden | Removal of TCS on specified goods | No TCS on sale of specified goods above ₹50 lakh. |
Omission of higher TDS/TCS for non-filers | Sections 206AB & 206CCA removed to ease compliance. | |
Definition of "forest produce" clarified | TCS to be collected only on specified forest produce. | |
Ease of Doing Business | Startup tax benefit extension | Section 80-IAC extended for 5 years (until 01.04.2030). |
Parity in LTCG for non-residents | FIIs taxed at the same rate as residents. | |
Simplification of charitable trust taxation | Registration validity increased from 5 to 10 years; minor violations excluded from cancellation. | |
Rationalization of business trust taxation | Business trust income taxed under section 112A. | |
SEP and business connection alignment | SEP rules exclude transactions confined to export purchases. | |
Clarification on ULIP taxation | Gains from non-exempt ULIPs taxed as capital gains. | |
Amendment in ‘capital asset’ definition | Clarifies taxability of securities held by investment funds. | |
Multi-year transfer pricing adjustments | Transfer pricing to be determined for 3 years. | |
Exemption from prosecution for delayed TCS | No prosecution if TCS is paid before quarterly filing deadline. | |
Employment and Investment | IFSC incentives extended | Exemptions, deductions extended to 31.03.2030; relaxed conditions for treasury activities. |
Investment extension for Sovereign/Pension Funds | Deadline extended from 31.03.2025 to 31.03.2030. | |
Presumptive taxation for non-resident electronics manufacturers | Special tax regime for setting up/operating electronics manufacturing facilities. | |
Tonnage Tax Scheme for inland vessels | Inland vessels covered under existing tonnage tax scheme. | |
NPS Vatsalya deduction | Section 80CCD(1B) benefits extended to NPS Vatsalya accounts. | |
Miscellaneous Amendments | NSS withdrawals exemption | Exemption on withdrawals post 29.08.2024. |
Perquisite limits revised | Section 17 amended to revise employee income limits for perquisites. | |
SUUTI exemption extended | Exemption extended to 31.03.2027. | |
Non-applicability of Section 271AAB | No penalty for search cases initiated after 01.09.2024. | |
AO authority for penalties | Assessing Officer to impose penalties with Joint Commissioner approval. | |
Removal of date restrictions for faceless schemes | No cut-off date for faceless scheme notifications. | |
Time limit for immunity applications | AO to decide within 3 months of application receipt. | |
Time limit for tonnage tax option | Decision deadline set at 3 months post-application. | |
Exclusion of stay period from TCS default orders | Court stay period excluded in time limit calculations. | |
Rationalization of penalty time limits | 6-month deadline for imposing penalties post-appeal/order. | |
Clarity on court stay periods | Amendments to define start/end dates of stayed periods. | |
Rationalization of retention period for seized books | Documents retained for one month post-assessment order. | |
Carry forward of losses in case of amalgamation | Amendments in Section 72A and related provisions. |
Budget 2025: Direct Tax Changes for Businesses & Individuals
Disclaimer: The information provided in this article is for general informational purposes only and should not be considered as professional tax, legal, or financial advice. While every effort has been made to ensure accuracy, tax laws and regulations are subject to change.
Comments