01/04/2025
Important Changes in Income Tax and GST with effect from 01-04-2025:
Changes in Income Tax:
1. IncomeTax Slabs under the New Tax Regime:
Up to 4 lakh (previously 3 lakh) : 0%
4 lakh to 8 lakh : 5%
8 lakh to 12 lakh : 10%
12 lakh to 16 lakh: 15%
16 lakh to 20 lakh: 20%
20 lakh to 24 lakh: 25%
Above 24 lakh: 30%
However, no changes have been made to the tax slabs under the old tax regime.
2. Rebate under Section 87A
The tax rebate under Section 87A for the new tax regime has been raised from 25,000 to 60,000 meaning no income upto Rs. 12 lakhs.
With standard deduction of Rs. 75,000, Salaried individuals will enjoy the tax-free income limit upto 12.75 lakhs under new regime.
3. Changes in TDS Threshold Limits:
Lot of changes have been made in the threshold limits of TDS. Some of them are briefed below:
• Interest other than Interest on securities (Sec 194A):
Interest Income for Senior Citizens Increased from 50,000 to 1 lakh
In case of others when the payer is a bank, cooperative society and post office, Rs. 40000 increased to Rs. 50000
Rs. 10000 in other cases
• Dividend Income (Sec 194): Rs. 5000 increased to Rs. 10000
• Insurance Commission (Sec. 194D): Rs. 15000 increased to Rs. 20000
• Commission/ Brokerage (Sec. 194H): Rs. 15000 increased to Rs. 20000
• Rent payment ( Sec. 194I): Earlier it was Rs. 2.4 lakh in a financial year), now increased to Rs. 50000 per month
• Remuneration, Interest and Commission paid to partners (Sec. 194T): This section has been newly inserted. TDS @ 10 % is to be deducted on remuneration, intersest and commission if the amount exceeds Rs. 20000.
The limit of deduction available to partnership firms and LLPs for remuneration paid to partners is also enhanced.
On first 6 lakhs: 3 lakhs or 90% of Book Profit, whichever is higher and
On Remaining: 60% of Book Profit
4. Changes in TCS:
• Remittance under LRS and overseas tour program package: Rs. 7 lakhs increased to Rs. 10 lakhs
• Remittance under LRS for education if financed through educational loans: No TCS applicable as against 7 lakhs limit before 01-04-2025.
• Purchase of Goods: No TCS as against Rs. 50 lakh limit before
5. Extended timeline for Updated Returns:
The time limit for filing an Updated Income Tax Return (ITR-U) has been extended to 48 months from the end of the relevant assessment year subject to additional tax payments.
6. IFSC Tax Concessions:
The deadline for commencing operations in International Financial Services Centres (IFSCs) for claiming tax benefits extended to 31st March, 2030. Life insurance premiums paid by non-residents in IFSCs are fully exempt under Section 10(10D), with no cap on the premium amount.
7. Startup Tax Benefits Extended till 31st March 2030:
Under Section 80-IAC, startups incorporated before April 1, 2030, can claim a 100% deduction of profits for three consecutive years out of ten years subject to conditions.
8. Treatment Of ULIPs as Capital Gains:
*The proceeds from ULPIs whose premium exceeds 10% of the assured amount or Rs. 2.5 Lakhs annually will be treated as capital gains and will be taxed accordingly.
9. Two House Properties can now be claimed as Self Occupied:
The Finance Bill 2025, relaxed the condition to determine deemed let-out property by allowing individuals to claim up to two house properties as self-occupied and declare NIL income on such properties without any conditions.
Changes in GST:
1. Input Service Distributor (ISD) Mechanism
Effective 1st April, 2024, the ISD mechanism is mandatory for distributing ITC on common services (e.g., rent, ads, professional fees) across GST registrations under the same PAN. Businesses must issue ISD invoices and file GSTR-6 monthly by the 13th. Non-compliance may lead to ITC denial and penalties up to ₹10,000 or the incorrect ITC amount.
2. Removal of the “Declared Tariff” term in Hotel Industry:
GST will be levied based on the actual amount charged. Hotels charging above ₹7,500 per day will be classified as “specified premises” and attract 18% GST on restaurant services with Input Tax Credit (ITC) benefits.
3. Multi-Factor Authentication (MFA):
MFA will be mandatory for all GST portal users, regardless of turnover, to enhance security and prevent unauthorized access.
4. GST on Sale of Old Cars:
The GST rate on the sale of old cars will be revised to 18% from 12%
