02/02/2025
*_🅱️udget Highlight - 2025_*📜
*Focus: Sustainable and inclusive growth driven by key reforms and initiatives across various sectors.*
*Direct Tax Proposals*
👨💼 *Personal Income Tax:*
- 면 No income tax on income up to ₹12 lakh under the new tax regime.
- 📈 Revised tax slabs and rates for those earning above ₹12 lakh.
- 💰 Taxpayers with income up to ₹12 lakh from normal income (excluding special rate income like capital gains) will receive a tax rebate in addition to the benefit from slab rate reduction, resulting in no tax payable.
* 🏦 *TDS/TCS Rationalization:*
- ✂️ Reduced number of rates and increased threshold limits for TDS and TCS.
- 👴👵 Limit for tax deduction on interest for senior citizens doubled from ₹50,000 to ₹1 lakh.
- 🏠 Annual limit for TDS on rent increased from ₹2.40 lakh to ₹6 lakh.
- ✈️ Threshold to collect tax at source (TCS) on remittances under LRS increased from ₹7 lakh to ₹10 lakh.
- 📚 TCS on remittances for education purposes removed if the remittance is from a loan taken from a specified financial institution.
- 🛍️ TCS on the sale of goods omitted to prevent compliance difficulties.
- 💳 Higher TDS deduction provisions will now apply only in non-PAN cases.
- ⏰ Relaxation provided in TCS provisions for delayed payment up to the due date of filing the statement.
* ✅ *Voluntary Compliance:*
- 📅 Time limit for filing updated returns extended to four years, promoting voluntary compliance.
* ⬇️ *Reduced Compliance Burden:*
- 🏥 Registration period for small charitable trusts increased to ten years, easing the compliance burden.
- 🏡 Benefit of two self-occupied properties allowed without any conditions, addressing difficulties faced by taxpayers.
* 🤝 *Ease of Doing Business:*
- 📝 Scheme introduced for determining the arm's length price for a three-year block period, aligning with global best practices.
- ⚖️ Scope of safe harbor rules expanded to reduce litigation and provide certainty in international taxation.
💼 *Employment and Investment:*
- 🏭 Tax certainty provided for electronics manufacturing schemes.
- 🚢 Benefits of the existing tonnage tax scheme extended to inland vessels registered under the Indian Vessels Act, 2021.
- 🚀 Support continued for the Indian start-up ecosystem by extending the period of incorporation by 5 years.
- 🏢 Specific benefits proposed for ship-leasing units, insurance offices, and treasury centers of global companies in IFSC.
- 🏛️ Certainty of taxation provided to Category I and Category II AIFs on gains from securities.
- 🗓️ Date for making investments by Sovereign Wealth Funds and Pension Funds extended to 31st March 2030.
*Financial Regulatory and Legal Proposals*
* 💰 *FDI in Insurance Sector:*
- ⬆️ FDI limit increased to 100% for companies investing the entire premium in India.
- 📝 Current guardrails and conditionalities associated with foreign investment to be reviewed and simplified.
📑 *KYC Simplification:*
- 🔄 Revamped Central KYC registry to be rolled out in 2025.
* 🏢 *Merger of Companies:*
- ⏩ Rationalized requirements and procedures for faster approval of company mergers.
🛤️ Scope for fast-track mergers widened and the process made simpler.
* 👨⚖️ *High-Level Committee for Regulatory Reforms:*
- 🧑🤝🧑 Committee formed to review non-financial sector regulations and promote ease of doing business.
* 📜 *Jan Vishwas Bill 2.0:*
- ❌ Proposed to decriminalize over 100 provisions in various laws, enhancing the ease of doing business.
* 📊 *Investment Friendliness Index of States:*
- 📈 Index launched to encourage healthy competition and promote investment-friendly policies across states.
* 🛡️ *FSDC Mechanism:*
- ⚙️ Mechanism under the Financial Stability and Development Council (FSDC) set up to assess the impact of financial regulations and enhance their responsiveness.
*Tax Rates*
*Tax Rates for Assessment Year 2026-27*
* 👨💼 *Individual, HUF, AOP, BOI, AJP – New Regime:*
- 💰 Up to ₹4,00,000: Nil
- ₹4,00,001 to ₹8,00,000: 5%
- ₹8,00,001 to ₹12,00,000: 10%
- ₹12,00,001 to ₹16,00,000: 15%
- ₹16,00,001 to ₹20,00,000: 20%
- ₹20,00,001 to ₹24,00,000: 25%
- Above ₹24,00,000: 30%
* 🏦 *Co-operative Societies:*
- Up to ₹10,000: 10%
- ₹10,001 to ₹20,000: 20%
- Above ₹20,000: 30%
- 🆕 Under New Regime: 22%
* 🏢 *Firms:* 30%
🏢 *Local Authorities:* 30%
🏢 *Domestic Companies:*
- Turnover up to ₹400 crore: 25% - New Regime
- Turnover above ₹400 crore: 30%
* 🏢 *Companies other than domestic companies:* 35% (except for income chargeable at special rates)
*Rebate under Section 87A*
* For Assessment Year 2026-27:
- The rebate for individuals under section 115BAC will be increased. The new limit will be ₹12,00,000, with a maximum rebate of ₹60,000.
Thanks and regards
CA Vinay Kumar Patawari
V K Patawari & Co.
