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TMI BlogIncome Tax Changes from April 1, 2025- Everyone Must Know!X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax Changes from April 1, 2025- Everyone Must Know! X X X X Extracts X X X X X X X X Extracts X X X X ..... ef to taxpayers. These revised tax slabs will apply from FY 2025-26 onwards: Income Tax Rate Up to Rs.4 lakh NIL Rs.4 lakh to Rs.8 lakh 5% Rs.8 lakh to Rs.12 lakh 10% Rs.12 lakh to Rs.16 lakh 15% Rs.16 lakh to Rs.20 lakh 20% Rs.20 lakh to Rs.24 lakh 25% Above Rs.24 lakh 30% Thanks to an increased rebate under Section 87A, individuals earning up to Rs.12 lakh per year won't have to pay any income tax under the new system 2. Increased Rebate Under Section 87A Under the new tax regime tax rebate under Section 87A has been raised from Rs.25,000 to Rs.60,000 for taxpayers. Individuals earning up to Rs.12 lakh annually will be completely exempt from income tax under the new regime. People opting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the old tax regime: The rebate limit remains unchanged at Rs.12,500. 3. Tax Deduction at Source (TDS) Changes Effective from April 2025, the threshold limits for TDS on various income categories have been increased. Some key updates are shown in the table below: Section Before 1st April 2025 From 1st April 2025 193 - Interest on securities NIL Rs.10,000 194A - Interest other than Interest on securities Rs.50,000 for senior citizens; Rs.40,000 for others Rs.1,00,000 for senior citizens; Rs.50,000 for others 194 - Dividend (individual shareholder) Rs.5,000 Rs.10,000 194I - Rent Rs.2.4 lakh per year Rs.50,000 per month 194H - Commission or brokerage Rs.15,000 Rs.20,000 194J - Fee for professional or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... technical services Rs.30,000 Rs.50,000 194LA - Income by way of enhanced compensation Rs.2.5 lakh Rs.5 lakh 194T - Remuneration, Interest, and Commission paid to partners NIL Rs.20,000 These changes are designed to reduce compliance burdens and increase tax efficiency. 4. Tax Collected at Source (TCS) Changes There are also changes to TCS provisions starting from April 2025. Some key updates are: Section Before 1st April 2025 From 1st April 2025 206C(1G) - Remittance under LRS & Overseas Tour Program Rs.7 lakh Rs.10 lakh 206C(1G) - Remittance under LRS for education (financed by educational loans) Rs.7 lakh Nil (No TCS) 206C(1H) - Purchase of Goods Rs.50 lakh Nil (No TCS) 5. Updated Tax Return: I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR-U The deadline for filing an updated tax return (ITR-U) has been extended from 12 months to 48 months (4 years). This provides taxpayers more time to correct any omissions in their original returns and settle additional tax liabilities. The additional tax liability will depend on the timeline of filing the updated return, as shown below: ITR-U Filed Within Additional Tax 12 months from the end of the relevant AY 25% of additional tax (tax + interest) 24 months from the end of the relevant AY 50% of additional tax (tax + interest) 36 months from the end of the relevant AY 60% of additional tax (tax + interest) 48 months from the end of the relevant AY 70% of additional tax (tax + interest) 6. Benefits for IFSC (Inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... national Financial Services Centre) To promote India as a global financial hub, tax concessions for operations in IFSC units have been extended until March 31, 2030. Additionally, life insurance premiums paid by non-residents for policies purchased from IFSC offices are exempt from tax under Section 10(10D), with no maximum premium limit. 7. Tax Exemption for Start-ups 100% tax deduction on profits for 3 consecutive years out of 10 years from the year of incorporation to- Start-ups incorporated before April 1, 2030. This aims to encourage innovation and entrepreneurship in India. 8. Omission of Sections 206AB and 206CCA Sections 206AB and 206CCA to be omitted from the Income Tax Act. The removal of these sections is expec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted to reduce delays and improve efficiency as it previously required tax deductors and collectors to determine whether the recipient had filed their tax returns 9. Deduction on Remuneration Paid to Partners Partnership firms and LLPs will benefit from increased deductions for remuneration paid to partners. The deduction limits have been revised to allow higher deductions in the tax computation process, as outlined below: Book Profit Limit On the first Rs.6,00,000 of book profit Rs.3,00,000 or 90% of the book profit, whichever is higher On the remaining balance of book-profit 60% of the book profit 10. Treatment of ULIPs as Capital Gains The government has updated the tax rules for unit-linked insurance Plans (ULIPs). If the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yearly premium paid for these ULIPs is more than Rs.2.5 lakh, the money you earn from them will now be treated as capital gains. This means they will be taxed according to the capital gains tax rates. 11. Relaxation of Deemed Let-Out Property Provision The Finance Bill 2025 has relaxed rules for people owning more than one house. Now, you can declare up to two houses as self-occupied. This is advantageous for individuals unable to live in their second homes due to their work as they won't have to report any income from these properties. Conclusion The changes mentioned above will significantly impact tax planning for both businesses and individuals. It's very important for CA students, CA articles, and every other indivi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dual to closely review these new tax provisions and adjust their financial plans to take full advantage of the potential benefits. Consulting with tax experts is recommended! X X X X Extracts X X X X X X X X Extracts X X X X
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