The Government of India has introduced several significant amendments to the Income Tax Act, which will come into effect from April 1, 2025. These changes encompass revisions in tax slab rates, modifications in Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) provisions, an extension of deadlines, and new taxation rules for partnership firms and Limited Liability Partnerships (LLPs). Below is a detailed breakdown of these amendments:
Page Contents
1. Revised Income Tax Slab Rates
The new income tax slabs are as follows:
| Income Slab (₹) | Tax Rate |
|---|---|
| Up to 4,00,000 | 0% |
| 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 under Section 87A has been increased to ₹60,000 (previously ₹25,000).
- Tax-free income up to ₹12 lakh if taxable income does not exceed ₹12 lakh.
2. Changes in TDS Thresholds
Various TDS thresholds have been revised as follows:
| Section | Purpose | Old Threshold | New Threshold |
|---|---|---|---|
| 193 | Interest on securities | Nil | ₹10,000 |
| 194A | Interest (Senior Citizens) | ₹50,000 | ₹1,00,000 |
| 194 | Dividend | ₹5,000 | ₹10,000 |
| 194-I | Rent (Yearly) | ₹2.4L | ₹50,000/month |
| 194J | Professional Fees | ₹30,000 | ₹50,000 |
| 194LA | Compensation | ₹2.5L | ₹5L |
3. TCS Amendments
Key changes in Tax Collected at Source (TCS) provisions:
| Section | Scenario | Old Threshold | New Threshold |
|---|---|---|---|
| 206C(1G) | LRS/Overseas Tour | ₹7L | ₹10L |
| 206C(1G) | Education Loan (LRS) | ₹7L | Nil (No TCS) |
| 206C(1H) | Purchase of Goods | ₹50L | Nil (No TCS) |
4. Updates on ITR-U (Updated Return)
- The deadline for filing an Updated Return (ITR-U) has been extended to 48 months (4 years) from the end of the relevant assessment year.
- Example: For FY 2021-22 (AY 2022-23), the updated return can be filed until 2027-28.
5. New Limits for Partner Remuneration
Revised remuneration limits for partners in firms:
| Book Profit (₹) | Remuneration Limits |
| Old Limits | |
| Up to ₹3,00,000 | Higher of ₹1,50,000 or 90% of book profit |
| Above ₹3,00,000 | 60% of book profit |
| New Limits | |
| Up to ₹3,00,000 | Higher of ₹3,00,000 or 90% of book profit |
| Above ₹3,00,000 | 60% of book profit |
6. Introduction of Section 194-T (New TDS Provision)
A new TDS provision, Section 194T, has been introduced, affecting partnership firms and LLPs. The key highlights are:
- Applicability: TDS deduction on payments to partners, including:
- Salary & Remuneration
- Commission & Bonus
- Interest on Capital
- Threshold: If total payments exceed ₹20,000 per year.
- TDS Rate: 10%
- Effective Date: 01/04/2025
7. Other Key Changes
- Startups: Tax holiday under Section 80-IAC extended till 31.03.2030.
- IFSC Benefits: Tax concessions extended till 31.03.2030.
- ULIPs: Proceeds taxed as capital gains if premium exceeds 10% of sum assured or ₹2.5L/year.
- Sections 206AB/206CCA omitted, removing higher TDS provisions for non-filers.
Conclusion
These tax reforms aim to enhance transparency, ease compliance, and provide relief to taxpayers. Taxpayers, especially businesses and professionals, should take note of the revised thresholds and rates to ensure compliance and maximize benefits.
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For any assistance regarding these changes, feel free to reach out to CA Gitesh Gandhi, Partner at A. Chauhan & Associates. Contact: 95926-29616, 95926-29618 Email: ca.gitesh3101@mail.com
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Very infomative
Point No.5 – New limits for Partners’ Remuneration- Book Profits up to Rs.600000/- – 90% of Rs.600000/- or Rs.300000/- whichever is higher and on Balance over Rs.600000/- – 60% of excess over Rs.600000/-. I think, it’s a typographical error.