Updates on Finance Bill, 2025

Income Tax

1. From AY 2026-27 onwards, for assessee opting for New Tax Regime, limit of total income for rebate, on which Income Tax is payable as per the rates of income tax enhanced from Rs. 7,00,000/- to Rs. 12,00,000/-
2. Limit for Rebate of Income Tax extended to Rs. 60,000/-.
3. No Income Tax on Average Monthly Income of upto Rs. One Lakh.
4. Salaried Class to pay Nil Income Tax upto Rs. 12.75 Lakh per Annum in New Tax Regime
5. New Proposed simplified income tax slabs under New Regime of Tax (Where Income is above Rs. 12 Lakhs):
6. In case of Assessee Individuals opting for old regime, no changes in tax slabs.
7. The Rebate under Section 87A will extend only so far as income pertains to salary and other income.
8. Suppose, where total income is Rs. 12 Lakh out of which salary and other income is Rs. 8 Lakh but short term capital gain income on equity shares or mutual fund is Rs. 4 lakh, then Rebate will be given only on Rs. 8 Lakh.
9. On the Rs. 4 Lakh capital gains income, tax payers need to pay the income tax separately.
10. Proposed to allow benefit to claim annual value of 2 (Two) self-occupied properties as Nil without any condition.
11. Reduced Compliance for Small Charitable Trust/ Institution: Period of Registration extended from Five Year to Ten Years.
12. Rationalization of TDS provisions
13. The Finance Bill, 2025 proposes to enhance the thresholds for deduction and collection of TDS and TCS for different categories of payments.
14. Provision of higher TDS deduction will now apply only in Non-PAN cases.
15. Extension of Time Limit to file ITR-U for any Assessment Year, from the current limit of two years, to four years.
16. Levy of TCS removed from sale of goods under Section 206C (1H).
17. TCS on remittance under Liberalized Remittance Scheme (LRS) for purpose of education, financed by loan from specified financial institutions: Nil Rate
18. Threshold increased from Rs. 7 lakh to Rs. 10 Lakh for TCS in case of remittance under the LRS.

Goods and Services Tax

1. Inter-State reverse charge mechanism will also be included under the ISD mechanism with effect from 1st April 2025.
2. Additional Condition to be complied to reduce tax liability for credit note issued under Section 34 of the CGST Act: a) Reversal of ITC by the Recipient, if availed, or b) Confirmation that incidence of tax on such transaction has not been passed on to any other person, in any other cases
3. The Legislative enablement of the Invoice Management System is made through Section 38(1) and 38(2) of the CGST Act, by replacing the term, ‘auto-generated statement’ with a ‘statement’ containing the details of input tax credit. The Government has been empowered to prescribe any other details which will form part of GSTR-2B.
4. Amendment is proposed to Section 39 of the CGST Act where the Government will have power to impose conditions or restrictions on the registered person for furnishing monthly returns under the CGST Act.
5. In cases of appeal against Order imposing Penalty (“Penalty only Orders”), pre-deposit of 10% on penalty amount for appeal before Appellate Authority.
6. Pre-deposit of 10 per cent of the penalty amount (in addition to pre-deposit paid before first appellate authority) for appeal before GST appellate tribunal for “Penalty Only Order”.