Direct Taxes

Posted 01 Feb 2025

Updated 04 Feb 2025

3 min read

New income-tax bill: Government will introduce the bill to carry forward the same spirit of "Nyaya" to achieve Good Governance by simplifying provisions and making them responsive.
TDS/TCS rationalization
- Reduction in rates: TDS will be rationalized by reducing rates and thresholds, with higher limits for tax clarity. The senior citizen interest deduction limit raised to ₹1 lakh, and TDS on rent increases to ₹6 lakh, benefiting small taxpayers.
- Threshold to collect tax collection at source (TCS) on remittances: Under RBI's Liberalized Remittance Scheme (LRS) is proposed to be increased from ₹ 7 lakh to ₹ 10 lakh.
- Decriminalization: Provide the relaxation to delay for payment of TCS up to the due date of filing statement was decriminalized.
- Voluntary Compliance: Proposed to extend the time-limit to file updated returns, from the current limit of two years, to four years by voluntary compliance by taxpayers who had omitted to report their correct income.
Ease of Doing Business
- Streamline the process of transfer pricing: A new scheme will allow determining arm's length prices for international transactions over a 3-year block period.
- Scope of safe harbour rules expanded: With a view to reduce litigation and provide certainty in international taxation.
- Senior Citizens' Withdrawal Exemption: Withdrawals from old NSS accounts by senior citizens, post-August 29, 2024, will be tax-exempt. NPS Vatsalya accounts will be treated like regular NPS accounts, within limits.
Employment and Investment
- Tax certainty: A presumptive taxation regime will be introduced for non-residents providing services to electronics manufacturing companies and taxation in infrastructure sector AIFs.
- Tonnage Tax Scheme for Inland Vessels: Proposed to be extended to inland vessels registered under the Indian Vessels Act, 2021.
- Extension for incorporation of Start-Ups: Extended the period of incorporation by 5 years for start-ups which are incorporated before April 01, 2030.
- International Financial Services Centre (IFSC): Specific benefits to ship-leasing units, insurance offices and treasury centres of global companies which are set up in IFSC.
- Extension of investment date for Sovereign and Pension Funds: The investment period for Sovereign Wealth and Pension Funds in the infrastructure sector is extended by five years.
Personal Income- tax Reforms with special focus on middle class
- New tax regime exemption: No income tax payable upto income of ₹ 12 lakh under the new regime.
- Standard Deduction: Raised to ₹ 75,000.
- Under new tax regime, revise tax rate slabs are as follows: