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Starting April 1, 2025, several significant changes in taxation and accounting regulations will take effect for the financial year 2025-26. These reforms aim to enhance compliance, streamline tax structures, and bring clarity to various provisions. Below is a summary of the major updates:

1. Income Tax Reforms Effective from April 1, 2025

A. Adjustments in Tax Slabs under the New Tax Regime

The revised income tax slabs under the new tax regime are as follows:

Income Slabs (₹)	Tax Rate (%)
0 – 4,00,000	Nil
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%
More than 24,00,000	30%

B. Increased Rebate under Section 87A

• The rebate limit has been increased from ₹7 lakh to ₹12 lakh.
• Individuals earning up to ₹12 lakh under the new tax regime will not be liable to pay tax.

C. Enhancement of Standard Deduction

• The standard deduction for salaried individuals and pensioners under the new tax regime has been increased from ₹50,000 to ₹75,000.
• This deduction does not apply to income taxable at special rates, such as capital gains under Sections 111A or 112.

2. Key Changes in TDS (Tax Deducted at Source) & TCS (Tax Collected at Source)

A. TDS Amendments

• TDS on Partner’s Remuneration & Interest – A 10% TDS will be applicable if remuneration, interest, or commission to partners exceeds ₹20,000. Profit-sharing remains exempt under Section 10(2A).
• TDS on Interest from Securities (Section 193) – The exemption limit has been raised to ₹10,000.
• TDS on Interest from Non-Securities (Section 194):
  • For senior citizens: Raised from ₹50,000 to ₹1,00,000.
  • For others: Increased from ₹40,000 to ₹50,000.
  • For interest paid by entities other than banks, post offices, or co-operatives: Increased from ₹5,000 to ₹10,000.
• TDS on Dividend Income (Section 194) – Exemption limit increased from ₹5,000 to ₹10,000.
• TDS on Mutual Fund Units (Section 194K) – Exemption limit raised to ₹10,000.
• TDS on Lottery & Gambling Winnings (Sections 194B & 194BB) – Exemption limit changed to ₹10,000 per transaction instead of aggregate in a financial year.
• TDS on Insurance Commission (Section 194D) – Exemption limit raised from ₹15,000 to ₹20,000.
• TDS on Professional Fees & Royalties (Section 194J) – The exemption limit is now ₹50,000, up from ₹30,000.
• TDS on Rent (Section 194I) – Now applicable only if rent exceeds ₹50,000 per month (earlier ₹2,40,000 annually).
• TDS on Enhanced Compensation (Section 194LA) – Exemption limit raised from ₹2,50,000 to ₹5,00,000.
• TDS on Securitization Trust Investments (Section 194LBC) – Reduced from 25-30% to 10%.

B. TCS Amendments

• TCS on Foreign Remittance (Section 206C(1G)):
  • The exemption limit under the Liberalized Remittance Scheme (LRS) has been increased from ₹7 lakh to ₹10 lakh.
  • TCS applies beyond ₹10 lakh at a rate of 5%.
  • For overseas tour packages: 5% TCS up to ₹10 lakh, and 20% beyond ₹10 lakh.
  • TCS on education loans under Section 80E has been abolished (previously 0.5%).
• Omission of Sections 206AB & 206CCA – The requirement for higher TDS/TCS rates for non-filers of ITR has been removed.

3. Filing & Compliance Changes

A. Extended Time Limit for Filing Updated Returns

• Taxpayers can now file an updated return up to 48 months from the end of the relevant assessment year (previously 24 months).

B. Startup and IFSC Tax Benefits Extended

• Tax benefits for startups under Section 80-IAC extended to March 31, 2030.
• IFSC entity incentives under Section 80LA also extended to March 31, 2030.

C. Crypto Taxation and Virtual Digital Assets (VDA)

• New Section 285BAA mandates reporting of cryptocurrency transactions by exchanges and intermediaries.
• Gains from VDAs, including cryptocurrencies, are classified under “Income from Other Sources” (Section 158B).

4. Accounting & GST Updates

A. Introduction of Ind AS 116 for Lease Accounting

• Effective from April 1, 2025, Ind AS 116 requires companies to recognize lease assets and liabilities in financial statements, ensuring better transparency.

B. Repeal of Equalisation Levy on Digital Advertisements

• The 6% Equalisation Levy on digital advertisement services by non-resident entities will be removed, addressing concerns from international trade partners.

C. Revised Tax Audit Form (Form 3CD)

• Effective April 1, 2025, new amendments to Form 3CD require more detailed reporting to enhance tax compliance and record accuracy.

D. Mandatory GST Input Service Distributor (ISD) Registration

• Companies with multiple GST registrations under a single PAN must register as an Input Service Distributor (ISD) to ensure proper Input Tax Credit (ITC) distribution.

E. E-Invoice Reporting Requirements

• Businesses with an Annual Aggregate Turnover (AATO) exceeding ₹10 crore must report e-invoices within 30 days of issuance to avoid rejection by the Invoice Registration Portal (IRP).

F. GST Rate Changes

• Used Car Sales – GST increased from 12% to 18%.
• Hotel Industry – GST on restaurant services in hotels charging ₹7,500+ per unit/day is now 18% with ITC benefits.

G. Revised Invoice Series and Turnover Calculation

• Businesses should initiate a new invoice series from April 1, 2025, for compliance purposes.
• Proper turnover calculation is essential to determine GST registration eligibility, QRMP scheme qualification, and e-invoicing obligations.

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Disclaimer: The information provided in this article is intended for educational purposes only. The information presented is intended to provide general guidance. Any reliance you place on such information is therefore strictly at your own risk. In no event will ALACRITY CORPORATE SOLUTIONS PVT.LTD. be liable for any loss or damage.