Important Income Tax, TDS and TCS changes from 1 April 2025

The new financial year starting April 1, 2025, brings major changes in income tax laws, impacting individuals, businesses, and investors.

Key amendments include:
✅ Basic exemption limit increased to ₹3 lakh
✅ Tax-free income up to ₹12 lakh under Section 87A
✅ Updated TDS/TCS rules with higher exemption limits for interest, dividends, and commissions
✅ Updated return filing timeline extended to 48 months
✅ Extended tax benefits for startups under Section 80-IAC
✅ IFSC incentives available till March 31, 2030
✅ Crypto transactions now under stricter reporting norms (Section 285BAA)
✅ Business trusts taxed at preferential capital gains rates
✅ Amalgamated entities face changes in loss carry-forward rules

These changes directly impact tax-saving strategies, making it crucial for taxpayers to reassess financial plans.

Major Income Tax Changes from April 1, 2025

Basic Exemption Limit Increased (New Tax Regime)

Under the revised tax slabs, the basic exemption limit has been increased:

Rebate under Section 87A Increased

➡ Income up to ₹12 lakh will now be tax-free under the new tax regime.
➡ Rebate limit increased from ₹7 lakh to ₹12 lakh.

TDS & TCS Amendments

A) TDS Changes

🔹 TDS on Partner’s Remuneration, Interest, and Commission

• 10% TDS on remuneration, commission, and interest paid to partners exceeding ₹20,000
• Profit-sharing remains tax-free under Section 10(2A)

🔹 TDS on Interest (Section 193 & 194)

• Securities Interest: Exemption limit increased to ₹10,000
• Bank/Post Office Interest:
  • Senior Citizens: ₹1,00,000 (earlier ₹50,000)
  • Others: ₹50,000 (earlier ₹40,000)
• Other Interest Payments: Exemption limit increased from ₹5,000 to ₹10,000

🔹 TDS on Dividends (Section 194)

• Exemption limit increased from ₹5,000 to ₹10,000

🔹 TDS on Insurance Commission (Section 194D)

• Exemption limit increased from ₹15,000 to ₹20,000

🔹 TDS on Brokerage & Commission (Section 194H)

• Exemption limit increased from ₹15,000 to ₹20,000

🔹 TDS on Professional Fees (Section 194J)

• Exemption limit increased from ₹30,000 to ₹50,000

🔹 TDS on Rent (Section 194I)

• Earlier: ₹2,40,000 per annum
• Now: Applicable only if rent exceeds ₹50,000 per month

🔹 TDS on Business Perks (Section 194R)

• 10% TDS on business benefits/perquisites over ₹20,000 per year

🔹 Omitted Sections:

• Section 206AB & 206CCA (Higher TDS/TCS for non-filers) removed

B) TCS Changes

🔹 Higher TCS Exemption on Foreign Remittances

• Liberalized Remittance Scheme (LRS): TCS exempted up to ₹10 lakh (earlier ₹7 lakh)
• TCS on Foreign Remittances:
  • 5% for ₹10 lakh+ transactions
  • Education loans (Section 80E) now exempted from TCS (earlier 0.5%)
• TCS on Overseas Tour Packages:
  • 5% up to ₹10 lakh
  • 20% on amounts exceeding ₹10 lakh

Extended Time Limit for Updated Returns

✅ Updated return filing period extended from 24 months to 48 months

Tax Benefits for Startups & IFSC

✅ Startups (Section 80-IAC):

• Tax benefits extended till March 31, 2030

✅ IFSC Entities (Section 80LA):

• Incentives extended till March 31, 2030

Crypto Taxation & Virtual Digital Assets (VDAs)

✅ New Section 285BAA Introduced

• Mandatory reporting of crypto transactions by exchanges & intermediaries
• VDAs included as “undisclosed income” under Section 158B

Business Trust Taxation (Section 115UA)

✅ Capital Gains now taxed at preferential rates (instead of the maximum marginal rate)

Carry-Forward of Losses for Amalgamated Entities

✅ 8-year carry-forward period now counted from the year the loss was first recorded (instead of the year of amalgamation)

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