As India steps into the new financial year, commencing on April 1, 2025, several significant changes are poised to reshape the nation’s economic landscape. These alterations, primarily stemming from the Union Budget 2025, encompass revisions to the income tax structure, modifications to Goods and Services Tax (GST) regulations, and adjustments to Tax Deducted at Source (TDS) provisions. Here’s a comprehensive overview of the key changes:
Income Tax Reforms:
- Revised Tax Slabs:
- The new tax regime, under Section 115BAC, has undergone significant revisions. Tax slabs have been restructured to provide greater relief to taxpayers, particularly those in the middle-income bracket.1
- Notably, individuals earning up to ₹12 lakh annually will find themselves exempt from income tax, provided they opt for the new tax regime.2
- Enhanced Rebate under Section 87A:
- The rebate under Section 87A has been increased to ₹60,000 for taxpayers adhering to the new tax regime.3 This enhancement effectively raises the threshold for tax-free income.
- Adjustments to TDS Regulations:
- TDS threshold limits have been adjusted across various sections to alleviate the compliance burden on taxpayers and improve cash flow.4
- For instance, the TDS limit on interest income for senior citizens has been raised, providing them with enhanced financial security.5
- Extended Timeline for Updated Tax Returns:
- The deadline for filing an Updated Tax Return (ITR-U) has been extended to 48 months, offering taxpayers greater flexibility in complying with their tax obligations.6
GST Modifications:
- Mandatory Multi-Factor Authentication (MFA):
- To bolster security, MFA will be mandatory for all GST portal users, irrespective of their turnover.7
- Changes Regarding Hotel Industry:
- The concept of “Declared Tariff” will be removed, and GST will be based on the actual amount charged.8
- Hotels charging above a specific limit will have specific GST rules applied to the restaurant services they offer.
- Changes to the ISD mechanism:
- The Input Service Distributor (ISD) mechanism will be mandatory for businesses distributing Input Tax Credit (ITC) on common services across multiple GSTINs under the same PAN.9
- Changes to used car sales:
- The GST rate on the sale of used cars will increase.10
Broader Economic Implications:
- These fiscal adjustments are anticipated to stimulate consumer spending, invigorate economic growth, and streamline the tax system.
- By enhancing disposable income and reducing compliance burdens, the government aims to foster a more conducive environment for both individuals and businesses.
- These changes show a trend towards simplification of the tax system, and making it easier for people to comply with tax laws.11
It is important for all Indian tax payers, and businesses to properly research these changes, and ensure they are compliant with all new rules.
