Key Changes in GST Effective from January 16, 2025

GST

Key Changes in GST Effective from January 16, 2025

GST

The Government of India has announced several important changes to the Goods and Services Tax (GST) framework through various notifications, effective from January 16, 2025. These changes aim to enhance affordability, promote public welfare, and streamline taxation processes across multiple sectors. Below is a summary of these updates:

1. Concessional GST Rate for Fortified Rice Kernel (FRK)

Notification No. 01/2025 introduces a reduced GST rate of 5% for Fortified Rice Kernel (FRK), replacing the earlier rate of 18%. This move is aimed at promoting better nutrition and making FRK more affordable for consumers.
Effective Date: January 16, 2025

2. GST Exemption for Gene Therapy

Notification No. 02/2025 has added Gene Therapy under a new entry, S. No. 105A, in the GST exemption schedule. This exemption underscores the government’s focus on encouraging advanced medical treatments and fostering innovation in healthcare.
Effective Date: January 16, 2025

3. Revised GST Rate for Old and Used Vehicles

Under Notification No. 04/2025, the GST rate on the sale of old and used vehicles has been increased from 12% to 18%. The taxable value will be determined based on the supplier’s margin:

  • For registered dealers claiming depreciation under the Income Tax Act: GST will be calculated on the difference between the selling price and the depreciated value.

  • For others: GST will be calculated on the difference between the selling price and the purchase price.

Effective Date: January 16, 2025

4. Changes in Hotel Accommodation Rules

Notification No. 05/2025 redefines the concept of “specified premises” and removes the term “declared tariff” for hotel accommodation services. The new definition of “specified premises” includes:

(a) Premises where hotel accommodation services were provided in the previous financial year with a unit’s supply value exceeding ₹7,500 per day or equivalent.
(b) Premises declared as specified by a registered person filing Annexure VII between January 1 and March 31 of the preceding financial year.
(c) Premises declared as specified by a new registrant filing Annexure VIII within 15 days of receiving their registration acknowledgment.

Opt-Out Option: Those opting out of the specified category must file Annexure IX during the January-March period of the preceding financial year.

Effective Date: April 1, 2025

5. Amendments to Reverse Charge Mechanism (RCM)

Notification No. 07/2025 amends the RCM provisions for the following services:

(a) Sponsorship Services

RCM will now apply only to sponsorship services provided by individuals or entities other than a body corporate. Sponsorship services provided by a body corporate will attract GST under the forward charge mechanism.

Read More: Tax Implications on Purchase and Sale of Immovable Property in India

(b) Renting of Immovable Property

RCM will apply to the renting of immovable property (other than residential dwellings) provided by an unregistered person to a registered person, excluding those who have opted for the composition levy. Previously, all registered persons receiving such services were covered under RCM.

Effective Date: January 16, 2025

These changes reflect the government’s commitment to aligning GST policies with public interest, industry needs, and economic goals. Businesses and taxpayers should take note of these updates to ensure compliance and optimize their tax planning strategies.

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Tax Implications on Purchase and Sale of Immovable Property in India

Immovable Property

Tax Implications on Purchase and Sale of Immovable Property in India

Immovable Property

Purchasing and selling immovable property in India involves navigating complex tax regulations under the Income Tax Act, 1961, and Goods and Services Tax (GST) laws. Understanding these implications can help individuals ensure compliance and optimize financial outcomes.

Tax Considerations for Buyers

TDS on Property Transactions

Under Section 194-IA of the Income Tax Act, buyers must deduct 1% TDS on property transactions exceeding ₹50 lakh. If the seller’s PAN is unavailable, the TDS rate increases to 20%. TDS applies to the entire sale consideration, even if there are multiple buyers or sellers.

Key Compliance Steps:

  1. TDS Deposit: TDS must be deposited using Form 26QB within 30 days from the end of the month in which it was deducted.

  2. TDS Certificate: Buyers must issue Form 16B to the seller, available 10-15 days after TDS deposit.

Penalties for Non-Compliance

Non-compliance with TDS provisions attracts penalties under Section 194-IA, including:

  • Late Filing Fee: ₹200 per day under Section 234E, up to the TDS amount.

  • Interest for Delay:

    • 1% per month for late deduction.

    • 1.5% per month for late deposit.

  • Additional Penalties: ₹10,000 to ₹1,00,000 for non-filing or errors in TDS statements under Section 271H.

SFT Reporting

For property transactions exceeding ₹30 lakh, registrars must report details to the Income Tax Department via Form SFT-012. These transactions are reflected in the buyer’s Form 26AS, ensuring greater scrutiny by authorities.

Tax Considerations for Sellers

The tax treatment of gains depends on the holding period of the property:

  • Short-Term Capital Gains (STCG): If sold within 24 months, gains are taxed at the seller’s applicable income slab rate.

  • Long-Term Capital Gains (LTCG): If held for more than 24 months, sellers can opt for:

    • 20% tax with indexation benefits, or

    • 12.5% tax without indexation (applicable for transactions post July 23, 2024, if purchased on or after this date).

GST on Immovable Property

Applicability

GST is applicable to under-construction properties, classified as a supply of services. Completed properties or those with a certificate of completion are exempt from GST.

GST Rates

  1. Residential Properties:

    • Affordable Housing: Defined as properties with a carpet area of up to 60 sqm (metro cities) or 90 sqm (non-metro cities) and costing up to ₹45 lakh. GST rate: 1%.

    • Non-Affordable Housing: Properties not meeting affordable housing criteria. GST rate: 5% (without ITC).

  2. Commercial Properties: GST rate: 12% (with ITC).

Immovable Property

Input Tax Credit (ITC)

Under Section 17(5) of the CGST/IGST Act, 2017, ITC is generally blocked for construction-related expenses but allowed in specific cases:

  1. When expenses are not capitalized and debited to the Profit & Loss Account.

  2. For contractors providing further taxable services.

  3. For construction of plant and machinery used in business operations.

Read More: Important Income Tax Threshold Limits for AY 2025-26 for Individuals

Penalties for GST Non-Compliance

Failure to comply with GST regulations can result in interest, penalties, and additional scrutiny.

Tax implications for purchasing and selling immovable property in India are multifaceted. Buyers must ensure proper TDS deduction and deposit, while sellers need to account for capital gains taxes. Additionally, GST applies to under-construction properties, with varying rates based on property type. Consulting tax experts can help navigate these complexities, ensure compliance, and avoid penalties.

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Important Income Tax Threshold Limits for AY 2025-26 for Individuals

Threshold Limits

Important Income Tax Threshold Limits for AY 2025-26 for Individuals

Threshold Limits

The Income Tax Act for the Assessment Year (AY) 2025-26 introduces key threshold limits and provisions applicable to individuals, encompassing both the old and new tax regimes. Here’s a detailed overview of these provisions to help taxpayers understand their obligations under different scenarios:

1. Basic Exemption Limits

Old Tax Regime:

  • Income Slab: ₹0 – ₹2,50,000 – Tax Rate: Nil

  • Income Slab: ₹2,50,001 – ₹5,00,000 – Tax Rate: 5%

  • Income Slab: ₹5,00,001 – ₹10,00,000 – Tax Rate: 20%

  • Income Slab: Above ₹10,00,000 – Tax Rate: 30%

New Tax Regime:

  • Income Slab: ₹0 – ₹3,00,000 – Tax Rate: Nil

  • Income Slab: ₹3,00,001 – ₹7,00,000 – Tax Rate: 5%

  • Income Slab: ₹7,00,001 – ₹10,00,000 – Tax Rate: 10%

  • Income Slab: ₹10,00,001 – ₹12,00,000 – Tax Rate: 15%

  • Income Slab: ₹12,00,001 – ₹15,00,000 – Tax Rate: 20%

  • Income Slab: Above ₹15,00,000 – Tax Rate: 30%

2. Surcharge Rates

Surcharge applies to individuals based on total income:

  • ₹50 lakh to ₹1 crore: 10%

  • ₹1 crore to ₹2 crore: 15%

  • ₹2 crore to ₹5 crore: 25%

  • Above ₹5 crore: 37%

Under the New Regime, the maximum surcharge is capped at 25%. Additionally, for income chargeable under Sections 111A, 112, 112A, and dividend income, the surcharge is limited to 15%.

Cess: A 4% Health and Education Cess is applicable on the total of Income Tax and Surcharge.

3. Income from Salaries

Standard Deduction:

    • ₹50,000 under the Old Regime

    • ₹75,000 under the New Regime

4. Income from House Property

Taxpayers can claim deductions for:

  • Property Taxes Paid

  • Interest on Housing Loans (subject to specified conditions and limits)

5. Business and Professional Income

Maintenance of accounts is mandatory if:

    • Turnover exceeds ₹25 lakh, or

    • Income exceeds ₹2.5 lakh over the past three years.

  • Audit is required for income exceeding specified thresholds.

  • Cash payments above ₹10,000 per day are disallowed as expenses.

6. Presumptive Taxation

Small businesses and professionals can opt for presumptive taxation at predefined rates, simplifying compliance requirements.

Threshold Limits

7. Capital Gains Tax

  • Long-Term Capital Gains (LTCG): Tax rate is 12.5% for all assets after July 23, 2024.

  • Short-Term Capital Gains (STCG): Tax rate is 20% for equity shares and equity-oriented mutual funds after July 23, 2024.

  • Exemptions:

    • Investment in NHAI/REC Bonds: Up to ₹50 lakh

    • Investment in Equity Shares: Up to ₹1.25 lakh (conditions apply)

Read More: Guide to Setting Off and Carrying Forward Losses Under the Income Tax Act, 1961

The Income Tax Act for AY 2025-26 introduces provisions tailored to different income levels and categories. By understanding these thresholds and deductions, taxpayers can better plan their finances and ensure compliance. Always consult a tax professional for personalized guidance.

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