The Union Budget 2025 introduces significant updates impacting income tax, GST, and MSMEs, aiming to simplify compliance, boost economic activity, and ease the financial burden on taxpayers. Below are the major highlights:
| Total Income (INR) | Tax Rate |
|---|---|
| Up to 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% |
| Above 24,00,000 | 30% |
No tax for income up to INR 12,00,000, provided there are no capital gains.
Salaried individuals can avail of a standard deduction of INR 75,000, making income up to INR 12,75,000 tax-free.
Rebate under Section 87A: 100% of tax payable or INR 60,000, whichever is lower.
Taxpayers can now file updated returns within 48 months instead of 24 months.
Additional tax levied based on delay:
12-24 months: 50%
24-36 months: 60%
36-48 months: 70%
Filing after 36 months is restricted if a show cause notice is issued.
Self-occupied Property: Up to two properties can now claim “Nil Annual Value,” removing deemed rental income.
National Saving Scheme (NSS): Withdrawals made after August 29, 2024, are tax-exempt.
Small Charitable Trusts: Registration period extended from 5 years to 10 years for trusts with total income not exceeding INR 5 crore.
TDS Rate Reduction:
Insurance commission: Reduced from 5% to 2%.
Income from securitization trust: Reduced to 10% from 25-30%.
Threshold Increases:
Interest on securities: INR 10,000 (previously Nil)
Interest (other than securities): INR 1,00,000 for senior citizens, INR 50,000 for others
Dividend income: INR 10,000 (previously INR 5,000)
TCS on Sale of Goods: Removed to reduce compliance burden.
No higher TDS for non-filers (Sections 206AB & 206CCA omitted) unless PAN is unavailable.
Liberalized Remittance Scheme (LRS) Limit: Increased from INR 7 lakh to INR 10 lakh.
Reduced Pre-Deposit for Appeals:
E-way bill penalties: Lowered from 25% to 10% of penalty.
Other penalties: Previously Nil, now 10% of penalty.
Credit Note Adjustments: Output tax liability can only be reduced if the recipient reverses the corresponding Input Tax Credit.
| Type | Old Investment Limit (INR Cr) | Old Sales Limit (INR Cr) | New Investment Limit (INR Cr) | New Sales Limit (INR Cr) |
| Micro | 1 | 5 | 2.5 | 10 |
| Small | 10 | 50 | 25 | 100 |
| Medium | 50 | 250 | 125 | 500 |
This will expand MSME coverage, ensuring faster payments within 15 days under Section 43B(h) of the Income Tax Act.
New Income Tax Bill: Expected by February 2025 to enhance middle-class spending.
Fast-Track Company Mergers: Proposed to improve efficiency and ease of doing business.
The Budget 2025 introduces major tax reliefs, eases GST compliance, and strengthens MSME support, fostering economic growth. The changes in tax slabs, exemptions, and compliance reductions are designed to encourage investment and spending, making the new fiscal year more business-friendly.
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