The Finance Bill, 2025 introduces several amendments to the Income-tax Act, 1961, impacting tax rates, deductions, exemptions, compliance provisions, and penalty structures. Below is a detailed summary of the key Income Tax changes: 1. Tax Rates and Surcharge a) Individual and HUF Tax Slabs (Under Old Regime) • Income up to ₹2,50,000 – No tax • ₹2,50,001 – ₹5,00,000 – 5% • ₹5,00,001 – ₹10,00,000 – 20% • Above ₹10,00,000 – 30% • Senior Citizens (60-80 years): Basic exemption limit is ₹3,00,000. • Super Senior Citizens (80+ years): Basic exemption limit is ₹5,00,000. • Rebate under Section 87A: Available for income up to ₹5,00,000. b) New Tax Regime (Section 115BAC) • Income up to ₹3,00,000 – No tax • ₹3,00,001 – ₹6,00,000 – 5% • ₹6,00,001 – ₹9,00,000 – 10% • ₹9,00,001 – ₹12,00,000 – 15% • ₹12,00,001 – ₹15,00,000 – 20% • Above ₹15,00,000 – 30% c) Surcharge on High Income • Income between ₹50 lakh - ₹1 crore – 10% • Income between ₹1 crore - ₹2 crore – 15% • Income between ₹2 crore - ₹5 crore – 25% • Income above ₹5 crore – 37% • Surcharge on Capital Gains under Section 112A & Dividend Income: Capped at 15%. d) Corporate Tax Rates • Domestic Companies: • Regular rate: 30% • Companies with turnover below ₹400 crore: 25% • New manufacturing companies (Section 115BAB): 15% • Companies under Section 115BAA: 22% • Foreign Companies: 40% • Surcharge for Domestic Companies: • Income between ₹1 crore - ₹10 crore: 7% • Income above ₹10 crore: 12% e) Co-operative Societies • Taxed at 30%, but those under Section 115BAD or 115BAE get 22% or 15% rates. • Surcharge: • Income between ₹1 crore - ₹10 crore: 7% • Income above ₹10 crore: 12% 2. Amendments to Key Income Tax Provisions a) Changes in Deductions and Exemptions • Section 10: • Extended exemption for income from International Financial Services Centre (IFSC). • Crypto-assets now defined under Section 2(47A), subject to taxation. • Tax exemption under Section 10(4D) extended till 2030 for specified investment funds. • New exemption for Foreign Portfolio Investors (FPI) investing through IFSCs. • Section 80C, 80CCD, 80D: No major changes, but higher limits for pension funds (NPS) under 80CCD(2). • Section 80-IAC: Extension of tax benefits for eligible start-ups. • Section 87A: Rebate remains for taxable income up to ₹7 lakh under the new tax regime. b) Assessment, Appeals & Penalties • Section 139: • Higher penalty for late filing of ITR. • More power to Assessing Officer (AO) for scrutiny cases. • Section 132 & 132B (Search & Seizure): • Stricter TDS/TCS monitoring to curb tax evasion. • Section 144BA & 263 (GAAR & Revision Powers of CIT): • GAAR applicability extended, allowing reassessment of past cases. • Section 153 & 153B: • Time limits for assessment proceedings reduced. • Section 271AAB & 271C (Penalties for Undisclosed Income & TDS Defaults): • Higher penalties for failure to report high-value transactions. • Section 285BAA: • New reporting requirements for specified financial transactions. c) Capital Gains and Business Income • Section 45 (Capital Gains on Property Transactions): • Indexed cost of acquisition benefit extended for certain transactions. • Gains on digital assets (crypto, NFTs) now taxable under Section 115BBH. • Section 50C (Stamp Duty Valuation of Property Sales): • Safe harbor limit increased to 15% from 10%. • Section 72A & 72AA (Carry Forward of Losses in Mergers & Demergers): • Extended to more business combinations. 3. TDS/TCS Amendments • New Section 194BA: • TDS on online gaming winnings exceeding ₹10,000. • Section 194B, 194BB: • Higher TDS on lottery winnings and betting transactions. • Section 194S: • TDS on crypto transactions at 1%. • Section 206AB & 206CCA (Higher TDS/TCS for Non-Filers): • Non-filers of ITR for two consecutive years will face double the TDS rate. • Omission of Sections 206AB & 206CCA: • Simplification of compliance for certain taxpayers. 4. Procedural & Compliance Changes • Section 140B (Self-Assessment Tax Payment Rules Revised). • Section 153B (Faster disposal of appeals & faceless proceedings enhanced). • Section 144C (Dispute resolution streamlined for international taxation cases). • E-assessment & E-appeals: • More focus on faceless assessments & AI-based scrutiny. 5. Indirect Taxes Impacting Income Tax • Customs Duties: • Increase in import duties on luxury goods, digital services. • Relief for certain industrial raw materials. • GST Modifications: • Amendments to CGST sections 2, 12, 13, 38, 39, 107, 112. • New Sections 122B & 148A introduced for stricter GST compliance. 6. New Tax Incentives • Startups & MSMEs: • Extended tax holiday for startups (Section 80-IAC) till 2028. • Faster depreciation benefit for capital investment. • Manufacturing & Infrastructure: • Lower tax rates for new manufacturing entities (Section 115BAB). • Tax deductions for green energy projects. • Cryptocurrency & Digital Assets: • Defined as “crypto-assets” under Section 2(47A). • Flat 30% tax (Section 115BBH) on crypto gains. • No deduction for losses on crypto transactions. • 1% TDS on transactions above ₹50,000 (Section 194S). Conclusion The Finance Bill, 2025 aims to streamline tax compliance, promote digital transactions, curb tax evasion, and boost investments in IFSC, startups, and manufacturing. Key takeaways: ✔ Higher surcharge rates on high-income earners ✔ Crypto-assets now formally taxed ✔ More incentives for startups & new industries ✔ Stronger enforcement through TDS/TCS changes ✔ Faceless assessment & faster resolution of disputes Follow https://whatsapp.com/channel/0029Va6mSySL7UVc3qWITX3w