TaxTMI 
TaxTMI 
Personal Income-tax reforms with special focus on middle class - FAQ
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....he new slabs in the proposed new regime introduced by Finance Bill, 2025? Ans. The new slabs proposed are as under: Sl.No. Total Income (Rs. In lacs) Rate of tax u/s 115BAC (1A) 1. 0- 4 0% 2. 4-8 5% 3. 8-12 10% 4. 12-16 15% 5. 16-20 20% 6. 20-24 25% 7. More than 24 Lacs 30% Q.4. What is the tax benefit for different category of taxpayers (0-24 lacs) Total Income Tax as per existing rates[as per Finance (No.2) Act, 2024] Tax as per proposed rates Benefit of Rate/Slab Rebate Benefit [with reference to (3)] Total Benefit[computed when compared to current slab rates] Tax Payable under new regime (1) (2) (3) (4)=(3)-(2) (5) (6)=(4)+(5) (7) 8 lac 30,000 20,000 10,000 20,000 30,000 0 9 lac 40,000 30,000 10,000 30,0....
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....The benefit of such Nil tax liability mentioned above is available only in the new tax regime. This New tax regime is the default regime. To avail the benefit of rebate allowable under proposed provisions of new tax regime, only return is to be filed otherwise no other step is required to be taken. Q.7. The change in tax slabs is beneficial for which category of persons? Ans. New tax regime is applicable to person, being an individual or Hindu undivided family or association of persons [other than a co-operative society], or body of individuals, whether incorporated or not, or an artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2. Accordingly, change in tax slabs will benefit all these persons. Q.8. How will a person who has an income Rs 12 lac benefit from new rates? Ans. Any individual earlier was required to pay a tax of Rs 80,000 (in the new regime) for an income of Rs. 12 lacs. Now he will be required to pay nil tax on such income. Q.9. Whether the limit of total income for NIL tax payments has increased in this budget? Ans. Yes, the limit of total income for NIL tax payments in the new tax regime has been increased to Rs.....
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....me Tax without Marginal relief (Rs.) Tax actually payable with marginal relief Rs 12,10,000 61,500 10,000 Rs 12,50,000 67,500 50,000 Rs 12,70,000 70,500 70,000 Rs 12,75,000 71,250 71,250 [ No marginal relief] Q.17. How the marginal relief is computed? Ans. The marginal relief is computed in the following manner:- (i) First the tax as per slab rate is computed on the total income. For e.g. In the answer given to question no.15 above, tax on the total income of Rs. 12,10,000/-shall be computed in following steps: Sl.No. Amount to be charged (out of total income of Rs. 12, 10,000/-) Tax Amount as per slab rates 1. Initial amount of 4 lac Nil (being basic exemption) 2. Tax on subsequent amount of 4 lac (from 4 lac to 8 lac) Rs. 20,000 (being 5% of Rs. 4 lac) 3. Tax on subsequent amount of 4 lac (from 8 lac to 12 lac) Rs. Rs. 40,000/- (being 10% of Rs. 4 lac) 4. Tax on balance amount of Rs. 10,000/- Rs. 1500 ((being 15% of Rs. 10,000) Aggregate tax liability Rs. 61, 500/- ....
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....ces Centre? Ans. In order to promote the development of world-class financial infrastructure in India, several tax concessions have been provided to units located in IFSC (exemptions, deductions or relocation of funds to IFSC, under the Income-tax Act, 1961) over the past few years. Q.3. Whether there are sunset dates in provisions related to tax incentives for IFSC? Ans. Yes, under the existing provisions there are sunset dates such as 31.03.2024, 31.03.2025 or 31.03.2026 for various tax incentives provided to IFSC. However, in Finance Bill 2025, sunset dates for commencement of operation have been extended in all cases. Q.4. What changes as regards sunset dates have been introduced through amendment in Finance Bill? Ans. The sunset dates for commencement of operations of IFSC units for several tax concessions, or relocation of funds to IFSC, etc. is proposed to be extended to 31st day of March, 2030. The sunset dates have been revised in following sections:- Section Brief Description 80LA(2)(d) Deductions in respect of certain incomes of Offshore Banking Units and International Financial Services Centre. 10(4D) Exemption to certain incomes includi....
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....How is it relevant to units in IFSC? Ans. A treasury center of an entity or a group enables it to centralise and concentrate cash and risk management to gain economies of scale, process efficiencies, and tighter control of cash flow in the group. The establishment of a treasury centre in the IFSC allows corporations to manage their global treasury operations such as foreign exchange and risk management, asset management, and advisory related to mergers and acquisitions etc. Q.10. What amendment is carried out for treasury centres in IFSC? Ans. Under the present provision, deemed dividend would be applicable to Treasury centres. Finance Bill proposes that the provisions of deemed dividend shall not apply to Treasury centres in IFSC on any advance or loan between two group entities, - a) where one of the group entity is a "Finance company" or a "Finance unit" in IFSC set up as a global or regional corporate treasury centre for undertaking treasury activities or treasury services; and b) the parent entity or principal entity of such group is listed on stock exchange in a country or territory outside India, (other than that as specified by the Board). Q.11....
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....in India, Q.3 What are the changes made to the definition of 'resultant fund' in section 47(viiad) of the Income tax Act, 1961 and the changes made by Finance Bill 2025? Ans. The 'resultant fund' was limited to a fund that had been granted a certificate of registration as a Category I or II or III Alternative Investment Fund (AIF) and is regulated under the SEBI (AIF) Regulations, 2012 or regulated under the IFSCA (Fund Management) Regulations, 2022. With the Finance Bill 2025, the Retail schemes and Exchange Traded Funds (ETFs) that are regulated under the IFSCA (Fund Management) Regulations, 2022 have also been added to the definition of 'resultant fund' subject to certain conditions. Q.4 What is the implication of the amendment made to section 47(viiad)? Ans. The relocation of an original fund to a resultant fund (being a Retail schemes and Exchange Traded Funds) is now also a tax neutral transaction subject to the conditions mentioned in 47(viiad). Q.5 Can a partnership firm be treated as a "resultant fund" under this section 47(viiad)? Ans. The 'resultant fund' can be a fund established or incorporated in India in the form of a trust or a company or a limi....
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....aforementioned transactions is exempt. This will also benefit the FPIs in that there will be more investments from non-residents because of the certainty provided in the domestic tax law. Q.8 Where are the rules prescribed for this section till date? Ans. The rules prescribed for this section are Rule 21-AK in the Income Tax Rules, 1962. FAQ:5- Bringing clarity in income on redemption of Unit Linked Insurance Policy Q.1. What are the provisions relating to amount received under a life insurance policy? Ans. Section 10(10D) provides for income-tax exemption on the sum received under a life insurance policy, including bonus on such policy, subject to certain conditions. Q.2. What conditions are to be fulfilled to claim exemption under Section 10(10D)? Ans. The conditions which are to be fulfilled to claim exemption under Section 10(10D) include: - a) premium payable for any of the years during the terms of the policy (life insurance or ULIP) issued on or after 01.04.2012 should not exceed ten per cent of the actual capital sum assured; and b) amount of premium or aggregate amount of premium payable during the term of such policy or policies shou....
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....very year and is repetitive. Q.3. What change is provided under the current Finance Bill to the assessee for the determination of Arm's Length Price? Ans. The assessee will have option to get the ALP, determined in relation to an international transaction or a specified domestic transaction for any previous year, applied to a similar transaction for the two consecutive previous years immediately following such previous year. In effect, the ALP determined in addition to such transaction for a year can be valid for similar transactions for the next 2 years. This shall reduce multiple proceedings for determining ALP for similar transactions. Q4. How will the taxpayer exercise this option? Ans. The taxpayer shall submit the option in a prescribed Form and the manner of filing this Form shall also be provided in the Rules. Q5. When can this option be exercised? Can more than one option be exercised for one assessment year? Ans. The assessee shall give this option to the TPO during the course of TP proceeding for determination of ALP. The exact timeline will be prescribed in the Rules. For transactions of different assessment years, option may be exercised separately. T....
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.... Q.2. What amendment has been caried out in respect of registration of trusts? Ans. The period of validity of registration of trust or institution with income below Rs 5 Crore has been increased from 5 years to 10 years in certain cases. Q.3. Which cases shall benefit from above amendment? Ans. The amended provisions shall be applicable to certain small trusts or institution whose total income does not exceed Rs. 5 crores in each of the two previous years, preceding the previous year in which application is made. Q.4. What amendment has been carried out in provisions relating to 'specified violation' in the case of trusts or institution? Ans. Under current provision an 'incomplete' application for registration is treated as specified violation. This may result in cancellation of registration and consequently, fair market value of the assets becomes chargeable to tax under the Act. In order to prevent harsh consequences for default of filing incomplete application, the above amendment has been carried out. The trust or institution shall be able to complete the application and the same shall be considered for the purposes of registration. Q.5. In the case of tru....
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....PF)? Ans. Two amendments have been proposed by the Finance Bill, 2025 viz.-. (i) For claiming exemption, specified persons (such as sovereign wealth funds and pension funds) are as of now required to make investment by 31/03/2025. The said date has been extended to 31/03/2030. (ii) It has been provided that long-term capital gains (whether or not such capital gains are deemed as short-term capital gains under section 50AA) arising from an investment made by such persons in India, shall continue to be exempted. Q.3. Why the deadline/time period for making investment has been extended? Ans. Considering the long-term nature of investments in the infrastructure sector and in order to provide the stability and time frame necessary for global investors to take decision and make substantial contribution to India's infrastructure development, the deadline for making investment has been extended. Q.4. Why exception has been carved out for long-term capital gains otherwise exempted under section 10(23FE) from applicability of provisions of section 50AA? Ans. The amendments to section 50AA by Finance (No. 2) Act, 2024, have re-classified all the capital gains ....
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....om this change? Ans. The provision directly applies to non-resident companies which are offering services or technology to electronic Manufacturing industry in India. The certainty provided in terms of taxation to such companies will promote development of manufacturing Industry in India in the electronics sector. Q.7. Will the scheme be applicable where technical personnel are provided by such non-resident? Ans. Yes. This presumptive scheme of taxation is applicable to non-resident providing services or technology. Therefore, where technical personnel are provided by the non-resident, it will be part of presumptive scheme. FAQ no. 10: Amendment of definition of 'capital asset' - Securities held by Investment Fund: Q.1 What are the changes made by the Finance Bill 2025 to the definition of capital asset? Ans. The definition of capital asset in section 2(14) has been amended to include the securities that are held by the Investment funds as well. Q.2 What are Investment Funds? Ans. Investment Fund is defined in section 115UB of the Income-tax Act, 1961. It means fund established or incorporate in India as trust or company or LLP or body corporate that is gran....
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.... for the purpose of calculating perquisites: Q1 What are the present provisions that are being amended under section 17 by the Finance Bill 2025? Ans. The present provisions provide for an upper limit on salary beyond which the following will be treated as perquisites and taxed in the hands of the employees (a) the amenities and benefits (in general) received from employers (b) the expenditure incurred by the employer for travel outside India on the medical treatment of an employee or his family member. Q.2 What are the changes proposed in the amendment to section 17 by the Finance Bill 2025? Ans. There are 2 changes proposed to specify the limit on salary so that: a. The amenities and benefits (in general) received by employees with a salary below certain limit would be exempt from being treated as perquisite. The limits, presently at Rs 50,000/- per annum, can now be prescribed by the Central Government. b. The expenditure incurred by the employer for travel outside India on the medical treatment of an employee with a salary below a certain limit, or for his family member would not be treated as a perquisite. Such limits, presently ....
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.... a 'business connection' in India. However, due to operation of current provisions relating to 'significant economic presence' such transactions or activities could have been deemed to accrue or arise in India. This has now been corrected. FAQ No. 14: Parity in rates of long-term capital gain on transfer of securities by non-resident Q.1 What is the current tax rate for income by way of long-term capital gains arising from the transfer of securities (other than units referred to in section 115AB) and not covered under section 112A by Foreign Institutional Investors (FIIs) [Reference: Section 115AD of the Income-tax Act, 1961]? Ans. The tax rate for income by way of long-term capital gains on transfer of securities (other than units referred to in section 115AB) by the FIIs that are not covered u/s 112A is 10%. Q.2 What is the change to the tax rate for these long-term capital gains brought in by the amendment by the Finance Bill, 2025? Ans. The tax rate for income by way of long-term capital gains arising from the transfer of the aforementioned securities by FIIs is now proposed to be 12.5%. With this amendment, long term capital gains for all securities except fo....
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....er and an employee or by any assessee. The withdrawal of the contributions is taxable subject to certain conditions. Q.3 What are the benefits allowed for NPS Vatsalya in Finance Bill, 2025? Ans. Scope of section 80CCD is proposed to be extended: Deduction shall now be allowed to the parent/guardian under the old taxation regime for amount deposited in the account of any minor child (up to 2 children) under the NPS-Vatsalya also. Proposed deduction shall be allowed u/s 80CCD(1B). Overall cap of Rs. 50,000 under the said sub-section (cumulatively for self and such minor child (up to 2 children) shall continue as earlier. Q.4 What will happen to the contribution in NPS-Vatsalya when the amount is withdrawn? Ans. Partial withdrawal upto 25% of contribution, in accordance with the Scheme is allowed exemption u/s 10(12BA) by Finance Bill 2025. When the contribution is finally withdrawn, the amount on which deduction is allowed earlier, will be charged to tax Q.5 When will the tax benefit for NPS-Vatsalya be available? Ans. From previous year 2025-2026 i.e. assessment year 2026-27 onwards. FAQ No. 17: Exemption from withdrawals from National Savings Sc....
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....e 10% 2. Sub-section (1) of section 206C - TCS on timber or any other forest produce (not being tendu leaves) obtained under a forest lease and timber obtained by any mode other than under a forest lease 2.5% 2% 3. Sub-section (1G) of section 206C - TCS on remittance under LRS for purpose of education, financed by loan from financial institution 0.5% after Rs. 7 lakh Nil Q.3 What are the changes proposed in Finance Bill, 2025 with regard to threshold of TDS and TCS? Ans. Following changes are proposed in the threshold of TDS and TCS: S. No. Section of the Act Present TDS/TCS threshold (in Rs.) Proposed TDS/TCS threshold (in Rs.) 1. 193 - Interest on securities Nil 10,000/- 2. 194A - Interest other than Interest on securities • 50,000/- for senior citizen; 40,000/- in case of others when payer is bank, cooperative society and post office 5,000/- in other cases 1,00,000/- for senior citizen 50,000/- in case of others when payer is bank, co-operative society and post office 10,000/- in other cases 3. 194 - Dividend, fo....
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....duced from 2.5% to 2%. Q.3 How has the term "forest produce" has been defined in the Act ? Ans. Forest produce has been assigned same meaning as provided any State Act for the time being in force, or in the Indian Forest Act, 1927. Q.4 What are the other changes made in relation to TCS on "forest produce"? Ans. Now only such forest produce (other than timber or tendu leaves) which are obtained under a forest lease will be liable for TCS. Earlier, the TCS was applicable on all kind of sale of forest produce. Q.5 What will be rate of TCS for sale of forest produce (other than timber and tendu leaves) under a forest lease? Ans. TCS will henceforth be collected at the rate of 2% instead of present rate of 2.5%. Q.6 From when this change will take place? Ans. This provision will apply from the 1.4.2025. FAQ no. 20 Removal of higher TDS/TCS for non-filers of return of income Q.1 What are the provisions of section 206AB and 206CCA of the Act. Ans. Section 206AB of the Act, mandates deduction of tax at higher rate where the deductee is a non-filer of Income Tax Return. Section 206CCA of the Act, mandates collection of tax at higher rate where the coll....
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....liance burden on the seller (collector). This will also result in avoidable blockage of liquidity. Q.5 From which date taxpayer will not be required to collect TCS under this section? Ans. From 01.04.2025, the taxpayer is not required to collect TCS under this section. FAQ no. 22 Extension of Tonnage Tax Scheme to Inland vessels Q.1 What is tonnage tax scheme? Ans. Chapter XII-G of the Income tax Act 1961 provides special provisions relating to income of the shipping companies. Tonnage tax scheme, as provided in the Chapter XII-G, is a presumptive tax scheme for shipping companies which allows them to compute their profits on presumptive basis. Q.2 What are the salient features of the tonnage tax scheme? Ans. (i) The scheme allows shipping companies to opt for presumptive taxation. (ii) Under the scheme, computation of income will be made on presumptive basis based on the net tonnage of the ship and the days involved. (iii) If scheme is not opted, the income will be computed as per the regular provisions of the Act. (iv) The scheme provides tax certainty to the shipping companies. Q.3 Who is eligible to avail tonnage tax scheme as per existing provi....
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....o be furnished. Q.8 Whether any rules, forms etc. are proposed to be prescribed? Ans. Yes, rules and forms will be prescribed to furnish prescribed information by the Reporting Entity. Q.9 Why is it being made obligatory to furnish information of crypto asset? Ans. India has been included in the list of 52 "Relevant" jurisdictions for the purpose of Crypto- Asset Reporting Framework (CARF). CARF provides for the automatic exchange of tax-relevant information (AEOI) on Crypto-Assets. The G20 Leader's New Delhi Declaration called for the swift implementation of the CARF. To enable this an amendment is being brought for the prescribed Reporting Entities to furnish information of crypto-asset. Q.10 From when will the reporting entity be required to furnish information of crypto-asset? Ans. The Reporting Entity will have to provide information in respect of transaction in crypto- asset after the prescribed date. FAQ no. 24 -- Rationalisation of provisions related to carry forward of losses in case of amalgamation Q.1 What are the provisions of section 72A and 72AA of the Act? Ans. Sections 72A and 72AA of the Act provide that in case of specified amalgamation ....
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.... of the Act, it is proposed to exclude time period for which proceedings were stayed by an order of any court, etc. Q.4 From when these changes will take place? Ans. These changes will be effective from 01.04.2025. FAQ no. 26 -- Increasing time limit available to pass order under section 115VP Q.1 What is section 115VP of the Act? Ans. A qualifying shipping company may opt for tonnage tax scheme by making an application under this section to the jurisdictional Joint Commissioner of Income-tax. Q.2 What is the current time limit to pass an order under this section? Ans. The Joint Commissioner has to pass an order granting or refusing the approval of the option given by the taxpayer for the tonnage tax scheme, within one month from end of the month in which application was received. Q.3 What is the amendment proposed in Finance Bill 2025 with regards to the time limit? Ans. The new time limit to pass an order is three months from end of the quarter in which application has been received. Q.4 For which applications the new time limit will be applicable? Ans. The time limit will be applicable for all the application received on or after 01.04.2025. Q....
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....e Bill 2025? Ans. 70% of aggregate of tax and interest payable on additional income disclosed in the updated ITR. Q.6 What is the rationale for updated return upto 48 months as per the amendment brought in section 139(8A) of the Income-tax Act,1961 in Finance Bill 2025? Ans. This is in line with the philosophy of 'Trust First'. The facility of updated return upto 48 months will enhance voluntary compliance. Q.7 Can a taxpayer file more than one updated ITR? Ans. No. The taxpayer cannot file more than one updated ITR for one relevant assessment year. However, one updated return for every separate assessment year can be filed. Q.8 Can a taxpayer file updated ITR after filing revised ITR? Ans. Yes, a taxpayer after filing revised return can file updated return. He can file updated return for previous year at any time within 48 months from the end of relevant assessment year as per Finance Bill 2025 amendment. Q.9 Can a non-filer taxpayer file updated ITR? If yes, what will be his additional income-tax liability? Ans. Yes, a non-filer taxpayer can file updated ITR at any time for the previous year within 48 months from the end of relevant assessment year. ....
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....e Income-tax Act,1961 in Finance Bill 2025? Ans. No, there are no additional requirements. However, a taxpayer has to pay additional income-tax amounting to 60% of aggregate of tax and interest payable on additional income disclosed in the updated ITR if he wants to file update return after expiry of 24 months from the end of relevant assessment year upto 36 months from the end of relevant assessment year. Q.13 In case of non-filer, what shall be taken as additional income? Ans. Any income over and above the maximum amount which is not chargeable to income-tax shall be taken as additional income for the purposes of filing updated return by a non-filer. Q.14 Can a taxpayer file updated return where any notice to show-cause under section 148A has been issued in his case after thirty-six months from the end of the relevant assessment year? Ans. As per Finance bill 2025 amendment, no updated return shall be furnished by any person where any notice to show-cause under section 148A has been issued in his case after thirty-six months from the end of the relevant assessment year. However, where subsequently an order is passed under sub-section (3) of section 148A determin....
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....yed payment of TCS Q1. What is section 276BB of the Income-tax Act, 1961? Ans. Section 276BB of the Income-tax Act, 1961 provides for prosecution in case of failure to pay the tax collected at source to the credit of Central Government. Q2. What amendment has been made in section 276BB of the Income-tax Act, 1961 in Finance Bill 2025? Ans. Section 276BB of the Income-tax Act, 1961 has been amended to provide that prosecution shall not be instituted if the person has paid TCS to the credit of the Central Government at any time on or before the time prescribed for filing the statement under proviso to 206C (3) in respect of such payment. Q3. What happens if person does not pay TCS even after expiry of time prescribed for filing the TCS statement under proviso to 206C (3) of the Income-tax Act, 1961? Ans. The present provisions of section 276BB of the Income Tax Act,1961 shall continue to apply. Q4. What is the relaxation provided to the taxpayer through the amendment in section 276BB of the Income-tax Act, 1961 in Finance Bill 2025? Ans. Section 276BB of the Income-tax Act, 1961 has been amended to provide the relaxation from prosecution. The prosecution sh....
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....sently the limit for penalty amount in section 274(2) of the Act is Rs 10,000/- for Income-tax Officer and Rs 20,000/- for the Assistant or Deputy Commissioner. FAQ 32 : Extending the processing period of Application seeking immunity from penalty and prosecution Q1. What is section 270AA of the Income-tax Act, 1961? Ans. Section 270AA of the Income-tax Act, 1961 relates to immunity from imposition of penalty or prosecution. Q2. When is the assessee required to apply for immunity under section 270AA of the Income-tax Act, 1961? Ans. As per existing provisions, assessee should apply for immunity within one month from the end of the month in which the assessment or reassessment order has been received by him subject to fulfilment of prescribed conditions. Q.3 What are the prescribed conditions to make an assessee eligible for immunity under section 270AA of the Income-tax Act, 1961? Ans. The prescribed conditions are: - (i) Assessee has paid tax and interest payable as per such order within the period specified in notice of demand; and (ii) no appeal against such order has been filed. Q4. What is the time-limit for processing application of the assessee u....
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....od commencing on the date on which stay on the assessment proceeding was granted by an order of any court and ending on the date on which certified copy of the order vacating the stay is received by the jurisdictional Principal Commissioner or Commissioner." Q3. What sections regarding the vacation of stay of Court has been amended in Finance Bill 2025? Ans. Sections 144BA,153,153B,158BE,158BFA,263,264 and Rule 68B of Schedule II of the Income Tax Act,1961 has been amended to clarify the commencement and end date for exclusion of time period of limitation of respective sections. FAQ 35 : Time limit for retention of seized books of account or other documents rationalized Q1. Why is retention of seized books of account or other documents required after completion of assessment or reassessment in a particular case as per Section 132(8) of Income-tax Act,1961? Ans. Retention of seized books of account or other documents is required because in the course of search assessment proceedings in group cases, the assessment orders of one assessee may be passed earlier than the assessment orders of another assessee to which the seized books of account or other documents relate. ....
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....f the authorisations for search or requisition has been executed. Q4. What is Undisclosed income under Chapter XIV-B of the Income-tax Act,1961? Ans. Undisclosed income in respect of the block period includes: - (i) any money, bullion, jewellery, virtual digital asset or other valuable article or thing or any expenditure or any income based on any entry in the books of account or other documents or transactions, where such money, bullion, jewellery, virtual digital asset, valuable article, thing, entry in the books of account or other document or transaction represents wholly or partly income or property which has not been or would not have been disclosed for the purposes of this Act; or (ii) any expense, exemption, deduction or allowance claimed under this Act which is found to be incorrect. Q5. After Finance Bill, 2025, what shall stand revived under section 158BA (5) of the Income-tax Act,1961 if any proceeding initiated under Chapter XIV-B has been annulled in appeal? Ans. The assessment or reassessment or recomputation or a reference or an order relating to any assessment year which has abated under sub-section (2) or sub- section (3), shall revive. Q.6 Wh....