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News Indian Laws
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Tax treatment for foreign securities clarified, enhancing investor certainty and tightening compliance obligations for cross border instruments.
The Finance Bill, 2025 amendments clarify tax treatment for securities held by foreign investors by defining covered instruments for FIIs and specified funds under applicable regulatory compliance, expand coverage to include over the counter derivatives while removing ambiguous intermediary language, and strengthen assessment provisions to address inconsistencies and undisclosed income; Part IV validates pension classification authority to distinguish pension entitlements by retirement date.
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IFSC tax incentives expanded to ease fund relocations, clarify exemptions, and simplify non resident taxation.
Amendments relax compliance for investment funds by easing indirect participation thresholds and restoring executive modification powers; expand the relocation regime to include retail schemes and ETFs for tax neutral transfers into the IFSC; introduce a presumptive taxation scheme for non residents providing technology services for electronics manufacturing with exclusions for permanent establishment and royalty rules; correct and align IFSC insurance and specified fund exemptions with IFSCA conditions; extend derivative transaction exemptions to FPIs in the IFSC; refocus Chapter XIV B on undisclosed income and add Section 143(1) checks for return inconsistencies; and broaden the definition of capital asset to include securities held by Alternative Investment Funds under SEBI and IFSCA.
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Section 115BAC tax regime retained as default; surcharge tiers and caps specified, with marginal relief safeguards.
The Finance Bill, 2025 retains existing income-tax rates for assessment year 2025-26 and keeps special concessional regimes unchanged. Section 115BAC operates as the default regime for eligible individuals and similar entities unless an option is chosen, with prescribed slab rates applying. The Bill specifies tiered surcharge rates on tax under section 115BAC for higher incomes, caps surcharge on dividend and certain categorized income and for associations of companies, and provides marginal relief. Part III First Schedule provisions for advance tax and withholding are reallocated to Part I for 2025-26.
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Tax rates: existing graduated income-tax slab structure for individuals and related entities remains unchanged for the assessment year.
Part I of the First Schedule to the Finance Bill, 2025 prescribes graduated income-tax slabs and corresponding percentage rates for assessment year 2025-26 applicable to individuals, HUFs, associations of persons, bodies of individuals and certain artificial juridical persons. It distinguishes three resident-individual categories by age with differing basic-exemption thresholds and applies graduated marginal rates across successive income bands. The schedule for 2025-26 is stated to be unchanged from the prior assessment year.
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Income-tax rates for co-operative societies remain unchanged under the Finance Bill, preserving existing tiered percentage bands.
Income-tax rates for co-operative societies are specified in Paragraph B of Part I of the First Schedule to the Finance Bill and remain unchanged for the assessment year 2025-26, preserving a tiered rate structure that applies different percentage rates to successive income bands and maintaining continuity with the existing tax treatment for such entities.
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Firm tax rate unchanged under Finance Bill, maintaining existing income-tax treatment for partnership entities provision.
Firm taxation for assessment year 2025-26 is governed by the rate specified in Paragraph C of Part I of the First Schedule to the Finance Bill; the statutory rate for firms remains 30%, preserving the existing income-tax treatment of partnership firms as the operative rate for computing liabilities.
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Local authority tax rate remains unchanged for the assessment year, specified in the Finance Bill's First Schedule.
Paragraph D of Part I of the First Schedule to the Finance Bill prescribes the income-tax rate for a local authority and specifies that the rate remains unchanged at 30% for the assessment year 2025-26.
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Corporate tax rate differential maintained between smaller domestic companies and others, with surcharge rules and health and education cess applied.
Rates of income-tax for companies confirm lower rate for domestic companies below the turnover threshold and higher rates for other domestic and non-domestic companies; surcharge framework remains as prior year with exclusions for income of specified funds and capped surcharge treatment for incomes under the special domestic tax regime. Marginal relief is provided where surcharge is imposed. A Health and Education Cess is levied at a fixed percentage on income-tax inclusive of surcharge in all cases, with no marginal relief available for the cess.
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Deduction of income-tax at source: insurance commission TDS rate reduced, other TDS rates and surcharges largely retained
Deduction of income-tax at source for FY 2025-26 is set out in Part II of the First Schedule to the Finance Bill, 2025, with section-specific provisions continuing to govern TDS mechanics. The rate for taxation of insurance commission is reduced pursuant to amendments in the Finance (No. 2) Act, 2024 effective from 1 April 2025. Other TDS rates remain as specified in the prior Act, surcharge treatment is unchanged, and Health and Education Cess is levied at four per cent on income-tax including surcharge where applicable for non-residents and non-domestic companies.
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Income-tax withholding on salaries now set by prescribed rates, also governing advance tax computation and special assessments.
Rates for deduction of income-tax at source from Salaries and for computation of advance tax are prescribed in Part III of the First Schedule; those rates also apply for charging income-tax on current incomes where accelerated or special assessments are required, including provisional assessments, assessments of persons leaving the country, transfers to avoid tax, and short-duration bodies.
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New individual tax regime introduces revised slab rates, capped surcharge rules and an option to retain the old regime.
Proposed amendments create a revised new tax regime for individuals, HUFs, AOPs, BOIs and artificial juridical persons, prescribing progressive slab rates to determine income-tax from assessment year 2026-27, while allowing taxpayers to opt instead for rates in Part III of the First Schedule. The Part III schedule contains separate slab structures for general residents and for senior and super-senior residents. Computed tax (including specified capital gains) is subject to a multi-tiered surcharge with caps on surcharge for dividend and certain capital gains incomes, special limits for associations of companies, and marginal relief at thresholds.
News Bills
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Co-operative society tax rates and surcharge structure clarified for FY, with marginal relief and optional concessional tax regime available.
Rates of income-tax for co-operative societies remain unchanged from the prior fiscal year. A tiered surcharge regime applies with marginal relief to smooth threshold effects. Resident co-operative societies that satisfy specified conditions may elect a concessional tax option under the Finance Bill, which attracts a reduced surcharge on the alternative tax.
News Bills
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Firm income-tax rate unchanged; surcharge applies on incomes above the specified threshold, with a cap limiting surcharge impact.
The rate of income-tax for firms remains unchanged from the prior year as set in Paragraph C of Part III of the First Schedule. A surcharge applies on a firm's income-tax where total income exceeds a specified threshold, but the total of income-tax and surcharge on income above the threshold is capped so it cannot exceed the tax on the threshold amount by more than the excess income.
News Bills
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Surcharge on local authorities' income capped above the statutory threshold while base tax rates remain unchanged.
The income-tax rate for local authorities set in Paragraph D of Part III of the First Schedule is unchanged for FY 2025-26; a surcharge applies where total income exceeds one crore rupees, but the aggregate tax and surcharge on income above that threshold is limited so it cannot exceed the tax on one crore rupees by more than the excess income amount.
News Bills
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Corporate tax rate structure revised with differential domestic and foreign company rates, surcharge bands, marginal relief, and a health cess.
Corporate tax rates for FY 2025-26 set differentiated base rates for domestic and non domestic companies, allow domestic companies to opt into a concessional section 115BAA regime, and apply tiered surcharge rates with marginal relief; an additional Health and Education Cess is levied on tax inclusive of surcharge and is not eligible for marginal relief.
News Bills
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Rebate under section 87A expanded for new tax regime, raising eligibility and capping deduction to tax payable.
The proviso to section 87A grants a limited rebate and marginal relief to resident individuals whose income is chargeable under the new tax regime, excluding incomes taxed at special rates. From assessment year 2026-27 the Finance Bill proposes to increase the income limits and the maximum rebate under the proviso, and to add a proviso limit that the deduction cannot exceed the tax payable under the new tax-regime rates.
News Bills
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Incentives to International Financial Services Centre: proposed tax and regulatory amendments to further promote IFSC operations in non rupee currencies
IFSC is a jurisdiction providing financial services to non-residents and permitted residents in currencies other than the Indian Rupee; prior tax concessions have been granted to IFSC units to develop financial infrastructure, and the Union Budget 2025-26 proposes further amendments to provide additional incentives for operations from IFSC units, building on existing concessions to enhance its attractiveness for international financial services.
News Bills
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IFSC tax concession sunset extension extends commencement and relocation deadlines to March 2030, effective April 2025.
The Finance Bill proposes extending sunset dates for tax concessions tied to IFSC units and relocation of funds to IFSC, moving the deadline for commencement and relocation-related benefits to 31 March 2030; these amendments take effect from 1 April 2025.
News Bills
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Life insurance exemption extended to IFSC-issued policies without premium cap, improving parity for non-residents and clarifying scope.
Exemption for amounts received under life insurance policies, including bonuses, will expressly apply to policies issued by IFSC insurance offices; the proposed amendment removes the existing premium-cap condition for IFSC-issued policies to provide parity for non-resident policyholders, while leaving other exemption conditions intact, effective 1 April 2025.
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Exemption to capital gains and dividend expanded to ship leasing units in IFSC, aligning tax treatment with aircraft leasing.
The measure extends existing IFSC exemptions applying to aircraft leasing so that non residents or IFSC units engaged in ship leasing are exempt from capital gains tax on transfers of equity shares of domestic companies that are IFSC ship leasing units, and dividends paid by an IFSC ship leasing company to another IFSC ship leasing unit are likewise exempt. The amendment aligns ship leasing with aircraft leasing treatment and specifies an effective commencement under the Finance Bill.

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CUSTOMS DUTY EXEMPTIONS / CONCESSIONS BEING ALLOWED TO LAPSE

24 July, 2024

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Union Budget 2024-25 (Full) + FINANCE (No.2) Bill, 2024

Certain BCD exemptions entries under S No. 50/2017-Customs dated 30.6.2017 and other notifications are being allowed to lapse with effect from 30.9.2024.

(a) The following entries of notification no. 50/2017-Customs dated 30.6.2017 are being allowed to lapse with effect from 30.9.2024:

S. No.

S N of 50/2017 Customs

Description

1.

478

Wireless apparatus, accessories and parts as specified in List 29 imported by a licensed amateur radio operator

2.

353

Foreign currency coins when imported into India by a Scheduled Bank

3.

387

 Zinc metal recovered by toll smelting or toll processing from zinc concentrates exported from India for such processes

4.

441

Spinnerettes made inter alia of Gold, Platinum and Rhodium or any one or more of these metals, when imported in exchange of worn-out or damaged spinnerettes exported out of India

5.

238

Organic/inorganic Coating material for manufacture of electrical steel

6.

254

Catalyst for manufacture of cast components of Wind Operated Electricity Generator

7.

255

Resin for manufacture of cast components of Wind Operated Electricity Generator

8.

277A

Calendared plastic sheet for manufacturing of Smart Card under chapter heading 8523

9.

339

Concessional rate on import of Toughened glass with low iron content and transmissivity of minimum 91% and above, for use in manufacture of solar thermal collectors or heaters

10.

421

Specified goods required for basic telephone service, cellular mobile telephone service, internet service or closed users’ group 64 KBPS domestic data network via INSAT satellite system service and parts, for manufacture of the goods

11.

479

Mono or Bi polar Membrane electrolysers and parts thereof including secondary brine purification components, jumper switches, filtering elements for hydrogen filters for caustic soda or potash units; Membrane and parts thereof or other parts for caustic soda or potash units;

12.

475

Specified goods including scramblers, descramblers, encoders, decoders, jammers, network firewalls, network sniffers, scanners and monitoring systems, probes for data monitoring and SMS/MMS monitoring systems

13.

482

Newspaper page transmission and reception facsimile system or equipment; and Telephoto transmission and reception system or equipment

14.

495

Batteries for electrically operated vehicles, including two and three wheeled electric motor vehicles.

15.

497

Active Energy Controller (AEC) for use in manufacture of Renewable Power System (RPS) inverters

16.

579

Survey (DGPS) instruments, 3D modeling software for ore body simulation cum mine planning and exploration (geophysics and geochemistry) equipment required for surveying and prospecting of minerals

17.

419

Aluminium Oxide for manufacture of washcoat of catalytic converter

18.

420

Clay 2 powder for use in ceramic substrate for catalytic convertor

19.

340

Solar tempered glass or solar tempered (anti-reflective coated) glass for use in manufacture of solar cells/panels/modules

20.

565

Specified goods for use in the manufacture of Flexible Medical Video Endoscope [heading 9018]

21.

566

 Specific input goods for manufacture of syringes, needles, catheters and cannulae

22.

568

Parts and components for manufacture of blood pressure monitors and blood glucose monitoring system (Glucometers)

Note: Description of entries is indicative. Notification may be referred to for complete description.

(b) The following notifications are being allowed to lapse with effect from 30.9.2024:

S. No

Notification No.

Description

1.

97/99-Customs dated 21 July 1999

Exempts BCD and additional duty under Sections 3(1), 3(3) and 3(5) on standard gold bars imported by a RBI authorised bank

2.

30/2004-Customs dated 28 January 2004

Provides full exemption from BCD to second-hand computers/accessories and peripherals received as donation by schools, charitable institutions.

3.

102/2007-Customs dated 14 September 2017

Provides exemption from Special Additional Duty (SAD) levied vide section 3(5) of CTA on to all goods imported for subsequent sale when IGST, CGST, SGST or UTGST paid by importer.

4.

45/2005-Customs dated 16 May 2005

Provides exemption from Special Additional Duty levied under Section 3(5) of CTA on goods cleared from SEZ to DTA.

5.

151/94-Customs dated 13 July 1994

Provides exemption to imports of duty-paid fuel and lubricating oil on aircrafts taken during the outward flight; goods imports by United Arab Airlines; aircraft engines, spares imported by Indian Airlines and Air India International. Re-import entries will operate from re-import notification 45/2017-Cus

6.

26-Customs dated 19th February 1962

Provides exemption from import duty under the Sea Customs Act on catering cabin equipment, food and drink on re-importation by aircrafts of the Indian Airlines Corporation from foreign flights

Note: Description of entries is indicative. Notification may be referred to for complete description.


Full Text:

Union Budget 2024-25 (Full) + FINANCE (No.2) Bill, 2024

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Acts Income Tax