Income Tax Act, 2025 effective from 1st April, 2026. Simplified Rules & Forms to be notified shortly.
Exemption: Interest awarded by Motor Accident Claims Tribunal to a natural person will be tax-free.
Small Taxpayer Scheme: Automated rule-based process to obtain lower or nil TDS certificate without filing an application.
Revised Return Filing: Extended up to 31 March following the tax year (original & belated returns). Nominal fee for revisions after 31 Dec: Rs 1,000 / Rs 5,000 depending on income.
TDS & Compliance Simplification*
Manpower services now explicitly under TDS on contractor payments.
Depositories can accept Form 15G/15H from investors with holdings in multiple companies, and share directly with companies.
No TAN required for TDS on immovable property purchase from non-residents; PAN can be used like resident transactions.
Foreign Asset Declaration: Time-bound scheme for foreign assets & foreign income below a threshold.
Non-residents on Presumptive Taxation:
Exempt from MAT (As per proposal).
Corporate & Accounting Changes ICDS Integration: Joint committee (MCA & CBDT) to merge ICDS into Ind AS; separate ICDS accounting removed from 2027–28.
Buyback Tax: Proceeds taxed as capital gains for all shareholders. Promoters’ effective tax: 22% (corporate), 30% (non-corporate).
MAT Credit Set-Off: Allowed only under new tax regime, limited to ¼ of tax liability.
MAT Final Tax: Effective 1 April 2026, rate reduced from 15% → 14%. Existing MAT credits remain usable under new limits.
Employee Contributions
Deduction for employees’ contribution to PF, ESI, or similar funds allowed if employer deposits by income tax return filing date instead of statutory due date.
Key Takeaways
Simplified filing & compliance for individuals & small taxpayers.
