PROPOSED CHANGES IN THE INCOME TAX, VIDE FINANCE BILL 2025

DISCUSSION ON CHANGES PROPOSED IN THE INCOME

 TAX, VIDE FINANCE BILL 2025 (Part-II)

TAXATION OF CHARITABLE TRUSTS AND SOCIETIES

·     Section 12AB – The time period for which the registration u/s 12A is granted, has been increased from 5 years to 10 years in case of the trust or societies whose total receipts does not exceed Rs.5 crore in the 2 immediately preceding financial years in which the application is made [w.e.f. 01.04.2025].

 

·     Section 12AB – w.e.f. 01.04.2025, registration u/s 12A cannot be cancelled for minor omissions in the application filed for registration u/s 12A.

 

·     Section 13(3) – This section is proposed to be amended to change the definition of persons who are considered related on the basis of the contribution made by them to the trust. The limit of substantial contribution has been increased from Rs.50,000/- to Rs.1,00,000/- per year. A new condition has also been proposed to be inserted of lifetime contribution of Rs.10,00,000/-

 

Further, the relatives and concerns in which the person making substantial contribution are proposed to be excluded from ambit of the definition of related persons.

CHANGES RELATING TO COMPUTATION OF BUSINESS INCOME

·     Section 44BBD – A new section is proposed to be inserted w.e.f. AY 2026-27, which provides for presumptive taxation of 25% of the receipts earned by a non- resident by providing services or technology for setting up of an electronics manufacturing unit, by a resident in India under the scheme notified by the ministry of electronics and Information Technology.

 

·     Section 72A – A new sub- clause (6A) is proposed to be inserted to provide for carry forward and set-off of losses in case of amalgamation or business reorganization which takes place on or after 01.04.2025. The new sub-section provides for carry forward of losses for the remaining period out of the total 8 years by the successor entity i.e., loss will be carried forwarded for a total period of 8 years, combined by both predecessor and successor entity.

 

 ·     Section 72AA – Changes like that in Section 72A have also been proposed to be made in this section.

 ·     Section 80IAC – Sunset on exemption of 100% profits of the eligible startups has been extended from  31.03.2025 to 31.03.2030.

 

CHANGES IN TDS AND TCS PROVISIONS

 ·     Section 193 [Interest on securities] - This section is proposed to be amended to increase the amount of interest on debentures not liable to TDS from Rs.5,000/- to Rs.10,000/-. It is further, proposed to be amended to consolidate the interest payable by the same payer to same payee, on various securities. W.e.f. 01.04.2025.

 ·     This Finance bill proposes to increase the threshold limits for deduction of TDS in some of the applicable provisions. The summary of the same is as under: -

(Amount in Rs.)

Section	Particulars	Existing Limit	Proposed Limit
194	Dividend	5,000/-	10,000/-
194A	Interest (other than interest on securities
	-   Interest payable by banks & Post office	40,000/-	50,000/-
	-     Interest payable by others	5,000/-	10,000/-
	-   where interest recipient is a senior citizen payable by banks & PO	50,000/-	1,00,000/-
194D	Insurance commission	15,000/-	20,000/-
194G	Commission on sale of lottery tickets	15,000/-	20,000/-
194H	Commission	15,000/-	20,000/-
194I	Rent (Both building and plant & machinery)	2,40,000/- per annum	50,000/- per month
194J	Fee for Profession and Technical Services	30,000/-	50,000/-
194K	Income in respect of Mutula fund units	5,000/-	10,000/-
194IA	Compensation for acquisition of immovable property other than agricultural land	2,50,000/-	5,00,000/-

 

All the above increase are applicable w.e.f. 01.04.2025.

 

For TDS u/s 194I the limit has been made from annual to monthly basis. This means that if a person leases out his property for a partial period say 3 or 4 months, and the monthly rent exceeds Rs.50,000/- then it will be within the ambit of TDS even if the total rent for the whole years is less than Rs.6,00,000/-.

 

·     Section 194B [winnings from crosswords lottery etc.] – The limit of Rs.10,000/-, for the aggregate of winnings in whole year is proposed to be made applicable for each transaction separately w.e.f. 01.04.2025.

 

·     Section 194BB [Winnings from horse races] – The limit of Rs.10,000/-, for the aggregate of winnings in whole year is proposed to be made applicable for each transaction separately w.e.f. 01.04.2025.

 

·     Section 194LBC – Rate on TDS on income distributed by securitization trust is proposed to be reduced to 10% for all classes of assessee instead of current 25% and 30%, w.e.f. 01.04.2025.

 

·     Section 206AB & 206CCA – This sections states that a deductee will suffer higher rate of TDS and TCS if he has not filed his ITR for the immediately preceding year. These sections are proposed to be removed w.e.f. 01.04.2025.

 

·     Section 206C(1) – The Rate of TCS on timber is proposed to be reduced from 2.5% to 2%, w.e.f. 01.04.2025.

 

·     Section 206C(1G) - Threshold limit for non-collection of TCS in case of all foreign remittances is proposed to be increased from 7,00,000/- to Rs.10,00,000/-. Further, no TCS will be made if foreign remittance is for educational purpose and has been sourced by taking an educational loan from Bank w.e.f. 01.04.2025.

 

·     Section 206C(1H) - TCS on sale of goods is proposed to be removed w.e.f. 01.04.2025. Corresponding changes have also been made in Section 194Q.

 

·     Section 206C(7A) – This sub-section is proposed to be amended to provide the time limits for passing of order in pursuance of any appeal or revisions order, under TCS law also. The time limits have been incorporated from section 153(3)(5)and(6)w.e.f.01.04.2025.

Author

Shabnam