Budget Highlights: 2025-26
Finance Minister Nirmala Sitharaman emphasized various update affecting Income Tax, GST, MSME in the Union Budget 2025-26, targeting economic growth and opportunity enhancement. This budget address New Tax rates, TDS realization, lower rate of insurance commission, securitization investment, tax exemption from withdrawal of NSS, two self-occupied properties can claim Nil annual value etc. Other changes include reduce tax compliance burden, revision in classification criteria of MSME, introduction of new income tax bill.
Proposed Tax Structure
- Under the new tax regime, the following tax rate revisions are proposed for FY 2025-26 (AY 2026-27):
| Income up to 4 lakh rupees | No tax |
| Income from 4 to 8 lakh rupees | 5 percent |
| Income from 8 to 12 lakh rupees | 10 percent |
| Income from 12 to 16 lakh rupees | 15 percent |
| Income from 16 to 20 lakh rupees | 20 percent |
| Income from 20 to 24 lakh rupees | 25 percent |
- Under new tax regime No Tax upto Twelve Lakh (12,00,000) without capital gain.
- No tax shall be payable on salary upto 12,75,000 as benefit of Standard deduction available to salaried employees as per sec 16(ia) of Income Tax Act.
- Change in limit of Rebate under section 87A from 25,000 to 60,000 due to this change no tax upto 12lakh income.
- Rebate applies only to income taxed under Normal Rate and not Special Rate.
Updated Return
If taxpayer misses filing return or needs to correct their income details, then can submit updated return u/s 139(8A) upto 48 months from end of Assessment Year with payment of additional tax.
Earlier it only allows upto 24 months from end of assessment year.
| Delay | Additional Tax |
| Upto 12 months | 25% |
| 12- 24 months | 50% |
| 24- 36 months | 60% |
| 36- 48 months | 70% |
Note: If in case taxpayer receive a show cause notice u/s 148A, then in this case taxpayer can not file an updated return within 36 months.
Withdrawal from NSS (National Saving Scheme)
Provide tax exemption on withdrawal from NSS (National Saving Scheme) on or after 29th Aug 2024 for Individuals.
As per current tax treatment withdrawal from NSS is Taxable under head of Income from other sources and also attract TDS on certain withdrawals.
Now, this withdrawal exempt from tax and not attract any TDS liability.
Self-occupied property
Taxpayer allow to take Nil Annual Value of self-occupied property for upto two without any fulfillment of condition.
Small charitable trust registration
Period of Registration of Small charitable trust and institution extended from 5 ears to 10 years for reduction of compliance burden.
Small charitable trust means, trust whose total income without giving effect of provision of sec 11 and 12 does not exceed 5 crores during each of previous years.
Sec 44BBD insert
Provide a presumptive taxation regime for non-resident engaged in business of providing services or technology, to resident company which are establishing or operating electronic manufacturing facility or connected facility for manufacturing or producing electronic goods, article or thing in india under scheme notified by CG, deeming 25% of specified receipt as taxable business income.
TDS and TCS Rationalization
For easy compliance process and reduce tax burden provide relief to taxpayers i.e. Business owners
| SR. NO. | SECTION | CURRENT RATE | NEW RATES |
| 1 | Sec 194LBC – Income from securitization trust | If payee- Individual and HUF- 25% Other- 30% | 10% for all |
| 2 | Sec 194D – Insurance Commission | 5% | 2% |
| 3 | Sec 194A – Interest other than interest on securities | For senior citizen- Rs. 50,000When payer is Bank, Co-operative society, post office- Rs.40,000Other- Rs. 5,000 | For senior citizen- Rs. 1,00,000When payer is Bank, Co-operative society, post office- Rs.50,000Other- Rs. 10,000 |
| 4 | Sec 194- Dividends | Rs. 5,000 | Rs. 10,000 |
| 5 | Sec 194B/194BB- Lottery winnings/ Winning from Horse Race | Rs. 10,000 (Aggregate Amount) | Rs. 10,000 in respect of single transaction |
| 6 | Sec 194D- Insurance Commission | Rs. 15,000 | Rs. 20,000 |
| 7 | Sec 194G/ 194H- Lottery Commission/ Commission on Brokerage | Rs. 15,000 | Rs. 20,000 |
| 8 | Sec 194I- Rent | Rs. 2,40,000 during Financial Year | Rs. 50,000 per month or part of month i.e. 6,00,000 Annual Limit |
| 9 | Sec 194J- Fees for Professional and Technical services | Rs. 30,000 | Rs. 50,000 |
| 10 | Sec 194K- Income in respect of units of Mutual fund or Specified Company | Rs. 5,000 | Rs. 10,000 |
| 11 | Sec 194LA- Compensation on acquisition of certain immovable property | Rs. 2.50,000 | Rs. 5,00,000 |
| 12 | Sec 193- Interest on securities | Nil | Rs. 10,000 |
Omitted Sec 206AB and 206CCA of Income Tax Act which mandates higher TDS rates for non-filers of income tax returns. It is difficult for deductor to verify whether as non-filer or not and it led to unnecessary compliance burden.
(Now higher TDS rates will only apply on Non-PAN cases)
LRS Remittance
For LRS (Liberalised Remittance Scheme) Remittance, increased threshold limit from RS. 7,00,000 to Rs. 10,00,000.
Virtual Digital Assets
Crypto-asset is now included under “Virtual Digital Assets”
GST
Pre-deposit of penalty under GST before appeal
- In case of appeal related to Tax and Other Dues Pre-deposit shall be 10% of Tax with appellate authority
- In case of appeal related to E-way bill penalty Pre-deposit shall be 10% of penalty with appellate authority, instead of 25% of penalty.
- In case of appeal related to other penalties Pre-deposit shall be 10% of penalty with appellate authority, instead of nil penalty.
MSME criteria
New MSME classification criteria:
| Class | Investment | T/O | New Investment | New T/O |
| Micro | 1 cr. | 5 cr. | 2.5 cr. | 10 cr. |
| Small | 10 cr. | 50 cr. | 25 cr. | 100 cr. |
| Medium | 50 cr. | 250 cr. | 125 cr. | 500 cr. |
For any clarification on any topic contact with company suggestion.
