Finance Bill, 2025 has been introduced in the Lok Sabha on 01st February, 2025 and has proposed various amendments under Direct and Indirect Taxes.

Key changes proposed vide Finance Bill, 2025 under the Income Tax Act, 1961 –

Tax deducted at source (TDS)/ Tax collected at source (TCS)-

• Sub-section (1H) of Section 206C, requires any person being a seller who receives consideration for sale of any goods of the value or aggregate of value exceeding INR 50 lakhs in any previous year, to collect tax from the buyer at the rate of 0.1% of the sale consideration exceeding INR 50 lakhs, subject to certain conditions. It is proposed to omit Sub-section 1(H) of Section 206C. This will come into effect from the 1st April, 2025.
• Section 206AB, requires deduction of tax at higher rate when the deductee specified therein is a non-filer of income-tax return. Section 206CCA, requires for collection of tax at higher rate when the collectee specified therein is a non-filer of income-tax return. It is proposed to omit Section 206AB and Section 206CCA. This will come into effect from the 1st April, 2025.
• Section 276BB provides for prosecution in case of failure to pay the tax collected at source to the credit of Central Government. It is proposed to amend section 276BB to provide that the prosecution shall not be instituted, if the payment of the tax collected at source has been made to the credit of the Central Government at any time on or before the time prescribed for filing the quarterly statement in respect of such payment. This amendment will take effect from the 1st day of April, 2025.
• Below are the proposed changes in the TDS rates and thresholds limit under various sections. This amendment will take effect from the 1st day of April, 2025.

Relevant Section	Particulars	Existing Rates/Threshold	Proposed Rates/Threshold
Section 194LBA	TDS Rates on payment of income by securitization trust to resident individual and HUFs investors	25% for individual investors, and 30% for HUF investors	10%
Section 193	TDS on interest on securities	Nil	INR 10,000
Section 194	TDS on dividend to individual shareholders	INR 5,000	INR 10,000
Section 194K	TDS on income from mutual fund units	INR 5,000	INR 10,000
Section 194D, Section 194G and Section194H	TDS on insurance commission, or lottery commission or any other commission or brokerage	INR 15,000	INR 20,000
Section 194J	TDS on professional or technical services or royalty or non-compete fees	INR 30,000	INR 50,000
Section 194-I	TDS on rent	INR 2.4 lakh during the financial year	INR 50,000 per month or part of the month
Section 194B and Sction 194BB	TDS on winnings from lottery or crossword puzzle or any other game and horse race	Aggregate of amounts exceeding INR 10,000 in a financial year	INR 10,000 per single transaction

Time limit for filing of updated return extended-

Sub-section 8A of Section 139 is proposed to be amended to extend the time limit to file an updated tax return to four years instead of two years from the end of the relevant assessment year. An additional 60% tax is payable if filed after two years but within third years from the end of the relevant assessment year. An additional 70% tax payable if filed after three years but within four years from the end of the relevant assessment year. Disallow filing updated tax return if reassessment notice is issued after three years from the end of the relevant assessment year unless such reassessment is dropped. This will come into effect from the 1^st April, 2025.

International Financial Services Centre (IFSC)-

• Section 80LA provides for deductions in respect of certain incomes Offshore Banking Units and IFSCs, of an amount equal to one hundred per cent of such income for any ten consecutive assessment years, at the option of the Assessee. Accordingly, as proposed any income arising from the transfer of an asset, being an aircraft or a ship, which was leased by a unit of the International Financial Services Centre from its business to a person, subject to the condition that the unit has commenced operation on or before the 31st day of March, 2030 instead of 2025.
• Revision in Section 9A which specifies certain activities that shall not constitute business, the condition that aggregate participation or investment in the fund, directly or indirectly, by persons resident in India does not exceed five per cent of the corpus of the fund as specified in clause (c ) of Sub-section 3 of the said section is being rationalised for all the eligible investment funds whether or not their eligible fund managers are based in IFSC. Thus, it has been proposed to introduce specific simplified regime for IFSC based fund managers, managing funds situated in other jurisdiction so that fund managers in IFSC are at par with the fund management entities in competing foreign jurisdiction.

Additionally, it is being proposed to grant relaxation under sub-section 8A to an eligible investment fund and its eligible fund manager, if such fund manager is located in an IFSC, and has commenced its operations on or before the 31st day of March, 2030 instead of 2024.

This will be applicable from 1st day of April, 2025.

Charitable trusts-

• Section 12AB is proposed to be amended to provided that for smaller trusts / institutions, those who have total income not exceeding INR 5 crores during each of the two previous year, preceding to the previous year in which such application is made, validity period of registration shall increase from 5 years to 10 years.
• Sub section 4 of Section 12AB is proposed to be amended to provide that minor default such as incomplete application for registration will not lead to cancellation of tax registration.
• Sub section 4 of Section 13 is proposed to amend the meaning of “specified person” in case of trust or institution. Threshold for substantial contribution for specified person is proposed to be increased to INR 1 lakh during the relevant year, or to INR 10 lakhs in aggregate up to the end of relevant financial year. Further it is also proposed that, relatives of person with substantial contribution or any concern in which such person has a substantial interest shall not be part of specified persons.

This will be applicable from 1st day of April, 2025.

Business Trusts

Section 115UA is proposed to be amended to provide that income of REITs and InvITs (business trusts) is taxed at the maximum marginal rate, subject to the concessional tax rates under sections 112 A ( long-term capital gains arising on transfer of listed shares) along with Section 111A and Section 112. This will be applicable from 1st day of April, 2025.

Tonnage Taxation Scheme

Section 115VD is proposed to be amended to include inland vessels as defined in Inland Vessels Act, 2021 in the definition of qualifying ship so as to provide the given the choice to opt for the tonnage tax regime or continue to remain within the normal corporate tax regime.

Start-ups-

Section 80-IAC is proposed to be amended to extend last date for incorporation of eligible start-ups to avail the benefits for tax holiday of three years out of first 10 years from 31,March 2025 to 31,March 2030. This will come into effect from the 1st April, 2025.

Amalgamation or business re-organisation

Section 72 is proposed to be amended to provide that any loss transitioned to successor entity pursuant to amalgamation or business re-organizations shall be available for carry forward and set-off for not more than eight years immediately succeeding the assessment year for which such loss was first computed for predecessor entity. This amendment will take effect from the 1st day of April, 2025.

Key changes proposed vide Finance Bill, 2025 under the Indirect Taxes –

Central Goods and Service Tax Act (CGST), 2017

Revision under Schedule III of the CGST Act, 2017

Proposed to insert new clause under Paragraph 8 of the schedule wherein supply of goods warehoused in a Special Economic Zone or in a Free Trade Warehousing Zone to any person before clearance for exports or to the Domestic Tariff Area shall neither be treated as supply of goods nor as a supply of service.

No refund of tax

Section 128 is proposed to be amended to provide that no refund of tax already paid will be available in case of supply of goods warehoused in a Special Economic Zone or in a Free Trade Warehousing Zone to any person before clearance for exports or to the Domestic Tariff Area.

Revision in the provision for reduction in the output tax liability of the supplier

Section 34 is proposed to be amended to provided that no reduction in output tax liability of the supplier shall be permitted, if the

1. input tax credit as is attributable to such a credit note, if availed, has not been reversed by the recipient, where such recipient is a registered person; or
2. incidence of tax on such supply has been passed on to any other person, in other cases.

Revision of amount of penalty in case of further appeal to Appellate Authority under Section 107 of the CGST Act, 2017

Section 107 is proposed to be amended to provide that no appeal shall be filed against an order unless a sum equal to 10% of the penalty has been mandatorily been paid by the appellant before Appellate Authority instead of 25%.

Time of supply in case of supply of vouchers by a supplier

Sub Section 4 of Section 12 and 13 is proposed to be omitted. Time of supply of vouchers by a supplier i.e (a) the date of issue of voucher, if the supply is identifiable at that point; or (b) the date of redemption of voucher, in all other cases shall stand omitted.

New section inserted for track and trace mechanism of certain goods

New section is proposed to be inserted for track and trace mechanism and person in contravention of the said provision shall, in addition to any penalty under Chapter XV or the provisions of this Chapter, be liable to pay a penalty equal to an amount of one lakh rupees or ten per cent. of the tax payable on such goods, whichever is higher.

Insertion of definition of Unique Identification Marking under

Clause 116A of Section 2 is proposed to be inserted to define “Unique Identification Marking” means the unique identification marking referred to in clause (b) of sub-section (2) of section 148A and includes a digital stamp, digital mark or any other similar marking, which is unique, secure and non-removable.

Customs Act, 1962/Customs Tariff Act, 1975

Time Limit for provisional assessments

New Sub-section (1B) under section18 is proposed to be inserted to provide a definite time limit of two years for finalisation of provisional assessments with some exceptions. In case of non adherence to the time limit, the importer/exporter needs to communicate the reasons in writing. For pending cases, the time limit shall be calculated from the date of the president’s assent of the finance bill.

Voluntary revision of entry, post clearance

New Section 18A is proposed to be inserted to provide that wherein the importer or exporter of the goods, after the clearance, may revise an entry already made in relation to the goods, in such form and manner, within such time and subject to such conditions as may be prescribed. In case of revised entry and self-assessment made following actions may be taken:

1. any duty short-levied, not levied, short-paid or not paid, then the same may be paid voluntarily by the importer or exporter of such goods along with the interest.
2.   duty paid in excess of that payable on such goods or whole of the duty paid, requiring refund, then, such revised entry shall be deemed to be a claim for refund.

Further it is proposed that no revision of entry shall be made under this section in the following cases:

1. cases where any audit under Chapter XIIA or search, seizure or summons under Chapter XIII has been initiated and intimated to the importer or the exporter concerned.
2. cases requiring refund where the proper officer has re-assessed the duty.

Changes to IGCR (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2017

Rules 6 and 7 is proposed to be amended to increase the time limit for fulfilling end use from current six months to one year. Further, the importers will now have to file only a quarterly statement instead of monthly statement.

Custom Duty Rate Changes w.e.f. 1^st February, 2025:

Footwear:

Basic Customs Duty (BCD) on following footwear stands decreased from 35% to 20%:

• Waterproof Footwear with outer soles and Uppers of Rubber or of plastics, the uppers of which are neither fixed to the sole nor assembled by stitching, riveting, nailing, screwing, plugging or similar processes.
• Footwear with outer soles and uppers of rubber or plastics.
• Footwear with outer soles of rubber, plastics, leather or composition leather and uppers of leather.
• Footwear with outer soles of rubber, plastics, leather or composition leather and uppers of textile materials.
• other footwear.

Solar Cells:

• BCD on Solar Cells reduced from 25% to 20%.
• BCD on Solar Module and Other semiconductor devices and photovoltaic cells reduced from 40% to 20%.

Motor Vehicles:

• BCD on Motor vehicles for transport of 10 or more persons is reduced from 40% to 20%.
• Motor cars and other motor vehicles principally designed for the transport of persons (other than those of heading 8702) is reduced from 125% to 70%.
• BCD on Motor vehicles for transport of goods is reduced from 40% to 20%.
• BCD on Motorcycles and cycles fitted with an auxiliary motor with or without side-car is reduced from 100% to 70%
• BCD on Motorcycles and bicycles is reduced from 35% to 20%.

IT and Electronics Sector:

• BCD on Ethernet switches Carrier grade reduced from 20 % to 10%.
• BCD on Open cell for Interactive Flat Panel Display Module with or without touch, Touch Glass Sheet and Touch Sensor PCB for the manufacture of the Interactive Flat Panel Display Module reduced from 15/10% to 5%.
• BCD on Interactive flat panel Displays stands increased upto 20% from 10%.

Leather:

BCD exempted on Wet Blue Leather (hides and skins)

Metal Scrap & Lithium-Ion Battery Waste and Scrap:

BCD exempted on Lead waste and scrap, Zinc waste and scrap, Cobalt powders Waste and scrap of Lithium-Ion Battery.

Other rate changes:

• BCD on Luminaries and lighting fittings including searchlights and spotlights and parts thereof etc is reduced from 25% to 20%.
• Other tube or pipe fittings of stainless steel is reduced from 25% to 15%.

Social Welfare Surcharge (SWS):

No SWS will be levied on following goods:

• Solar Cells
• Luminaries and lighting fittings including searchlights and spotlights and parts thereof etc.
• Other Footwear with Outer Soles and Uppers of Rubber or Plastics.
• Footwear with Outer Soles of Rubber, Plastics, Leather or Composition Leather and Uppers of Leather.
• Footwear with Outer Soles of Rubber, Plastics, Leather or Composition Leather and Uppers of Textile Materials.
• Other Footwear.
• Solar Module and Other semiconductor devices and photovoltaic cells.
• Motor vehicles for transport of 10 or more persons.
• Motor vehicles for transport of goods.
• Motor cars and other motor vehicles principally designed for the transport of persons in other than Completely Built Form with CIF value exceeding USD 40,000.
• Motor cars and other motor vehicles which have been registered abroad before import into India i.e. Used Vehicles.
• Used motorcycles and cycles fitted with an auxiliary motor with or without side-car.

Source: Ministry of Finance

Share this: