2025MONTHLY NEWS & UPDATES FOR FEBRUARY 2025

Executive Summary

Income Tax

• Section 192 of the Income-Tax Act, 1961 – Deduction at source – Salary- Clarification on Income-Tax Deduction from Salaries during FY 2024-25.
• Executive Summary on the comprehensive simplification of the Income-Tax Act, 1961.
• New slabs in the proposed new regime introduced by Finance Bill, 2025

Goods And Service Tax (GST)

• Circular no. 246/03/2025 – GST – Clarification on applicability of late fee for delay in furnishing of Form GSTR-9C, dated 30-01-2025
• Circular F. no. 190341/12/2025, dated 31-01-2025- The Ministry of Civil Aviation (MOCA) has shared details about Gazette Notification No. 08/2024 – IGST (Rate), dated 08-10-2024, issued by the Department of Revenue.
• Instruction no. 2/2025 – GST, dated 07-02-2025 – Section 128, along with Section 73 of the CGST Act, 2017, deals with waiving interest or penalties for certain tax demands and the procedure for department appeals related only to interest or penalties under Section 128A.
• Circular no. 247/04/2025 – GST, dated 14-02-2025 – Section 9 of the CGST Act, 2017, Clarification covers GST levy and collection on GST rates and the classification (Goods) based on the GST Council’s 55th meeting on 21-12-2024.

Companies Act 2013/ Other Laws

• Companies (Prospectus and Allotment of Securities) Amendment Rules, 2025
• IBBI (Voluntary Liquidation Process) (Amendment) Regulations, 2025
• IBBI Amends CIRP Regulations 2025
• SEBI (Mutual Funds) (Amendment) Regulations, 2025
• Relaxation in the timeline for reporting of differential rights issued by AIFs

A. SECTION 192 OF THE INCOME-TAX ACT, 1961 – DEDUCTION AT SOURCE – SALARY – CLARIFICATION ON INCOME-TAX DEDUCTION FROM SALARIES DURING FINANCIAL YEAR 2024-25 UNDER SECTION 192

Amendments made vide the Finance (No. 2) Act of 2024, Finance (No. 1) Act of 2024 and Finance Act of 2023 in respect of rates of deduction of income-tax from the payment of income under the head “Salaries” under section 102 of the Income-tax Act, 1961, during the financial year 2024-25

1. The term “Salary” has been defined in section 15 of the Act. As per the amendment in section 17(1) of the Act vide the finance Act, 2023. “salary”, inter alia, includes the following:

“The contribution made by the Central Government in the previous year, to the Agniveer Corpus Fund account of an individual enrolled in the Agnipath Scheme referred to in section 80CCH.”

2. As per the amendment vide the Finance Act, 2023 in section 17(2) of the Act, “perquisite”, inter alia, includes the following:

“(i)  The value of rent-free accommodation provided to the employee by his employer

 (ii) The value of any accommodation provided to the assessee by his employer at a concessional rate.”

B. Executive summary on the Comprehensive Simplifiaction of the Income-Tax Act,1961
The Income-tax Bill, 2025 has been tabled in Parliament on 13th February 2025, marking a significant step toward simplifying the language and structure of the Income-tax Act, 1961.The simplification exercise was guided by three core principles:

1. Textual and structural simplification for improved clarity and coherence.
2. No major tax policy changes to ensure continuity and certainty.
3. No modifications of tax rates, preserving predictability for taxpayers.

Quantitative Impact

The review has substantially reduced the Act’s volume, making it more streamlined and navigable. Key reductions are summarized below:

C. New slabs in the proposed new regime introduced by Finance Bill, 2025

The new tax regime applies to a person, being an individual or Hindu undivided family or association of persons [other than a co-operative society], or body of individuals, whether incorporated or not, or an artificial juridical person referred to in sub-clause (vii) of clause (31) of section.

Any individual earlier was required to pay a tax of Rs 80,000 (in the new regime) for an income of Rs. 12 lacs. Now he will be required to pay nil tax on such income.

A. Circular no. 246/03/2025 – GST – Clarification on applicability of late fee for delay in furnishing of Form GSTR-9C, dated 30-01-2025

Clarification has been issued regarding late fees for the delay in filing GSTR-9C:

• Key Point: If a taxpayer is required to file both GSTR-9 (Annual Return) and GSTR-9C, the annual return is considered complete only when both forms are submitted.
• Late Fee Applicability: If GSTR-9C is not submitted along with GSTR-9, the late fee under Section 47(2) of CGST Act applies from the due date until both forms are filed.
• Waiver of Late Fee: A special waiver has been granted through Notification No. 08/2025, allowing taxpayers to submit pending GSTR-9C for FY 2022-23 and earlier by March 31, 2025, without additional late fees beyond what was due for GSTR-9.
• No Refund: Any late fee already paid for delayed GSTR-9C submission will not be refunded.
• Trade notices are to be issued for public awareness, and any difficulties should be reported to the Board.

B. Circular F. no. 190341/12/2025, dated 31-01-2025- The Ministry of Civil Aviation (MOCA) has shared details about Gazette Notification No. 08/2024 – IGST (Rate), dated 08-10-2024, issued by the Department of Revenue

Clarification on GST Exemption for Foreign Airlines’ Import of Services:

• GST Exemption: As per the 54th GST Council meeting (09-09-2024), foreign airline establishments in India importing services from related persons abroad without consideration are exempt from GST, subject to these conditions:
• GST is paid on passenger & goods transport services in India.
• MoCA certifies that the establishment is a designated airline under a bilateral air service agreement.
• MoCA certifies that Indian airlines receive reciprocal tax exemption in the foreign country
• MoCA’s Role:
• Provided a list of designated foreign airlines operating in India for Winter 2024-25 (Annexure I).
• Consulted Air India, IndiGo, and Akasa Air on reciprocal tax exemptions (Annexure II).
• Action: The MoCA’s Office Memorandum (O.M.) and annexures are available on the CBIC website for reference.

C. Instruction no. 2/2025 – GST, dated 07-02-2025 – Section 128, along with Section 73 of the CGST Act, 2017, deals with waiving interest or penalties for certain tax demands and the procedure for department appeals related only to interest or penalties under Section 128A

Clarification on Section 128A – Waiver of Interest & Penalty:

• Provision: Section 128A of CGST Act (with Rule 164) allows waiver of interest/penalty for demands under Section 73 for FY 2017-18 to 2019-20, subject to conditions.
• Clarification Sought: Whether benefits apply if:
  • Tax is fully paid, but the department appealed due to incorrect interest calculation.
  • Penalty is not imposed or is below the threshold.
• Decision:
  • If full tax is paid and only interest/penalty is disputed, taxpayers are eligible for Section 128A benefits.
  • Appeals should be withdrawn or not filed if the only dispute is interest/penalty miscalculation.
• Action: Proper officers should withdraw appeals or accept the order if under review.

D. Circular no. 247/04/2025 – GST, dated 14-02-2025 – Section 9 of the CGST Act, 2017, Clarification covers GST levy and collection on GST rates and the classification (Goods) based on the GST Council’s 55th meeting on 21-12-2024.

Key Clarifications from the 55^th GST Council Meeting:

• GST on Pepper (Genus Piper)
  • HS Code: 0904
  • Rate: 5% GST (S. No. 38, Notification 1/2017-CT)
  • Exemption: Agriculturists supplying dried pepper are not liable for GST under Section 23(1).
• GST on Raisins by Agriculturists
  • Exemption: Raisins supplied by agriculturists are not liable for GST under Section 23(1).
• GST on Ready-to-Eat Popcorn
  • Salt & Spices: 5% GST (if loose), 12% GST (if packaged & labeled).
  • Caramel/Sugar Coated: 18% GST (HS 1704 90 90).
  • Past Period up to 14-2-2025: Issue regularized on an “as-is where-is”
• Implementation Issues: Report difficulties to the Board.

Companies (Prospectus and Allotment of Securities) Amendment Rules, 2025

The Ministry of Corporate Affairs (MCA) has issued the Companies (Prospectus and Allotment of Securities) Amendment Rules, 2025, under the Companies Act, 2013. This amendment modifies Rule 9B of the Companies (Prospectus and Allotment of Securities) Rules, 2014, granting a compliance extension for certain private companies.

Private companies (excluding Producer companies) that were not classified as small companies as of March 31, 2023, now have until June 30, 2025, to comply with the relevant sub-rule.

• IBBI (Voluntary Liquidation Process) (Amendment) Regulations, 2025

The Insolvency and Bankruptcy Board of India (IBBI) has issued the Voluntary Liquidation Process (Amendment) Regulations, 2025, effective January 28, 2025.

Key amendments include:

• The Board is now mandated to maintain a Corporate Voluntary Liquidation Account with a scheduled bank.
• New Regulation Introduces mandatory electronic filing of forms for different stages of liquidation, with specified timelines. Liquidators must ensure accurate and timely submissions, failing which a penalty of ₹500 per form per month will be imposed.
• Liquidators are now mandated to file the final report, including Form H, with the Adjudicating Authority when a scheme of compromise or arrangement under Section 230 of the Companies Act, 2013, is approved.

These amendments aim to enhance transparency, accountability, and compliance within the Voluntary Liquidation Process.

• IBBI Amends CIRP Regulations 2025

The Insolvency and Bankruptcy Board of India (IBBI) has introduced amendments to the Insolvency Resolution Process for Corporate Persons (CIRP) Regulations, effective February 3, 2025. These changes aim to streamline insolvency proceedings, particularly in the real estate sector.

Key Amendments:

• Resolution professionals (RPs) can now transfer property possession to homebuyers during the resolution process.
• Land authorities are now permitted to participate in Committee of Creditors (CoC) meetings.
• RPs must submit a report on real estate development rights within 60 days to aid decision-making.
• A monitoring committee may be formed to oversee resolution plan execution and submit quarterly progress reports to the Adjudicating Authority.
• MSME Status Disclosure: Corporate debtors must now disclose their MSME registration status to facilitate participation from eligible resolution applicants.

These amendments aim to enhance efficiency, transparency, and stakeholder confidence in the insolvency resolution process.

• SEBI (Mutual Funds) (Amendment) Regulations, 2025

The Securities and Exchange Board of India (SEBI) has introduced the Mutual Funds (Amendment) Regulations, 2025, bringing key changes to the Mutual Funds Regulations, 1996, effective April 1, 2025. The amendments require Asset Management Companies (AMCs) to invest a portion of their employees’ remuneration in mutual fund schemes based on their roles, as specified by SEBI. Additionally, AMCs must conduct stress tests on specific schemes and disclose the results in a prescribed format. The regulations also mandate that funds raised through New Fund Offers (NFOs) be deployed within a specified timeframe. Furthermore, AMCs must ensure that charges, commissions, or fees related to mutual fund distribution are paid in accordance with SEBI’s guidelines. These changes aim to enhance transparency, risk management, and accountability in the mutual fund industry.

• Relaxation in the timeline for reporting of differential rights issued by AIFs

The Securities and Exchange Board of India (SEBI) has extended the deadline for Alternative Investment Funds (AIFs) to report differential rights issues to March 31, 2025. This extension, from the original February 28, 2025 deadline, comes after requests from the AIF industry for additional time to comply with the reporting requirements.

The extension aims to provide AIFs with additional time to ensure compliance with these regulatory guidelines, thereby promoting fair and equal treatment of investors.

Disclaimer Information in this note is intended to provide only a general update of the subjects covered. It is not intended to be a substitute for detailed research or the exercise of professional judgment. KNM accepts no responsibility for loss arising from any action taken or not taken by anyone using this publication. Updates are for the period 28.02.2025