Executive Summary
Income Tax
- Revised Income Tax Slab under Section 115BAC rates effective from April 1st, 2025.
- Changes in provisions of Tax Deducted at Source.
- Key changes in Tax Collected at Source (TCS) provisions effective April 1st, 2025.
- New Limits for Partnership Firms under Section 40b.
- Other Changes made in the Income Tax Act, 1961, effective from April 1st, 2025.
Goods And Service Tax (GST)
- Section 3, read with section 5 of the Central Goods and Services Tax Act, 2017, and section 3 of the Integrated Goods and Services Tax Act, 2017 – officers under this act – powers of officers – appointment of officers – amendment in notification no. 2/2017-central tax, dated 19-6-2017
- Notification No. 16/2024-Central Tax, dated August 6, 2024, which makes ISD provisions mandatory from April 1, 2025.
Companies Act 2013/ Other Laws
- directs all companies to submit a half-yearly MCA return for delayed MSE payments exceeding 45 days
- Revises investment and turnover criteria for classifying enterprises as MSMEs
- IBBI Mandates Detailed Disclosure of Carry Forward Losses in Information Memorandum
- SEBI Amends LODR Regulations, 2015; Increases HVDLE Threshold to ₹1,000 Crore
- SEBI Amends PIT Regulations, Expands Scope of Unpublished Price Sensitive Information (UPSI)
INCOME TAX CHANGES EFFECTIVE FROM APRIL 1ST, 2025:
The Budget 2025 introduced some major changes to the Income Tax Act 1961 to simplify the tax structure in India. These changes will come into effect on 1st April 2025 and will be relevant from FY 2025-26 onwards.
A. REVISED INCOME TAX SLAB RATES
The Budget 2025 proposed new tax slab rates under section 115BAC, i.e., the New Tax Regime or the Default Tax Regime. This was to ensure that individuals save more and increase their spending capacity. These revised tax slab rates will be applicable for income earned in FY 2025-26 onwards.
| Sl .No. | Total Income (in lacs) | Rate of tax u/s 115BAC(1A) |
| 1. | Upto 4,00,000 | Nil |
| 2. | 4,00,001 to 8,00,000 | 5% |
| 3. | 8,00,001 to 12,00,000 | 10% |
| 4. | 12,00,001 to 16,00,000 | 15% |
| 5. | 16,00,001 to 20,00,000 | 20% |
| 6. | 20,00,001 to 24,00,000 | 25% |
| 7. | Above 24,00,000 | 30% |
- Rebate under Section 87A has been increased to ₹60,000 (previously ₹25,000). The threshold has been increased from Rs. 7,00,000 to 12,00,000
B. CHANGES IN TDS THRESHOLDS
Significant changes in the provisions of Tax Deducted at Source (TDS) will take effect from April 2025. One of the key proposals includes an increase in the threshold limits for various TDS sections, benefiting both individuals and businesses. The revised TDS thresholds for different sections are as follows:
| Section | Description | Previous Thresholds (in INR) | Revised Thresholds (in INR) |
| 193 | Interest on Securities | Nil | 10,000 |
| 194A | Interest – Senior Citizens – When payer is bank, Cooperative society & post office – Others | 50,000 40,000
5,000 | 100,000 50,000
10,000 |
| 194 | Dividend | 50,000 | 10,000 |
| 194K | Income in respect of units of a Mutual Fund | 5,000 | 10,000 |
| 194B | Winnings from the Lottery | 10,000 yearly (Aggregate) | 10,000 in respect of the single transaction |
| 194BB | Winnings from Horse race | 10,000 yearly (Aggregate) | 10,000 in respect of the single transaction |
| 194D | Insurance Commission | 15,000 | 20,000 |
| 194G | Income by way of commission, prize, etc. on lottery tickets | 15,000 | 20,000 |
| 194H | Commission or brokerage | 15,000 | 20,000 |
| 194-I | Rent | 240,000 yearly | 50,000 per month |
| 194J | Professional fees or Technical Services | 30,000 | 50,000 |
| 194LA | Income by way of Enhanced Compensation | 250,000 | 500,000 |
| 194T | Remuneration, Interest, and Commission Paid to Partners | Nil | 20,000 |
Omission of Sections 206AB & 206CCA – Higher TDS Provisions Removed
Sections 206AB and 206CCA, which mandated a higher TDS/TCS rate for non-filers of income tax returns, have been removed. Previously, taxpayers who had not filed their income tax returns for the last two years faced higher deduction rates. With the removal of these sections, businesses and individuals will no longer be subject to higher TDS/TCS rates for non-compliance.
C. TCS AMENDMENTS
Key changes in Tax Collected at Source (TCS) provisions effective from April 1st 2025, are as below:
| Section | Description | Previous Thresholds (in INR) | Revised Thresholds (in INR) |
| 206C(1G) | LRS/Overseas Tour | 700,000 | 1,000,000 |
| 206C(1G) | Education Loan (LRS) | 700,000 | Nil (NO TCS) |
| 206C(1H) | Purchase of Goods | 5,000,000 | Nil (NO TCS) |
D. NEW LIMITS FOR PARTNER REMUNERATION
Revised remuneration limits for partners in firms:
| Book Profit (in INR) | Remuneration |
| Old Limits | |
| Up to 300,000 | Higher of 150,000 or 90% of Book Profit |
| Above 300,000 | 60% of Book Profit |
| New Limits | |
| Up to 300,000 | Higher of 300,000 or 90% of Book Profit |
| Above 300,000 | 60% of Book Profit |
E. OTHER CHANGES:
- Startups – Tax Holiday Extension (Section 80-IAC):
The government has extended the tax holiday for eligible startups under Section 80-IAC until March 31, 2030. Startups that qualify under this section will continue to enjoy a 100% deduction on profits for three consecutive assessment years out of their first ten years of incorporation, provided they meet the prescribed conditions.
- IFSC Benefits – Extended Tax Concessions:
To promote financial activities in the International Financial Services Centre (IFSC), the government has extended tax concessions until March 31, 2030. This includes exemptions and tax benefits for units operating in the IFSC, making it an attractive destination for global financial businesses.
- Unit Linked Insurance Plans (ULIPs) – Taxation on Proceeds:
Proceeds from Unit Linked Insurance Plans (ULIPs) will now be taxed as capital gains if:
- The annual premium paid exceeds 10% of the sum assured or
- The total premium across policies exceeds ₹2.5 lakh per year
This change aims to curb the misuse of high-premium ULIPs as a tax-free investment avenue while maintaining their original purpose as an insurance product.
A. SECTION 3, READ WITH SECTION 5 OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 AND SECTION 3 OF THE INTEGRATED GOODS AND SERVICES TAX ACT,2017- OFFICERS UNDER THIS ACT- POWERS OF OFFICERS- APPOINTMENT OF OFFICERS- AMENDMENT IN NOTIFICATION NO. 2/2017- CENTRAL TAX, DATED 19-6-2017
Key Amendments to Notification No. 02/2017-Central Tax:
The Central Government hereby amends Notification No. 02/2017-Central Tax, published in the Gazette of India (G.S.R. 609(E)) dated 19th June 2017.
| Sno. | States | Districts (Added/Excluded) |
| 1. | Alwar (Serial No. 7) | Alwar, Khairthal-Tijara, Kotputli-Behror, Bharatpur, Deeg, Dholpur, Dausa, Karauli, Sawaimadhopur, Sikar, Jhunjhunu (Rajasthan) |
| 2. | Chennai Outer (Serial No. 23) | Added districts: Viluppuram, Kallakurichi, Thiruvannamalai, Vellore, Tirupathur, Ranipet, Tiruvallur, Kanchipuram, Chengalpattu Excludes: Chennai Corporation Zones I to XV (Wards 1-200 as of 01-04-2017) & St. Thomas Mount Cantonment Board |
| 3. | Jaipur (Serial No. 49) | Jaipur, Ajmer, Beawer, Tonk (Rajasthan) |
| 4. | Jodhpur (Serial No. 53) | Jodhpur, Phalodi, Nagaur, Didwana-Kuchaman, Pali, Sirohi, Jalore, Barmer, Balotra, Jaisalmer, Bikaner, Churu, Ganganagar, Hanumangarh (Rajasthan) |
| 5. | Madurai (Serial No. 63) | Madurai, Ramanathapuram, Sivagangai, Virudhunagar, Tuticorin, Tirunelveli, Tenkasi, Kanyakumari, Theni, Dindigul (excluding D. Gudalur Village of Palayam Firka of Vedasandur Taluk), Includes Tamil Nadu’s territorial waters and adjoining Puducherry waters |
| 6. | Tiruchirapalli (Serial No. 100) | Tiruchirappalli, Perambalur, Ariyalur, Karur, Pudukottai, Thanjavur, Thiruvarur, Nagapattinam, Mayiladuthurai, Cuddalore, D. Gudalur village of Palayam Firka of Vedasandur Taluk (Dindigul District) |
| 7. | Udaipur (Serial No. 102) | Udaipur, Salumbar, Rajsamand, Bhilwara, Chittorgarh, Pratapgarh, Dungarpur, Banswara, Bundi, Baran, Kota, Jhalawar (Rajasthan) |
B.NOTIFICATION NO. 16/2024- CENTRAL TAX, DATED AUGUST 6,2024, WHICH MAKES ISD PROVISIONS MANDATORY FROM APRIL 1ST,2015
From April 1, 2025, businesses receiving input service invoices for multiple branches must register as an Input Service Distributor (ISD) and distribute ITC accordingly. This applies to shared services like audit fees, legal consultation, and software subscriptions.
Previously optional, ISD registration is now mandatory under Notification No. 16/2024-Central Tax, dated August 6, 2024. Non-compliance may lead to ITC disallowances or penalties.
Input Service Distributor
- Purpose: Distributes ITC on input services (not goods or capital goods) to branches with different GSTINs under the same PAN.
- Distribution Rule: ITC is allocated in proportion to branch turnover.
- Tax Types: ITC is distributed as CGST, SGST, or IGST based on the recipient’s location.
Compliance:
- Requires a separate GST registration.
- Must file a GSTR-6 by the 13th of the following month; recipients view ITC in GSTR-6A and claim it in GSTR-3B.
- GSTR-9 annual return is not required for ISD.
- RCM invoices should be addressed to normal registration and not ISD registration.
- The time limit to avail of ITC is based on the date of the original invoice. For example, ITC related to FY 2024-25 must be availed by November 2025.
- Businesses must align SOPs, automate ITC tracking, and train staff for seamless compliance.
Documents required: Certificate of Incorporation, PAN of applicant, Identity/Address proof of Directors, Address proof of Business, Bank details, details of all GST registrations.
A. GOVERNMENT DIRECTS ALL COMPANIES TO SUBMIT HALF-YEARLY MCA RETURN FOR DELAYED MSE OAYMENTS EXCEEDING 45 DAYS (PROSPECTUS AND ALLOTMENTS OF SECURITIES) AMENDMENT RULES, 2025
The Central Govt. has directed all Companies receiving goods or services from micro and small enterprises to submit a half-yearly return to the MCA if payments exceed 45 days from the acceptance or deemed acceptance date. The return must include (a) the outstanding payment amounts and (b) the reasons for the delay.
B. GOVERNMENT REVISES INVESTMENT AND TURNOVER CRITERIA FOR CLASSIFYING ENTERPRISES AS MSMEs
The Central Government, under the Micro, Small and Medium Enterprises Development Act, 2006, has amended the notification S.O. 2119 (E) dated 26th June 2020, following the recommendations of the Advisory Committee. The amendments revise the investment and turnover limits for classifying enterprises as Micro, Small, and Medium Enterprises (MSMEs). Key changes include:
- Micro Enterprises: The Investment limit increased from ₹1 crore to ₹2.5 crore, and the turnover limit from ₹5 crore to ₹10 crore.
- Small Enterprises: The Investment limit was raised from ₹10 crore to ₹25 crore, and the turnover limit from ₹50 crore to ₹100 crore.
- Medium Enterprises: The Investment limit was revised from ₹50 crore to ₹125 crore and the turnover limit from ₹250 crore to ₹500 crore.
These changes will come into effect from April 1, 2025.
- IBBI MANDATES DETAILED DISCLOSURE OF CARRY FORWARD LOSSES IN INFORMATION MEMORANDUM
The Insolvency and Bankruptcy Board of India (IBBI) has instructed Insolvency Professionals to incorporate a dedicated section in the Information Memorandum (IM), explicitly outlining carry forward losses under the Income Tax Act, 1961. The disclosure must include the quantum of losses, a breakdown by specific heads, and the applicable time limits. This directive has been issued under Section 196 of the Insolvency and Bankruptcy Code (IBC), 2016.
A. SEBI AMENDS LODR REGULATIONS, 2015; INCREASES HVDLE THRESHOLD TO RS. 1,000 CRORE
The Securities and Exchange Board of India (SEBI) has revised the LODR Regulations, 2015, strengthening compliance requirements for High-Value Debt Listed Entities (HVDLEs). The threshold for HVDLE classification has been raised from ₹500 crore to ₹1,000 crore, with entities exceeding this limit required to comply within six months. Other key amendments cover the Board of Directors (BoD), Audit Committee, Nomination and Remuneration Committee, Related Party Transactions (RPTs), Secretarial Audit, and Secretarial Compliance Reports.
B. SEBI AMENDS PIT REGULATIONS, EXPANDS THE SCOPE OF UNPUBLISHED PRICE SENSITIVE INFORMATION (UPSI)
The Securities and Exchange Board of India (SEBI) has amended the Prohibition of Insider Trading (PIT) Regulations, 2015, broadening the definition of Unpublished Price Sensitive Information (UPSI). Key amendments include:
- Addition of new UPSI events such as award or termination of contracts, rating changes, fundraising plans, forensic audits, and litigation outcomes.
- Strengthened disclosure requirements related to fraud, defaults, insolvency proceedings, and regulatory actions.
- Introduction of a 2-day deadline for recording non-internal information in structured digital databases.
- Clarification that the trading window need not be closed for UPSI not originating within the listed company.
These regulations will come into effect 90 days from their publication in the Official Gazette.
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 for the period 28.03.2025
