Govt Notifies Finance Act 2025: 10 Key Changes [READ NOTIFICATION]

The Government of India has officially notified the Finance Act 2025 has been published in official gazette – After getting passed in both the houses of Parliament, Presidential assent accorded for Finance Bill 2025 on 29th March 2025.

Section 2 to 92 deals with Direct tax (income tax) changes effective from 1st April 2025.

Section 91 to 135 deals with Indirect Tax changes (including GST) – partially few provisions effective from 1st April 2025.

The new legislation aims to streamline tax administration, enhance compliance, and provide relief to specific sectors of the economy.

Key Highlights of the Finance Act 2025

1. Income-Tax Rates for Individuals (AY 2024-25)

(I) General Individuals, HUFs, AOPs, BOIs & Artificial Juridical Persons

• Up to ₹2,50,000 – No tax
• ₹2,50,001 – ₹5,00,000 – 5% on income exceeding ₹2,50,000
• ₹5,00,001 – ₹10,00,000 – ₹12,500 + 20% on income exceeding ₹5,00,000
• Above ₹10,00,000 – ₹1,12,500 + 30% on income exceeding ₹10,00,000

(II) Senior Citizens (60 to <80 years)

• Up to ₹3,00,000 – No tax
• ₹3,00,001 – ₹5,00,000 – 5% on income exceeding ₹3,00,000
• ₹5,00,001 – ₹10,00,000 – ₹10,000 + 20% on income exceeding ₹5,00,000
• Above ₹10,00,000 – ₹1,10,000 + 30% on income exceeding ₹10,00,000

(III) Super Senior Citizens (80+ years)

• Up to ₹5,00,000 – No tax
• ₹5,00,001 – ₹10,00,000 – 20% on income exceeding ₹5,00,000
• Above ₹10,00,000 – ₹1,00,000 + 30% on income exceeding ₹10,00,000

2.  Income-tax rates on co-operative society

If total income ≤ ₹10,000 → Tax = 10% of total income

If ₹10,000 < total income ≤ ₹20,000 → Tax = ₹1,000 + 20% of income exceeding ₹10,000

If total income > ₹20,000 → Tax = ₹3,000 + 30% of income exceeding ₹20,000

3. Goods and Services Tax (GST) Amendments

• Simplification of GST return filing procedures.
• Rationalization of tax rates on essential goods and services.
• Enhanced input tax credit mechanisms for businesses.

2. Customs and Import Duty Adjustments
   • Reduction in import duties on critical raw materials to boost domestic production.
   • Increase in tariffs on luxury and non-essential imports to support local industries.
   • Enhanced digitalization of customs procedures to reduce clearance times.
3. Digital Taxation and Compliance
   • Strengthening of digital economy taxation, including new provisions for e-commerce and cryptocurrency transactions.
   • Enhanced reporting requirements for digital payments and online businesses.
4. Extension of Tax Holiday for Startups
   • Eligible startups will continue to enjoy tax benefits for an extended period.
   • Additional incentives for venture capital investments in early-stage startups.
5. Amendment to Capital Gains Tax
   • Adjustments in taxation on long-term capital gains to align with inflation indexing.
   • Revised exemptions for capital gains reinvested in specified sectors.
6. Changes in TDS & TCS Rates
   • Revised rates for tax deduction at source (TDS) and tax collection at source (TCS) to improve revenue collection.
   • Introduction of automated compliance tools to simplify TDS/TCS filing.
7. Strengthening of Anti-Tax Evasion Measures
   • Introduction of stricter penalties and digital tracking to prevent tax evasion.
   • Expansion of the faceless assessment system to minimize manual intervention.
8. Green Energy Tax Incentives

• Special deductions and tax benefits for companies investing in renewable energy and sustainability projects.
• Reduction in GST for solar, wind, and other clean energy equipment.

Notification Details

Notification No. THE FINANCE ACT, 2025 No. 7 of 2025

Date: 29th March, 2025

Read More: Taxpayer Data Misuse Allegations: CBI Registers Case Against Income Tax Officials