The Honourable Finance Minister of India presented the Finance Bill, 2025, on 1 February 2025. She made an important announcement regarding introduction of a new income-tax bill in the coming week, which aims to bring significant tax reforms. These reforms would enable simplification and easy understanding for taxpayers and tax administration, leading to tax certainty and reduced litigation.
The Honourable Finance Minister of India presented the Finance Bill, 2025, on 1 February 2025. She made an important announcement regarding introduction of a new income-tax bill in the coming week, which aims to bring significant tax reforms. These reforms would enable simplification and easy understanding for taxpayers and tax administration, leading to tax certainty and reduced litigation.
The focus of this Budget is on easing the tax burden for all taxpayers especially the middle-class and encouraging a transition to the New Personal Tax Regime (NPTR). Additionally, several proposals related to procedural and compliance provisions, particularly in withholding tax and tax collection requirements, have been introduced.
The key personal tax proposals which are relevant for employers and individual taxpayers are given below:
| Income Range | Existing Tax Rate* | Proposed Tax Rate* |
| Up to ₹ 300,000 | 0.00% | 0.00% |
| ₹ 300,001 – ₹ 400,000 | 5.20% | 0.00% |
| ₹ 400,001 – ₹ 700,000 | 5.20% | 5.20% |
| ₹ 700,001 – ₹ 800,000 | 10.40% | 5.20% |
| ₹ 800,001 – ₹ 1,000,000 | 10.40% | 10.40% |
| ₹ 1,000,001 – ₹ 1,200,000 | 15.60% | 10.40% |
| ₹ 1,200,001 – ₹ 1,500,000 | 20.80% | 15.60% |
| ₹ 1,500,001 – ₹ 1,600,000 | 31.20% | 15.60% |
| ₹ 1,600,001 – ₹ 2,000,000 | 31.20% | 20.80% |
| ₹ 2,000,001 – ₹ 2,400,000 | 31.20% | 26.00% |
| ₹ 2,400,001 – ₹ 5,000,000 | 31.20% | 31.20% |
| ₹ 5,000,001 – ₹ 10,000,000 | 34.32% | 34.32% |
| ₹ 10,000,001 – ₹ 20,000,000 | 35.88% | 35.88% |
| Above ₹ 20,000,000 | 39.00% | 39.00% |
* Tax rates including health & education cess and surcharge
| Section | Nature of payment | TDS rates | Existing threshold (per annum) | Proposed threshold (per annum) |
| 193 | Interest on securities | 10% | Nil | ₹ 10,000 |
| 193(v)(a) | Interest on any debentures of a public company | 10% | ₹ 5,000 | ₹ 10,000 |
| 194 | Dividend paid to an individual shareholder | 10% | ₹ 5,000 | ₹ 10,000 |
| 194A | Interest other than interest on securities paid by banks/ co-operative society/ post offices to: | |||
| – Senior citizens | 10% | ₹ 50,000 | ₹ 1,00,000 | |
| – Other individuals | 10% | ₹ 40,000 | ₹ 50,000 | |
| – Any other payee | 10% | ₹ 5,000 | ₹ 10,000 | |
| 194B | Winnings from lottery / crossword puzzle / card game / any other game | 30% | ₹ 10,000 | ₹ 10,000 in respect of a single transaction |
| 194BB | Winnings from horse races | |||
| 194D | Insurance commission | 2% | ₹ 15,000 | ₹ 20,000 |
| 194G | Income by way of commission, prize etc., on lottery tickets | 2% | ₹ 15,000 | ₹ 20,000 |
| 194H | Commission or Brokerage | 2% | ₹15,000 | ₹ 20,000 |
| 194I | Rent payment by a person other than an individual or HUF | 10% | ₹ 240,000 | ₹ 50,000 per month/ part of the month |
| 194J | Fees for professional / technical services/ royalty | 10% | ₹ 30,000 | ₹ 50,000 |
| 194K | Income in respect of units of a mutual fund or specified company or undertaking | 10% | ₹ 5,000 | ₹ 10,000 |
| 194LA | Payment of enhanced compensation on compulsory acquisition of immovable property | 10% | ₹ 250,000 | ₹ 5,00,000 |
Annual Value of two self-occupied properties can be taken as NIL, regardless of reason for non-occupancy.
Proceeds from redemption of any Unit Linked Insurance Policies (ULIPs) which are not eligible for exemption, proposed to be taxable under the head Capital Gains.
Timeline for filing updated tax return proposed to be increased from 24 months to 48 months, with additional tax payment, as under:
| Timelines for updated tax return [from end of relevant Assessment Year] | Additional income tax [on tax and interest due] |
| Up to 12 months | 25.00% |
| After 12 months but before 24 months | 50.00% |
| After 24 months but before 36 months | 60.00% |
| After 36 months but before 48 months | 70.00% |
For a deeper discussion on the above, please reach out to your Vialto Partners point of contact, or alternatively:
Ishita Sengupta
India Lead / Mumbai
Sundeep Agarwal
Mumbai
Ravi Jain
Bengaluru / Kolkata
Anand Dhelia
Bengaluru / Hyderabad
Chander Talreja
Delhi NCR
Hitesh Sharma
Mumbai / Pune
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