Amendment Notes (May 25) Income Tax

AMENDMENTS FOR MAY 25 (Income Tax)

RATE OF TAX

A) Rate of Income Tax (Old Scheme)

FOREIGN Flat rate of 35 % on Total Income.
COMPANY

INCOME FROM HOUSE PROPERTY

1) Property used in Business of Letting out

The whole Rental income is taxable under : PGBP House Property

INCOME FROM OTHER SOURCES

2) Consideration received in excess of FMV of shares issued by Private Co. [Section 56

(2) (viib)]

• Applicability: When a Company, other than a company in which public are substantially
interested (i.e. a Private Co.) issues shares at a price higher than its FMV. Such excess
amount is taxable in the hand of such company as “Income from other sources”.
• Conditions: Such excess amount will be taxable only if the following conditions are
fulfilled
1. Shares should be sold to “RESIDENT “Shareholder”.
2. Such share should have been issued at a ‘Premium”
3. Such Issue price much be higher than its FMV.

The Provision of this section is not applicable after 1/4/24

Concept of Deemed Dividend u/s 2 (22)

2(22) (f):Buy Back of Shares (listed or unlisted) by a Domestic Company on or after 01-10-2024

No Deduction shall be Allowed from Deemed Income u/s 2(22)(f).

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 Amendment Notes (May 25) Income Tax

CAPITAL GAINS
1. Exceptions to Transfer: Section 47

• A gift/ will/ irrevocable trust: Any transfer of Capital Assets by an Individual or HUF
under a GIFT or WILL or IRREVOCABLE TRUST is not a transfer. {Section 47 (iii)}

2. DETEMINATION OF L.T.C.A OR S.T.C.A. & PERIOD OF HOLDING

A Capital asset is categorized as Long term capital asset or short term capital asset based
on the time period for which such assesse has held the asset with him.

SHORT TERM CAPITAL ASSET (in case transfer upto 22-7-2024)

{section 2(42A)}
PERIOD OF HOLDING <= 12 Months <= 24 Months <=36 months
1. All Security (other
than units) listed in
recognized Stock 1. Immoveable
exchange in India property (whether
in India or outside)
NATURE 2. Units of UTI

2. Unlisted shares
OF 3. Units of Equity (including Share 1. All other capital
oriented Mutual listed outside assets
fund India)
ASSET
4. Zero Coupon Bond

SHORT TERM CAPITAL ASSET

(in case transfer on or after 23-7-2024)

PERIOD OF HOLDING <= 12 Months <= 24 Months

1. All Security listed in
recognized Stock exchange in
NATURE India
2. Units of UTI
OF 3. Units of Equity oriented 1. All Other Capital Assets
Mutual fund

ASSET
4. Zero Coupon Bond

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 Amendment Notes (May 25) Income Tax

Following assets are always Short Term (chahe kuch bhi P.O.H ho) {u/s 50AA}
- units of a specified mutual fund acquired on or after 1.4.2023,
- market linked debentures,
- unlisted bond and unlisted debenture which is transferred or redeemed or matures on
or after 23.7.2024
- depreciable Assets.

3. Calculation of CAPITAL GAINS in case of sale of shares (listed or unlisted) due to BUY- BACK
by a Domestic company. {Section 46A}.

SHARES
Taxability in the Buy Back effected Buy Back effected
hands of before 01-10-2024 on or after 01-10-2024

COMPANY Pay Additional Tax u/s 115QA No tax implication

Capital gain EXEMPT u/s 10 Will be treated as Dividend and

SHAREHOLDER (34A) taxable under the head “ IFOS”
Also, for C.G the FVOC =NIL,
Hence there will be Capital
Loss.

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 Amendment Notes (May 25) Income Tax

4. Exemptions under Section 54 etc. (Conditional Exemption)

Particulars Section 54 Section 54F

Capital Gain Sale of Residential House property Sale of any asset other than
arising from (R.H.P) and land Appurtenant Residential H.P
(what to sell) thereto
Amount of Lower of If Cost of new asset or 10 Crore
Exemption. a) Lower of (which ever is lower) >=Sale
- Cost of new asset(s) or consideration received, then FULL
10 Crore EXEPMTION
Or
b) Amount of Capital Gain
If Cost of new asset or 10 Crore
(which ever is lower) < Sale
consideration , then
PROPORTIONATE EXEMPTION
available.

5. Specific Rates

NATURE OF ASSET S.T.C.G L.T.C.G

u/s 111 A u/s 112 A
Assets on which STT is paid on its sale
1) Listed equity shares Capital gain
2) Units of Equity Oriented M.F Transfer upto Up to Rs. 1.25
3) Units of Business Trusts 22/7/24 Lakhs
Assets on which STT is NOT PAID on its sale @15 % EXEMPTED
1) Security listed in Recognized Stock Exchange
located in International Financial Services Transfer on or In Excess of Rs.
Centre(IFSC) if transaction is undertaken in after 23/7/24
1.25 Lakhs:
foreign currency. @ 20 %
Transfer upto
22/7/24
@10%

Transfer on or
after 23/7/24
@12.5 %

(u/s 111A) (u/s 112A)

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 Amendment Notes (May 25) Income Tax

6. GENERAL RATES OF TAX ON CAPITAL GAIN

General Rates

L.T.C.G S.T.C.G

NORMAL TAX RATE

(i.e Slab Rate)
Asset Transferred Asset Transferred on
Upto 22-07-24 or after 23-07-24

Taxable @ 20% Land or Other Capital

(u/s 112) Building Assets

Acquired Acquired on
before or after
23-07-24 23-07-24

For For All Other

Indv. & HUF Assessee

- 20% with Indexation 12.5 % without

Or indexation
- 12.5% w/o indexation
(u/s 112)
(which is more benficial

(u/s 112)

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 Amendment Notes (May 25) Income Tax

7. INDEXATION

• CII for FY 24-25 : 363

• The Benefit of Indexation is not available in case of ALL L.T.C.G on transfer made on or
after 23-07-2024.

Confusion regarding Indexation : YES OR NO

An Indidual/HUF has an option to take the benefit of indexation arising on land & building or
both u/s 112, if :

1. LTCG arises on transfer of Land, Building or both (may be

residential/commercial/property used for any other purpose).
2. The above asset was acquired prior to 23/7/2024
3. The above asset is transferred on or after 23/7/2024.
If above conditions are satisfied, the assessee has an option to pay tax under old or new
regime (WHICHEVER IS MORE BENEFICIAL TO HIM) as follows :
OPTION 1 : Pay tax @ 12.5% (Without Indexation).
OPTION 2 : Pay Tax @ 20% (With Indexation).
Note : The above benefit to Resident I/HUF is to be given only while computing Tax on LTCG
u/s 112 [Not while computing Capital gain]

Simply,

> While calculating Capital Gains (ARISING ON OR AFTER 23-07-24) solve all problems
without giving indexation
> Now While calculating Tax liability on such LTCG assessee has an option to pay tax :
a) @ 20% (with indexation) or;
b) @ 12.5% (without indexation)

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 Amendment Notes (May 25) Income Tax

PROFIT & GAINS FROM BUSINESS & PROFESSION

1. REMUNERATION TO PARTNERS u/s 40(b)

Remuneration, commission, salary etc → Maximum allowed

→ Aggregate of

For first Book profit of 6 lakh → higher of Rs. 300000 or 90% of BP

(+)

For Balance Book Profit (B.P) ** → 60% of Balance B.P

DEDCUTION FROM GROSS TOTAL INCOME (GTI)

Sub Section (2): In case employer is
Employer’s Contribution to Employee’s Central Govt./ State
1) National Pension Scheme (Tier I A/c) Govt.
or 14% of (salary+DA, if)
2) Atal Pension Yojana or
(Such Contribution is first added in the hands of In case of all other
80CCD Individual
employee as salary and then allowed as Deduction in Employer
the hands of Employee under this section.)
10% of (salary +DA, if)

Amount of Contribution made in Agniveer Corpus Fund

Sub Section (1):
Own Contribution by Individual enrolled in Agnipath
Scheme to Agniveer Corpus Fund 100 % of the
Contribution made
Sub Section (2):
80CCH Indivduals C.G’s Contribution by Individual enrolled in Agnipath 100 % of the
Scheme to Agniveer Corpus Fund Contribution made
(Note: The C.G’s Contribution will first form part of
Salary income and then allowed as deduction u/s
80CCH)

80 G All Assesee 100 % without qualifying limit

1)…….. 100 % of the
13) National Sports Development Fund Donation made

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 Amendment Notes (May 25) Income Tax

ADVANCE TAX, TDS & TCS

193 : TDS on Interest on Securites

Deductor Deductee Threshold Limit Rate of TDS Time of

Deduction
Any Person Residents >10000 PAN At the Time of
paying Interest only : in case of 8% or 7.5% Funished : Payment.
of saving bonds 10%
w.e.f (01-10-2024)
: Floating Rate Savings PAN Not
Bonds, 2020 Funished :
: Any other notified 20 %
security by CG/SG

> 5000
: in case of Interest on
Deb. to Indiv./ HUF by
Co./ Co-op society in
which public have
substantial interest
(only if paid by A/c
cheque)

No limit
: In all other cases

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Amendment Notes (May 25) Income Tax

194BA : WINNINGS FROM ONLINE GAMING

Deductor Deductee Threshold Rate of TDS Time of

Limit Deduction
Any Person Any Person No Limit 30 % on Net No withdrwal
Winnings during the
year : At the
year End.

In case of
Withdrawal:
At the time of
withdrawal, on
each such
withdrawal
+
At year end on
remaining net
winnings
Exceptions
No TDS required to be deducted on withdrawal on satisfaction of all of the following conditions,
namely:-
(i) net winnings comprised in the amount withdrawn does not exceed Rs. 100 in a month;
(ii) tax not deducted on account of this concession is deducted at a time when the net winnings
comprised in withdrawal exceeds Rs. 100 in the same month or subsequent month or if there
is no such withdrawal, at the end of the financial year; and
(iii) the deductor undertakes responsibility of paying the difference if the balance in the user
account at the time of tax deduction under section 194BA is not sufficient to discharge the
tax deduction liability.
Other Imp Point
1) In case of Winning is provided in KIND
a) Value of Such Winning in kind
The valuation would be based on fair market value of the winnings in kind except in following
cases:-
(i) The online game intermediary has purchased the winnings before providing it to the
user. : In that case the purchase price shall be the value for winnings.
(ii) The online game intermediary manufactures such items given as winnings.: In that case,
the price that it charges to its customers for such items shall be the value for such
winnings.

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Amendment Notes (May 25) Income Tax

b) Procedure to followed by the intermediary

The person responsible for paying, shall, before releasing the winnings, ensure that tax has
been paid in respect of the net winnings. In the above situation, the deductor will release
the net winnings in kind after the deductee provides proof of payment of such tax (e.g.,
Challan details etc.).

c) GST will not be included for the purposes of valuation of winnings for TDS under section
194BA.

194DA: ANY SUM RECEIVED UNDER LIFE INSURANCE.

Deductor Deductee Threshold Rate of TDS Time of

Limit Deduction
Insurance Company Residents >=1.00,000/- Upto At the time of
only (only if not 30-09-24 Payment
exempt u/s 5% or
10(10D) (Maturity
Credit
Amount
Minus (-) whichever is
Premium earlier
Paid)

w.e.f :
01-10-24
2%

194G: COMMISSION ON SALE OF LOTTERY

Deductor Deductee Threshold Rate of TDS Time of

Limit Deduction
Any Person Any Person >15000/- Upto At the time of
30-09-24 Payment
5%

w.e.f :
01-10-24
2%

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Amendment Notes (May 25) Income Tax

194 H: ALL OTHER COMMISSION OR BROKERAGE

Deductor Deductee Threshold Rate of TDS Time of

Limit Deduction
1) All (Except Indv. & HUF) Residents >15000/- Upto At the time of
2) Indv./HUF only if it’s Only 30-09-24 Payment
5% or
Turnover form Business
> Rs. 1 crore Credit
w.e.f :
or whichever is
01-10-24
Gross Receipt from earlier
2%
Profession > Rs. 50
Lakhs in the Preceding
Financial Year (P.F.Y)

194 IB : RENT ( where 194 I is N.A)

Deductor Deductee Threshold Limit Rate of TDS Time of
Deduction
All persons on whom Residents > 50,000 per Earlier of
194 I is not applicable Only month or part Upto
{i.e Indv./HUF only if there of 30-09-24 March of every
it’s 5% F.Y
Turnover form Business or
< Rs. 1 crore w.e.f :
last month of
01-10-24
or tenancy
2%
Gross Receipt from
Profession < Rs. 50
Lakhs in the Preceding
Financial Year (P.F.Y)}
Note:
1) The last amount of TDS to be deducted from the last month’s rent shall not exceed the
amount of rent for the last month.

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Amendment Notes (May 25) Income Tax

194 M : TDS on Commission or Brokerage/ Professional fees/ T.F/ R/ NCF o r Contract

( where 194 H, J & C is Not Applicable)

Deductor Deductee Threshold Limit Rate of TDS Time of

Deduction
All persons on whom Residents > 50,00,000 in
194 H, J & C is not Only Agg. In a F.Y Upto At the time of
applicable 30-09-24 Payment
{i.e Indv./HUF only if 5% or
it’s
Credit
Turnover form Business w.e.f :
whichever is
< Rs. 1 crore 01-10-24
2% earlier
or
Gross Receipt from
Profession < Rs. 50
Lakhs in the Preceding
Financial Year (P.F.Y)}
Note:
In case, both of the sections 194 M and 194 C/ 194 H/ 194 J becomes applicable, then the
latter will be valid.

Certificate for deduction fo TDS at lower rate or at 0% {sec 197}

• Sections applicable: 192, 193, 194, 194A, 194C, D, G, H, I, J, K, LA, M, O , Q (w.e.f 1-10-24)

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 Amendment Notes (May 25) Income Tax

TAX UNDER NEW REGIME (DEFAULT REGIME) U/S 115BAC

NATURE OF
ASSESSEE RATE OF INCOME TAX

1) Resident Total Income Rate of tax / Tax amount

Individual <= 3 lakhs NIL
of > 3 lakhs but < = 7 lakhs 5% x (Total Income – 2.5 lakhs)
< 60 Years 20,000
> 7 lakhs but <= 10 lakhs
2) Non +
resident 10% x (Total Income – 7 lakhs)
Individual > 10 lakhs but <= 12 lakhs 50,000
of any age +
3) HUF 15% x (Total Income –10 lakhs)
4) AOP > 12 lakhs but <= 15 lakhs 80,000
5) BOI +
6) AJP 20% x (Total Income –12 lakhs)
> 15 lakhs 1,40,000
+
30% x (Total Income –15 lakhs)

B) Surcharge
NATURE OF RATE OF SURCHARGE (Flat Rate u/s 115BAC)
ASSESSEE
1) Individual Total Income Rate of Surcharge
of all age >Rs. 50 Lakhs but <= Rs. 1 Crore 10 % of Income tax
3) HUF > Rs. 1 Crore but <= Rs. 2 Crore 15% of Income Tax
4) AOP (other > Rs. 2 Crore 25% of Income tax
than AOP
However, the rate of surcharge shall not exceed 15% on
having only
Co.) 1) Dividend Income

5) BOI 2) S T C G u/s 111A

6) AJP 3) L.T.C.G u/s 112 & 112A.

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Amendment Notes (May 25) Income Tax

C) Health and Education Cess (H&EC):

It is a Cess collected by the Government to provide and finance quality health services and
basic education and secondary and higher education.
CALCULATION:
1) It is calculated @ 4 %
2) It is Calculated on (Income tax + Surcharge).
3) It is compulsory. (Calculated Always)

D) Rebate u/s 87A

1) Applicable only to RESIDENT INDIVIDUALS whose TOTAL INCOME does not exceed Rs.
7,00,000/-
2) Amount of Rebate is Lower of:
a) Rs. 25,000/-
or
b) Amount of Income Tax payable (Before H&EC @ 4%)
3) It is NOT applicable on LT.C.G. u/s 112 A.
Marginal Relief in Tax :
If Total Income is more than Rs. 7,00,000 but does not exceed Rs. 7,22,220, tax on such income
cannot exceed the amount by which the Total Income exceeds Rs. 7,00,000

Additional Benefits given under Different Heads of Income

Under Salary :
a) Standard Deduction: Rs. 75000/- (max) : u/s 16(ia)

Deduction is allowed from Gross Salary: Lower of

a) Rs. 75,000
OR
b) Actual Amount of Gross Salary
Under IFOS :
Family Pension :

Computation of Family Pension

PARTICULARS AMOUNT

Annual Family Pension received XXXXXX

Less : lower of 1/3rd OR Rs. 25,000/- (XXXX)
Taxable Income XXXXXX

CA VINAY KANKARIA 14
Amendment Notes (May 25) Income Tax

Under Rate of tax :

The provisons of AMT is not applicable u/s 115BAC

Benefits Taken away under Different Heads of Income (NOT ALLOWED)

The following deductions shall not be allowed in case an assessee opts for tax under section
115 BAC:-
Under Salary :
1. LTC
2. HRA
3. Special allowance U/S 10(14), except
● Conveyance allowance
● Traveling allowance
● Daily allowance
● Transport allowance to deaf/dumb/blind/orthopaedically handicapped
4. Daily allowance to MP/MLA
5. Deductions U/S 16
• Entertainment Allowance
• Professional Tax Paid
Under HP :
1. Interest on loan U/S 24(b) [only for self occupied property]

Under PGBP :
1. SEZ U/S 10 AA
2. Additional dependent U/S 32(1)(ii a)
3. Deduction U/S 35(1)(ii)/(ii a)/(iii)/(2AA) (i.e contribution to others)
4. 35 AD

Under Deductions :
All Deductions u/c VI A
except 80 JJAA and 80 CCD(2) & 80CCH(2)
Under Clubbing :
Exemption u/s 10(32) of Rs. 1500 (Income of Minor Child)

Under Set-off & Carry Forward:

List of losses that shall not be allowed to be set off

a. The loss of house property shall not be allowed to be set off with any head of income
b. The Loss of H.P Cannot be Carried Forward
c. Depreciation or carried forward loss of earlier assessment years, only if such loss or
depreciation is attributable to deduction not allowed above under PGBP

CA VINAY KANKARIA 15
Amendment Notes (May 25) Income Tax

OPT OUT OPTIONS

Section 115BAC is default tax regime. However, assessee can avail the benefit of regular
tax regime by exercising the option.
- Assessee does not have PGBP:
Option of regular tax regime must be exercise along with the return u/s 139(1) for
every PY.
- Assessee having PGBP:
Option of regular tax regime must be exercise along with the return u/s 139(1). Such
option once exercised shall apply for subsequent AY also. However the option once
exercise for regular tax regime can be withdraw only once for PY & there after the
person shall never be eligible for the benefit of regular tax regime till the time having
any income under PGBP.

CA VINAY KANKARIA 16
Amendments in Income Tax for May 2025 – Overview

1. Section 10(10D) – Life Insurance Maturity Exemption

Exemption under section 10(10D) not available if:

Premium exceeds `5,00,000 per annum for policies issued on or after 01.04.2023.

Applicable only to non-ULIP policies.

For multiple policies, this limit is applicable in aggregate.

2.Section 43B – MSME Payments

Any sum payable to a Micro or Small Enterprise is allowed only on actual payment basis.

Payment must be made within:

15 days (if no agreement), or

As per written agreement (max 45 days)

Otherwise, deduction is allowed only on actual payment, even if the method of accounting is mercantile.

3. New Tax Regime u/s 115BAC(1A) [w.e.f. A.Y. 2024-25]

Now the default regime for individuals, HUF, AOP, BOI, and artificial juridical persons.

Revised slab rates under this regime with basic exemption up to `3,00,000.

Standard deduction of `50,000 allowed under this regime.

Deduction under section 80C, 80D, etc. not allowed (except NPS u/s 80CCD(2)).

4.Rebate u/s 87A under New Regime

Rebate increased to 25,000 (earlier 12,500) for resident individuals if total income ≤ `7,00,000 under section
115BAC(1A).

5. Section 115BAC(6) – Opt-Out Option

Persons having income from business or profession:

Must opt-in or opt-out only once.

Once opted out, cannot re-enter the new regime unless business income ceases.

6. Section 56(2)(viib) – Scope Extended

Now applicable to non-residents as well.

If consideration for shares exceeds FMV, the excess is taxed as income from other sources.

7. Presumptive Taxation Limits Increased

Section 44AD (Businesses):

Threshold increased to `3 crore if cash receipts ≤ 5%.

Section 44ADA (Professionals):

Threshold increased to `75 lakh if cash receipts ≤ 5%.