Budget 2025: Presented a blueprint of tax reforms bringing big changes in the budget, also announced bringing a new income tax law
Sitharaman, while presenting the budget for 2025-26 in the Lok Sabha, promised to replace the six-decade-old law related to the regulation of income tax provisions with a simple and light new law. He said that the new income tax law will have the spirit of 'justice' and it will work on the principle of 'trust first, investigate later'.
Union Finance minister Nirmala Sitharaman on saturday presented the budget for the financial year 2025-26. It proposed tax reforms bringing big changes. This includes simplifying the income tax law, increasing the tcs limit on remittances and giving many benefits in income tax to the middle class.
Sitharaman, while presenting the budget for 2025-26 in the Lok Sabha, promised to replace the six-decade-old law related to the regulation of income tax provisions with a simple and light new law. He said that the new Income Tax Act will have a sense of 'justice' and it will work on the principle of 'trust first, investigate later'.
What is TCS?
TCS (Tax Collected at Source) is a type of tax levied by the government of India. This tax is levied on the amount received by the seller from the buyer when he sells certain specific goods or services. Under tcs, the seller has to deposit a certain percentage of the amount received from the buyer to the government as tax. This tax is deducted at the time of issuing a bill or invoice to the buyer by the seller.
He also proposed to extend the time limit for individuals filing revised Income Tax Returns (ITR) to four years. It is filed by those taxpayers who were unable to give information about their correct income at the prescribed time. At present, such returns can be filed within two years of the relevant tax assessment year. About 90 lakh taxpayers have voluntarily revised their income statements by paying additional taxes.
Sitharaman said that in the last 10 years, the government has implemented many reforms for the convenience of taxpayers. These include faceless tax assessment, taxpayer charter, quick return facility, about 99 percent of returns being based on self-assessment, and Vivaad se vishwas scheme. In her budget speech, she said that her taxation proposal aims to reform personal income tax with a special focus on the middle class and rationalize TDS (tax deduction at source) and tcs (tax collection at source) to reduce difficulties and ensure voluntary compliance.
The limit of tax deduction at source has been increased in the budget for better clarity and uniformity. The limit of tax deduction on interest income to senior citizens has been doubled from the existing Rs 50,000 to Rs 1 lakh. Similarly, the annual limit of Rs 2.40 lakh for TDS on rent will be increased to Rs 6 lakh.
Sitharaman said that this will reduce the number of transactions liable for TDS, which will benefit small taxpayers receiving small payments. The limit for collecting tcs on remittances under the Reserve Bank's liberalized remittance scheme (LRS) has also been raised from Rs 7 lakh to Rs 10 lakh. Remittance of funds for education is exempted from tcs where such remittance is from a loan taken from a specified financial institution.
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