Finance Minister Nirmala Sitharaman on Sunday announced several tax-related changes and proposals in the Union Budget while leaving some provisions and measures unchanged.
Finance Minister Sitharaman said during his budget speech that the Income Tax Act, 2025 will come into effect from April 1. (PTI)While some of these proposals were aimed at providing relief to ordinary taxpayers and facilitating compliance, others like the increase in STT would reduce the net profits of active traders.
New Income Tax Act effective from 1st AprilFinance Minister Sitharaman said during his budget speech Income Tax Act, 2025 Effective from April 1, the rules and tax return forms will be notified accordingly.
The new law will replace the six-decade-old tax law with changes introduced in the tax law in the 2026-27 budget to be incorporated into the new law.
“It (direct tax code) was completed in record time and the Income Tax Act 2025 will come into effect from April 1, 2026. The simplified income tax rules and forms will be notified soon, which will give taxpayers enough time to familiarize themselves with the requirements,” the finance minister said.
There is no change in income tax ratesThe new 2025 Income Tax Act is revenue neutral, leaving no change in tax rates. Sitharaman said income tax forms have been redesigned to make compliance easier for common citizens.
This makes direct tax laws easier to understand, removes ambiguity and thus reduces scope for litigation, PTI reported. Compared to the Income Tax Act of 1961, it reduced the amount of text and sections by about 50 percent.
Check out the highlights of Income Tax in the Union Budget here
Reduces burden of TDS complianceThe new budget has eased the compliance burden for Tax Deducted at Source (TDS), with the Finance Minister proposing that a person buying immovable property from non-residents will no longer need to provide TAN details.
Tax Deduction and Collection Account Number (TAN) is issued to corporate bodies, whereas Permanent Account Number (PAN) is for individuals.
As part of the new framework, a resident individual or a Hindu Undivided Family (HUF) can report TDS with the PAN number for transactions between two residents.
Increase in STT for futures and options tradesD Securities Transaction Tax on Futures and options trades have been increased, with the tax on the latter raised from 0.02 percent to 0.05 percent.
For option trades, both STT on option premium and option exercise will be increased to 0.15 per cent from the current rates of 0.1 per cent and 0.125 per cent, Sitharaman said.
The increase in STT, charged on the value of securities traded on recognized stock exchanges in India, is proposed to curb excessive speculation in the futures and options (F&O) segment, but will reduce net profits for active futures traders.
