New Direct Tax Code Applicable for your attempt? Finance Bill 2025

Summary

In this video, the speaker discusses important proposed amendments to the Direct Tax Code (DTC), including changes in tax slabs, TDS/TCS rates, and filing deadlines. The new tax rates promise relief, especially for salaried individuals and senior citizens. Key updates include a tax rebate for incomes up to ₹12 lakh and changes in the TDS thresholds. The speaker speculates that these amendments may impact exams from May 2026 onwards and advises students to stay updated with the latest tax laws for their preparation. The video also highlights the extension of deadlines for startup benefits and long-term capital gains tax simplifications.

Takeaways

• 😀 The Direct Tax Code (DTC) will be introduced next week, potentially impacting future assessment years from 2026 onwards.
• 😀 Proposed amendments affect the assessment years 2025-26, 2026-27, and beyond, signaling a transition in the tax framework.
• 😀 A major change in tax slabs has been introduced, including a 25% tax rate and new income brackets such as ₹4-8 Lakh, ₹8-12 Lakh, etc.
• 😀 Individuals earning up to ₹12 Lakh will benefit from a rebate that can nullify their tax liability, offering significant relief to salaried individuals.
• 😀 TDS (Tax Deducted at Source) and TCS (Tax Collected at Source) rates have been revised for various categories, including securities income and rental payments.
• 😀 Senior citizens will now have a higher TDS exemption limit of ₹1 Lakh for interest income, while the threshold for rental income is raised to ₹5 Lakh annually.
• 😀 The time limits for filing tax returns have been extended to 36 and 48 months, with higher penalties for late filings, up to 70%.
• 😀 The benefits for startups under Section 80-IAC have been extended until 2030, promoting entrepreneurship.
• 😀 The validity period for charitable trust registrations has been extended from 5 years to 10 years.
• 😀 The new updates indicate a shift towards simplifying tax structures, especially for non-residents and long-term capital gains, making the tax system more transparent.
• 😀 Students preparing for the May 2026 exam can rely on previous materials, but must stay updated on amendments, as these changes will likely be applied from that point onward.

Q & A

What is the significance of the upcoming Direct Tax Code (DTC)?

The Direct Tax Code (DTC) is expected to bring significant changes in taxation laws, including updates to personal income tax slabs and other key tax-related provisions. It is expected to be introduced next week, but the full implementation may take time, particularly for previous years like 2025-26.

How will the tax slabs change in the upcoming assessment years?

The tax slabs for salaried individuals have been revised to include a new 25% tax rate. Income brackets have been modified to accommodate higher tax exemptions, such as ₹4-8 lakhs, ₹8-12 lakhs, and so on. For income up to ₹12 lakh, taxpayers may receive a rebate, potentially reducing their tax to zero.

What rebate is being offered to individuals earning up to ₹12 lakh?

For individuals earning up to ₹12 lakh, a ₹60,000 rebate has been proposed. This rebate can potentially bring their tax liability to zero under the new tax regime.

What are the key changes for senior citizens in the new tax provisions?

For senior citizens, the tax threshold for TDS on interest income has been increased. Now, senior citizens with interest income up to ₹1 lakh will not have TDS deducted. This is a significant relief for senior citizens.

What are the changes in TDS and TCS rates introduced in the budget?

The budget proposes changes in TDS and TCS rates, including a reduction in the TDS rate on income from securities trusts to 10%. Additionally, the TCS rate has been reduced from 2.5% to 2% for some specific transactions, and certain limits for TCS on remittances have been revised.

What are the new limits for TDS on rental income?

The limit for TDS on rental income has been increased. Previously, TDS applied for rental income exceeding ₹2.4 lakh annually. Now, the threshold has been increased to ₹6 lakh per annum, making it easier for more individuals to benefit from lower TDS deductions.

How have the thresholds for TDS on interest income changed?

The thresholds for TDS on interest income have been revised for both senior citizens and regular individuals. Senior citizens will benefit from a higher threshold of ₹1 lakh, while the threshold for regular individuals has been increased from ₹40,000 to ₹50,000.

What is the impact of the extended deadline for filing tax returns?

The deadline for filing tax returns has been extended from 2 years to 4 years for certain assessments. This extension allows taxpayers more time to file their returns and avoid additional taxes for delayed filings.

What are the changes related to charitable trusts?

Charitable trusts will now have a 10-year validity for their registration, up from 5 years previously. This change aims to provide greater stability and long-term planning for charitable organizations.

What benefits are proposed for startups under the new amendments?

Startups will benefit from an extension of the ATIA benefits, allowing them to claim tax exemptions until March 2030. This extended period will support the growth and development of new businesses.