Recent Developments in GST and Taxation You Should Know

India’s tax landscape is evolving, with recent reforms aimed at simplifying compliance, boosting economic growth, and making taxation more transparent. Whether you're a salaried individual, a business owner, or an investor, these changes could have a significant impact on your financial planning. Here’s a breakdown of the latest updates in Income Tax and Goods and Services Tax (GST) that you should be aware of.

Income Tax Reforms

1. A New, Simpler Income Tax Bill

The government has proposed a new Income Tax Bill that aims to simplify tax laws, making them clearer and more concise. This move is expected to reduce confusion, minimize litigation, and enhance compliance for both taxpayers and tax administrators.

2. Revised Income Tax Slabs and Higher Rebate Limits

In a move to ease the burden on the middle class and encourage spending, new income tax slabs have been introduced under the Concessional Tax Regime (CTR):

Up to ₹4,00,000 – No tax
₹4,00,001 to ₹8,00,000 – 5%
₹8,00,001 to ₹12,00,000 – 10%
₹12,00,001 to ₹16,00,000 – 15%
₹16,00,001 to ₹20,00,000 – 20%
₹20,00,001 to ₹24,00,000 – 25%
Above ₹24,00,000 – 30%

Additionally, the rebate threshold has been increased from ₹7 lakh to ₹12 lakh, meaning individuals earning up to ₹12 lakh (₹12.75 lakh for salaried taxpayers, considering a standard deduction of ₹75,000) will pay zero tax.

3. Easier TDS and TCS Compliance

Several Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) provisions have been revised to make tax compliance smoother:

Higher TDS limit on interest for senior citizens – Now ₹1,00,000, up from ₹50,000.
Higher TDS exemption on rent – Now ₹6 lakh per year, up from ₹2.4 lakh.
TCS relief on foreign remittances – The threshold under the RBI’s Liberalized Remittance Scheme (LRS) has been increased from ₹7 lakh to ₹10 lakh, reducing tax burdens on global transactions.

4. More Time to File Updated Tax Returns

Taxpayers now have four years (instead of two) to file updated returns in case they need to correct previously declared income. This extension allows individuals and businesses more flexibility to comply with tax laws.

5. Tax-Free Withdrawals from NSS Accounts

A major relief for senior citizens — withdrawals from the National Savings Scheme (NSS) made on or after August 29, 2024, will now be tax-exempt. This ensures retirees can access their savings without additional tax deductions.

GST Updates

1. Aviation Turbine Fuel (ATF) Stays Out of GST

Despite demands from the airline industry, Aviation Turbine Fuel (ATF) has not been brought under the GST framework. This means airlines will continue paying state-imposed taxes, affecting airfare pricing and operating costs.

2. GST on Used Vehicles Standardized

To bring consistency in taxation, an 18% GST has been imposed on the sale of used or old vehicles by registered sellers. However, private transactions between individuals remain exempt.

3. No Immediate Tax Cuts on Insurance Premiums

Discussions about reducing GST on life and health insurance premiums have been deferred. While this remains on the agenda, for now, insurance buyers will continue paying the existing tax rates.

What These Changes Mean for You

More money in your pocket: The new tax slabs and rebates mean higher savings for middle-class taxpayers.
Easier compliance: Simplified TDS and TCS provisions reduce administrative hassles.
Longer deadlines: The extended window for filing updated tax returns offers greater flexibility.
Sector-specific impacts: Industries like aviation and automobile resale will see changes in taxation structures.

While these reforms aim to streamline taxation and benefit taxpayers, some complexities still exist, especially for businesses. Staying informed and consulting a tax expert can help you navigate these changes effectively. Want to ensure your business or personal finances are fully compliant with the latest tax laws? Taxezi can help you navigate GST, tax filing, and business registrations with ease. Get in touch with us today!