[responsive_menu_pro]

India: Tax and financial updates in Budget 2025

Spread the love

The Union Budget 2025 introduces several changes to the tax regime, financial policies, and customs regulations, focusing on exemptions, compliance, and investment reforms. The key updates are outlined below:

Revised thresholds for tax collection and deduction

  • The threshold for tax collected at source (TCS) under the Liberalized Remittance Scheme (LRS) has been increased from ₹7 lakh to ₹10 lakh.
  • The tax deducted at source (TDS) threshold on rent has been raised to ₹6 lakh, reducing compliance burdens.

 

Compliance simplifications

  • Taxpayers can declare the value of two self-occupied properties as nil, reducing tax liability on personal real estate.
  • The deadline for filing updated tax returns has been extended from two years to four years.
  • Late payment of TCS will no longer be treated as a criminal offense, reducing concerns for businesses.

 

Customs reforms and duty adjustments

  • Seven tariff rates will be eliminated as part of ongoing rationalization.
  • 82 tariff lines previously subject to cess are now exempt, lowering business costs.

 

Electronics and manufacturing sector changes

  • The basic customs duty (BCD) on certain goods has been increased from 10% to 20% to support domestic manufacturing.
  • BCD on display panel assembly components has been reduced to 5% to promote local production.

 

Incentives for electric vehicles (EVs) and critical minerals

  • 12 additional minerals essential for advanced technology and energy sectors are now duty-free.
  • 35 new capital goods for EV production have been added to the BCD exemption list.

 

Key financial and tax reforms

  • The foreign direct investment (FDI) cap in the insurance sector has been raised from 74% to 100%.
  • A new Income Tax Bill is expected to be introduced next week.
  • A nationwide Central KYC registry will be launched in 2025 to streamline financial compliance.

 

Mandatory pre-deposit for penalty appeals

  • Taxpayers appealing penalties must pre-deposit 10% of the disputed penalty amount.

 

Exemption on GST for SEZ and FTWZ transactions

  • GST will no longer apply to goods warehoused in Special Economic Zones (SEZs) or Free Trade Warehousing Zones (FTWZs) before clearance for exports or domestic sale.
  • This exemption is retroactive from July 1, 2017, but no refunds will be issued for previously paid taxes on such transactions.

 

Track and trace mechanism implementation

  • Introduction of Section 148A: A track and trace mechanism will be introduced for specified commodities.
  • New penalties under Section 122B: Non-compliance with the track and trace mechanism will result in penalties.

 

 

 

Follow us on LinkedIn to keep up with the latest VAT news

VAT/GST rates 2024 in Asia

Country Standard VAT/GST Rate Reduced Rates
Armenia The standard VAT rate is 20%.
Azerbaijan The standard VAT rate is 18%.
Bahrain From January 1, 2022, the standard VAT rate is 10%.
Bangladesh The standard VAT rate is 15%. 10%, 7.5%, 5%, 2,4%, 2%
Brunei There is no VAT in Brunei.
China The standard VAT rate is 13%, 9%, 6% Reduced rates of 5%, 2%, 3%, 1.5% and 0.5%.
UAE VAT is charged at 5% in the United Arab Emirates (UAE)
Georgia The standard VAT rate is 18%
Hong Kong There is no VAT or sales tax in Hong Kong.
India The primary rates of Indian GST are 0.25%, 1.5%, 3%, 5%, 12%, 18% and 28%
Indonesia The standard VAT rate is 11%
Iraq There is no VAT in Iraq. (The standard sales tax ranges from 10% to 300% on alcohol & tobacco)
Israel The standard VAT rate is 17%
Japan The standard (Consumption Tax) rate is 10% 8%
Kazakhstan The standard rate of VAT is 12%
South Korea The standard VAT rate is 10%
Kuwait There is no VAT in Kuwait
Laos The standard VAT rate is 10%
Lebanon The standard VAT rate is 11%
Malaysia On September 1, 2018, the Government of Malaysia replaced the Goods and Services Tax (GST) with a 10% Sales Tax (The standard rate of service tax is 8%) 5% (Sales Tax), 6%
Oman the standard VAT rate in Oman is 5%
Pakistan Pakistan does not have VAT. The standard sales tax rate is 18% Pakistan has a large number of reduced sales tax rates, including 1%, 2%, 5%, 10% and 12% (among others).
Philippines The standard VAT rate is 12%
Qatar There is no VAT in Qatar
Russia The standard VAT rate is 20% 10%
Saudi Arabia VAT is charged at 15%
Singapore The standard Goods and Services Tax (GST) rate is 9%
Sri Lanka The standard VAT rate is 18%
Taiwan The standard VAT rate is 5%
Tajikistan The standard VAT rate is 14% 10%, 7%, 5%
Thailand The standard VAT rate is 7% (Reduced from the standard 10% until 30 September 2024)
Turkey The standard VAT rate is 20% 10%, 1%
Uzbekistan The standard VAT rate is 12%
Vietnam The standard VAT rate is 8% Reduced VAT rate is 5%
*These rates are only indicative. Please use at your own discretion. Last update: 26/08/2024

Join us!

Subscribe to our monthly newsletter

SUBSCRIBE TO GLOBAL VAT NEWSLETTER

Get the latest VAT information directly in your inbox and stay up to date with all VAT developments around the world.

You have Successfully Subscribed!