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Latest Income Tax Notifications 2025: Key Updates Every Taxpayer Should Know

9/13/2025 08:00:00 AM
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The Central Board of Direct Taxes (CBDT) has been particularly active in September 2025, issuing several crucial notifications that impact millions of taxpayers across India. These updates reflect the government's continued efforts to streamline tax processes, enhance compliance, and adapt to the evolving financial landscape.

ITR Filing Deadline Extended - A Major Relief

One of the most significant developments has been the extension of the Income Tax Return filing deadline for FY 2024-25 (AY 2025-26) from July 31 to September 15, 2025. This extension provides much-needed breathing room for taxpayers who were struggling to meet the original deadline.

The CBDT cited several reasons for this extension. The Income Tax Return forms for AY 2025-26 underwent substantial structural and content-level updates aimed at simplifying compliance, improving transparency, and enabling more accurate reporting. These extensive revisions required additional time for system development, integration, and comprehensive testing of related utilities.

Adding to the complexity, the utilities for ITR-5, ITR-6, and ITR-7 were released only in August 2025, while ITR-2 and ITR-3 came out much later than usual on July 11, 2025. This delayed rollout meant taxpayers had insufficient time to familiarize themselves with the new forms and complete their filings accurately.

Also Read: GST 2.0 Arrives on 22 September 2025: What Businesses and Consumers Must Know

Revolutionary Changes in Income Tax Slabs

The Union Budget 2025 introduced groundbreaking changes to the income tax structure, particularly under the new tax regime. These modifications represent one of the most taxpayer-friendly adjustments in recent years.

New Tax Regime Structure for FY 2025-26

The revised income tax slabs under the new regime offer significant relief to middle-class taxpayers:

  • Up to Rs. 4 lakh: Nil tax (increased from Rs. 3 lakh)
  • Rs. 4 lakh to Rs. 8 lakh: 5% tax
  • Rs. 8 lakh to Rs. 12 lakh: 10% tax
  • Rs. 12 lakh to Rs. 16 lakh: 15% tax
  • Rs. 16 lakh to Rs. 20 lakh: 20% tax
  • Rs. 20 lakh to Rs. 24 lakh: 25% tax
  • Above Rs. 24 lakh: 30% tax

The most remarkable change is the increased rebate limit to Rs. 12 lakhs, meaning taxpayers earning up to this amount will pay zero tax under the new regime. This represents a substantial jump from the previous rebate limit of Rs. 7 lakhs.
Also read: Income-Tax Trends to Watch in India (2025-26)


Major TDS Rate Modifications

The Finance Act 2025 brought extensive changes to TDS (Tax Deducted at Source) rates and thresholds, effective from April 1, 2025. These modifications aim to reduce the compliance burden on small taxpayers while ensuring adequate tax collection from larger transactions.

Key TDS Changes Include:

Enhanced Threshold Limits:

  • Section 194A (Interest): Increased to Rs. 1 lakh for senior citizens and Rs. 50,000 for others
  • Section 194I (Rent): Monthly threshold raised to Rs. 50,000
  • Section 194J (Professional Fees): Annual threshold increased from Rs. 30,000 to Rs. 50,000
  • Section 194LA (Enhanced Compensation): Threshold doubled from Rs. 2.5 lakh to Rs. 5 lakh

New Section 194T: A completely new provision introduced for payments by firms to partners, with a 10% TDS rate applicable on amounts exceeding Rs. 20,000 annually.

Abolished Provisions: The controversial Sections 206AB and 206CCA, which imposed higher TDS rates on non-filers, have been removed to reduce compliance complexity.
Also read: GST Exporter Refund – A Detailed Overview

Cryptocurrency Taxation - Continued Scrutiny

Cryptocurrency taxation remains unchanged in 2025, with Virtual Digital Assets (VDAs) continuing to face the stringent 30% tax rate. However, the Income Tax Department has intensified its focus on compliance.

The department has been actively contacting cryptocurrency investors who failed to declare their digital asset transactions in their Income Tax Returns for Assessment Years 2023-24 and 2024-25. This initiative, part of the NUDGE campaign, aims to ensure proper compliance without being overly intrusive.

Key Crypto Tax Provisions:

  • Flat 30% tax on gains from cryptocurrency transactions
  • 1% TDS under Section 194S on transactions exceeding specified thresholds
  • No loss set-off allowed against other income sources
  • Dedicated Schedule VDA in ITR forms for reporting crypto gains

Advance Tax Deadlines - September 15 Critical Date

September 15, 2025, marks a crucial deadline for advance tax payments. Taxpayers must ensure they have paid 45% of their total estimated tax liability for FY 2025-26 by this date.

The advance tax payment schedule remains:

  • June 15: 15% of total liability
  • September 15: 45% cumulative
  • December 15: 75% cumulative
  • March 15: 100% complete payment

Failure to meet these deadlines attracts interest at 1% per month (12% annually), making timely compliance essential for avoiding unnecessary financial burden.
Also Read: GST Refund Appeal Rules 2025

Enhanced Digital Compliance Measures

The CBDT has significantly strengthened digital infrastructure to support the new tax regime. Several important notifications have been issued regarding:

PAN-Aadhaar Linking Mandate

Individuals who obtained their PAN using only an Aadhaar Enrolment ID before October 1, 2024, must link their Aadhaar number to the PAN database by December 31, 2025. Non-compliance could render the PAN inoperative, severely impacting financial transactions.
Also Read: GST Refund Process 2025: How to Claim Your GST Refund Easily

New ITR Forms and Procedures

The CBDT has notified various new ITR forms, including ITR-B for entities subject to search and seizure actions and updated versions of existing forms with enhanced disclosure requirements.

Foreign Asset Compliance Campaign

Over 30,000 taxpayers have revised their Income Tax Returns following the CBDT's awareness campaign targeting undisclosed foreign assets and income. This initiative resulted in the declaration of additional foreign assets and income worth more than Rs. 30,000 crore.

The campaign demonstrates the government's serious approach toward ensuring complete disclosure of foreign income and assets, with 6,734 taxpayers also revising their residential status from resident to non-resident.
Also read: How India Taxes E-Commerce in 2025

Looking Ahead - Key Takeaways for Taxpayers

The September 2025 notifications reflect a dual approach of providing relief to genuine taxpayers while tightening compliance measures. The extended ITR filing deadline, revised tax slabs, and enhanced rebate limits offer significant benefits to middle-class taxpayers.

However, the government has also made it clear that non-compliance will attract serious consequences. The focus on cryptocurrency taxation, foreign asset disclosure, and timely advance tax payments indicates that taxpayers must maintain meticulous records and ensure complete transparency in their financial dealings.

Immediate Action Items for Taxpayers:

  • Complete ITR filing before the extended September 15 deadline
  • Ensure advance tax payments are up-to-date (45% by September 15)
  • Review and declare all cryptocurrency transactions
  • Link Aadhaar with PAN if obtained through Enrolment ID
  • Assess eligibility for the new tax regime benefits

These developments underscore the importance of staying informed about tax regulations and seeking professional guidance when needed. The evolving tax landscape requires proactive compliance to avoid penalties and take advantage of available benefits.

 

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Frequently Asked Questions

1. What is GST and who needs to register for it?

GST stands for Goods and Services Tax; businesses with turnover exceeding thresholds specified by law must register for GST.

2. How can I register for GST online?

Registration can be done via the GST portal by submitting required details and documents electronically.

3. What are the types of GST taxes?

CGST, SGST (for intra-state sales), and IGST (for inter-state sales) are the principal GST types.

4. When and how often should I file GST returns?

Filing frequency varies; monthly, quarterly, or annually based on turnover and nature of registration.

5. What documents are required for GST registration?

PAN card, Aadhaar card, business address proof, bank account details, and photographs are typically required.

6. What is Input Tax Credit (ITC)?

ITC allows taxpayers to deduct the tax paid on purchases from the GST payable on sales.

7. How do I claim Input Tax Credit?

ITC claims are filed via GST returns with valid tax invoices and compliance with specific conditions.

8. What are the penalties for late GST filing?

Penalties include late fees, interest on tax dues, and potential legal consequences for prolonged non-compliance.

9. How can I file my Income Tax Return (ITR)?

ITR can be filed online on the Income Tax Department’s e-filing portal using relevant forms based on income sources.

10. What documents are needed for filing ITR?

PAN, Aadhaar, bank statements, Form 16, investment proofs, and relevant income and expense documents.

11. What is TDS and when is it applicable?

Tax Deducted at Source is applicable on various payments like salary, rent, professional fees as per thresholds.

12. How can tax consultancy help me save money?

By identifying tax deductions, exemptions, and planning strategies tailored to individual or business finances.

13. What is the difference between direct and indirect taxes?

Direct taxes like income tax are paid directly by the individual; indirect taxes like GST are passed to consumers.

14. What are the income tax slabs for individuals?

Income tax slabs vary by age and income under old and new regimes, with different rates applicable.

15. How do I compute taxable income?

Taxable income is total income minus eligible deductions under sections like 80C, 80D, etc.

16. What are common sections for tax deductions?

Sections like 80C (investments), 80D (health insurance), 80G (donations) offer deductions.

17. What is the process for GST audit?

GST audit involves verification of records by a chartered accountant to ensure compliance and proper tax payments.

18. Can tax consultants represent me before tax authorities?

Yes, tax consultants can represent clients during assessments, audits, and inquiries.

19. What is the due date for filing income tax returns?

Typically July 31st for individuals and September 30th for businesses for the previous financial year.

20. How are capital gains taxed?

Capital gains are classified as short-term or long-term, with different tax rates and exemptions.

21. What is e-way bill in GST?

E-way bill is an electronic document for movement of goods worth above a threshold under GST law.

22. How can I verify my ITR online?

Using Aadhaar OTP, net banking, Demat account or sending signed ITR V physically to CPC Bangalore.

23. What forms are used for income tax returns?

ITR-1 to ITR-7 forms, selected based on income sources and taxpayer category.

24. What is advance tax?

Advance tax is the income tax payable in installments during the year itself.

25. What is TDS refund?

Refund of excess TDS deducted beyond actual tax liability after filing ITR.

26. How can I update my PAN details?

PAN details can be updated through NSDL or UTIITSL websites with proper documents.

27. What are the tax benefits for senior citizens?

Higher exemption limits and specific reliefs are available for senior and super senior citizens.

28. Can NRIs file income tax returns in India?

Yes, NRIs with income earned or accrued in India must file ITR.

29. What is the significance of PAN and TAN?

PAN is Permanent Account Number for taxpayers; TAN is Tax Deduction Account Number for deductors.

30. What is the GST composition scheme?

A simplified tax scheme for small taxpayers with turnover under specified limits, with lower compliance.

31. How do I register a partnership firm for GST?

Partnership firms must apply online on GST portal with required documents and info.

32. What are invoices under GST?

GST invoices detail supply of goods or services and are mandatory for claiming ITC.

33. How can I update my business address in GST?

GST portal allows amendment of business address after submitting proof and documents.

34. What is the penalty for late GST payment?

Interest and late fee are levied on tax not paid on or before the due date.

35. What are exempted goods and services under GST?

Certain goods and services like agriculture produce, education, and healthcare may be exempt from GST.

36. How do I know if I'm liable to pay advance tax?

Taxpayers with tax liability exceeding ₹10,000 in a year must pay advance tax.

37. What are tax audit requirements under Income Tax?

Business or professional income taxpayers exceeding threshold turnover must audit accounts and file tax audit reports.

38. What are the consequences of not filing GST returns?

Penalties, blocking of ITC claims, and legal action may follow non-filing of returns.

39. How can tax consultants aid in tax planning?

Consultants analyze finances and suggest legal ways to optimize taxes and maximize deductions.

40. What is the importance of PAN in income tax?

PAN is mandatory for filing returns, TDS transactions, and financial dealings to track taxed income.

41. How is salary income taxed?

Salary income is added to total income and taxed as per slab rates after allowed deductions.

42. What is the limit for cash donations under section 80G?

Cash donations exceeding ₹2,000 are generally not eligible for deduction except to specified funds.

43. Can I file a revised ITR?

Yes, revised returns can be filed before the end of the relevant assessment year to correct errors.

44. What is the impact of GST on exports?

Exports are treated as zero-rated supplies under GST with benefits for refund of input taxes.

45. Can I avail GST registration for multiple states?

Yes, GST registration in multiple states is mandatory if business operates across those states.

46. How do I know my GSTIN?

GSTIN is issued at time of registration and can be viewed/downloaded from GST portal.

47. What documents are required for Income Tax audit?

Financial statements, books of accounts, tax invoices, bank statements, and audit reports are usually required.

48. What is Section 194T and its applicability?

Section 194T mandates TDS deduction on cash withdrawals over a specified limit by individuals or HUFs.

49. Can I claim deductions on home loan interest?

Yes, interest on self-occupied property is deductible under Section 24 up to ₹2 lakh per year.

50. How can I get expert tax consultancy services?

Expert services can be approached through qualified tax consultants who analyze your tax situation comprehensively and help ensure compliance and savings.
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