Navigate the shift from the Income Tax Act, 1961 to the 2025 Act

Investment-linked deductions

Section 80C allows a deduction up to ₹1,50,000 in aggregate for specified investments and payments such as LIC premium, PPF, EPF, ELSS, principal repayment of housing loan, tuition fees and Sukanya Samriddhi.

Deduction for health insurance premium

Section 80D allows individuals and HUFs to claim a deduction for health insurance premium and preventive health check-up — up to ₹25,000 for self, spouse and dependent children, with an additional ₹25,000 (₹50,000 for senior citizens) for parents.

Default new tax regime for individuals and HUFs

Section 115BAC is the default new personal tax regime with concessional slab rates and a standard deduction of ₹75,000, but it disallows most Chapter VI-A deductions including 80C and 80D.

Presumptive taxation for small businesses

Section 44AD presumes income at 8% (6% for digital receipts) of turnover for eligible resident small businesses with turnover up to ₹3 crore (where cash receipts do not exceed 5% of total receipts).

Presumptive taxation for professionals

Section 44ADA presumes income at 50% of gross receipts for resident professionals with gross receipts up to ₹75 lakh (where cash receipts do not exceed 5% of total receipts).

Tax audit thresholds

Section 44AB requires a tax audit for businesses with turnover above ₹1 crore (₹10 crore if cash transactions ≤ 5%) and professionals with gross receipts above ₹50 lakh.

TDS on payment to contractors

Section 194C requires TDS at 1% (individual/HUF payee) or 2% (other payees) on payments to contractors when a single payment exceeds ₹30,000 or aggregate annual payments exceed ₹1,00,000.

TDS on professional and technical fees

Section 194J requires TDS at 10% on professional fees, 2% on technical services and royalty for cinematographic films, and 2% on fees for technical services — triggered when annual payment exceeds ₹30,000 per category.

Capital gains exemption on residential house

Section 54 exempts long-term capital gains arising on transfer of a residential house if the gain is invested in another residential house in India within prescribed time-limits, capped at ₹10 crore.

Disallowance of payments to MSMEs beyond statutory time-limit

Clause (h) of Section 43B disallows deduction for sums payable to a Micro or Small enterprise beyond the time-limit specified in Section 15 of the MSMED Act, 2006 (45 days where there is a written agreement, otherwise 15 days) — allowed only in the year of actual payment.

Capital gains exemption on investing in a residential house

Section 54F exempts long-term capital gains from sale of any asset (other than a residential house) if the net consideration is reinvested in one residential house in India, subject to a ₹10 crore cap.

Deduction for donations to charitable institutions

Section 80G allows a deduction for donations to specified funds and approved charitable institutions — either 100% or 50% of the donation, with or without a qualifying limit of 10% of adjusted gross total income.

Rebate of income tax for resident individuals

Section 87A gives resident individuals a rebate that cancels out tax on incomes up to a specified threshold — ₹12,00,000 under the default new regime and ₹5,00,000 under the old regime.

House Rent Allowance (HRA) exemption

Section 10(13A) read with Rule 2A exempts House Rent Allowance to the extent of the least of actual HRA, rent paid minus 10% of salary, or 50%/40% of salary (metro/non-metro).

Filing of income-tax returns

Section 139 governs the filing of income-tax returns — due dates, belated returns u/s 139(4), revised returns u/s 139(5), updated returns u/s 139(8A) and defective returns u/s 139(9).

Intimation after processing of return

Section 143(1) provides for processing of returns by CPC and issue of an intimation showing income computed, tax payable or refund, after specified prima-facie adjustments.

Reassessment of income that escaped assessment

Section 148 read with Section 148A governs reopening of completed assessments. A show-cause must be issued under 148A before any 148 notice, with extended time-limits where the escaped income is ₹50 lakh or more.

Fee for late filing of return

Section 234F levies a fee of ₹5,000 for filing the return after the due date u/s 139(1), reduced to ₹1,000 where total income does not exceed ₹5 lakh.

Interest for default in payment of tax

Sections 234A, 234B and 234C levy interest at 1% per month for late filing of return, shortfall of advance tax, and default in payment of quarterly advance-tax instalments respectively.

TDS on interest other than interest on securities

Section 194A requires deduction of TDS at 10% on interest other than interest on securities, with thresholds of ₹40,000 (₹50,000 for senior citizens) for banks and post offices.

TDS on payment of rent

Section 194-I requires TDS on rent at 10% for land/building/furniture and 2% for plant and machinery, once aggregate rent in a year exceeds ₹2,40,000.

TDS on purchase of goods

Section 194Q requires buyers with turnover above ₹10 crore to deduct TDS at 0.1% on the value of goods purchased from a seller in excess of ₹50 lakh in a financial year.

TDS on benefits or perquisites in business or profession

Section 194R requires TDS at 10% on the value of any benefit or perquisite (whether in cash or kind) provided to a resident arising from business or profession, where aggregate value in a year exceeds ₹20,000.