Direct Tax (DT) Highlights

Key Relief Measures

• MACT Interest: Full exemption from tax and TDS for motor accident compensation

• TCS rationalized to 2% on overseas education, medical (LRS), tour packages, Tendu Leaves, and specific goods (Alcoholic Liquor, Scrap, Minerals)

• TDS Clarity: Manpower supply treated as contractor payments (1–2%)

• Automated Certificates: Lower TDS approval for small taxpayers

• Centralized Filing: Form 15G/15H through depositories for investors

• Capital Gain Exemption on Sovereign Gold Bonds: For individuals holding until maturity redemption

Compliance & Deadlines

• Revised returns accepted until 31 March with nominal fees

• ITR-1 & ITR-2 due: 31 July | Non-audit cases: 31 August

• Property TDS simplified — no TAN required for resident buyers purchasing from non-residents; PAN suffices

Foreign Asset Disclosure Scheme (One-time, 6 months)

For students, young professionals, tech employees, and relocated NRIs:

• Category A: Up to ₹1 crore — 60% total tax with prosecution immunity

• Category B: Up to ₹5 crore (already taxed) — ₹1 lakh fee for immunity

Global Investment Incentives

• Tax holiday till 2047 for foreign companies providing cloud services via Indian data centers

• 5-year exemption for non-residents supplying capital goods to toll manufacturers in bonded zones

• 5-year global income exemption for non-resident experts under notified schemes

• MAT exemption for all non-residents on presumptive basis

• IT Sector: Uniform 15.5% safe harbour margin; threshold raised to ₹2,000 crore; automated approvals for 5 years; Fast-Track APA in 2 years

Cooperative Boost

• Extended deductions for cattle feed and cotton seed suppliers

• Tax-free inter-cooperative dividends

• National Federal Cooperative dividend distribution to members (up to 31.01.2026)

Other DT Changes

• Buyback Tax: Taxed as Capital Gains — effective rate 22–30% for promoters

• STT Increase: Futures 0.05%, Options 0.15%

• MAT Rationalization: Rate reduced from 15% to 14%; made final tax under new regime; 25% brought-forward credit allowed for domestic companies

Penalty & Prosecution Reforms

• Assessment and penalty proceedings integrated; interest suspended during first appeal; pre-deposit reduced to 10%

• Immunity from penalty (50%) and prosecution on paying 100% tax; misreporting requires 120% tax payment

• Penalties for audit failure and non-TP reports converted to capped daily fees

• Decriminalize producing books/documents and TDS on in-kind payments; max imprisonment reduced to 2 years (from 7); punishment proportional to tax evaded

• Section 195: 60% rate eliminated; replaced with 30% tax plus 200% misreporting penalty

• Block assessment limited to 1 year if undisclosed income relates to a single tax year

• Extended search assessment timeline: 18 months (from 12) for specified persons

• Updated returns allowed after reassessment (+10% tax); no penalty on additional income

• Black Money Act: No prosecution for non-immovable foreign assets under ₹20 lakh; retrospective from 1 October 2024

• Crypto Penalties: ₹200/day for non-furnishing statements; ₹50,000 for inaccurate or uncorrected information

Indirect Tax (IDT) Highlights

Customs Duty — Export Promotion

Electronics & Manufacturing

• Microwave Ovens: BCD exemption on specified parts to boost local manufacturing

• Aviation & MRO: Exemption for aircraft components and MRO raw materials

• SEZ Relief: One-time DTA sales at concessional duty for capacity utilization

Energy Transition

• Lithium-Ion: BCD exempt for storage

• Solar Glass: Sodium antimonate exempt

• Nuclear: BCD exempt till 2035

• Minerals: Capital goods exempt

• Biogas CNG: Biogas value excluded from excise duty

Other Key Measures

• Healthcare Relief: BCD exemption on 17 cancer drugs + 7 rare disease drugs

• Personal Imports: Tariff reduced from 20% to 10%

• Courier Exports: ₹10 lakh value cap per consignment removed to support MSMEs and e-commerce

Process Reforms

Key GST Amendments

• Section 15(3): Post-sale discounts no longer need to be linked to prior agreements — only credit note issuance required

• Section 34: Amended to reference Section 15, creating legislative harmony between discount and credit note mechanisms

• Section 54(6): Provisional refund provisions extended to inverted duty structures (input tax rate exceeds output tax rate)

• Section 54(14): Rs. 1,000 minimum threshold for export refund claims eliminated — exporters can now claim any amount

• Section 101A(1A): Existing Tribunals empowered to hear appeals pending National Appellate Authority establishment; effective 1 April 2026

• Section 13(8): Clause (b) omitted — place of supply for intermediary services now determined under Section 13(2) of IGST Act