New Delhi, Feb 1 (.) The Income Tax Act, 2025 is slated to come into effect from April 1, 2026, and the simplified Income Tax rules and forms will be notified in due course giving adequate time to taxpayers to acquaint themselves with its requirements, Finance Minister Nirmala Sitharaman said on Sunday.
The forms have been redesigned for simpler understanding and compliance for ordinary citizens, she said.
Sitharaman proposed to constitute a Joint Committee of Ministry of Corporate Affairs and Central Board of Direct Taxes for incorporating the requirements of Income Computation and Disclosure Standards (ICDS) in the Indian Accounting Standards (IndAS).
Separate accounting requirement based on ICDS will be done away with from the tax year 2027-28.
“To support the Prime Minister’s vision of home-grown accounting and advisory firms to become global leaders, the Budget also proposes to rationalize the definition of accountant for the purposes of Safe Harbour Rules,” she said.
In terms of some other key tax proposals, the Budget also highlighted curbing the improper use of buyback by promoters, it proposes to tax buyback for all types of shareholders as Capital Gains.
However, to disincentivize misuse of tax arbitrage, promoters will pay an additional buyback tax.
This will make effective tax 22 per cent for corporate promoters. For non-corporate promoters, the effective tax will be 30 per cent.
TCS rate for Remittance under the Liberalised Remittance Scheme of an amount or aggregate of the amounts exceeding ten lakh rupees: 2% for the purpose of education or medical treatment and 20% for the purpose of other than education or medical treatment.
Securities transaction tax (STT) proposed to be raised on Futures to 0.05 per cent from present 0.02 per cent. STT on options premium and exercise of options are both proposed to be raised to 0.15 per cent from the present rate of 0.1 per cent and 0.125 per cent respectively.
In continuance to simplified regime and lower tax rate for corporates, set-off of brought forward (Minimum Alternate tax) MAT credit is proposed to be allowed to companies only in the new regime to encourage companies to shift to the new regime, Sitharaman said.
Set-off using available MAT credit is proposed to be allowed to an extent of 1/4th of the tax liability in the new regime.
Ending further accumulation from April 1, 2026, MAT is proposed to be made final tax. In line with this change, the rate of final tax will be reduced to 14 per cent from the current MAT rate of 15 per cent.
The brought forward MAT credit of taxpayers accumulated till March 31, 2026, will continue to be available to them for set-off as above, the Finance Minister highlighted in her speech.
. VK SAS PRS