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New Tax Rules effective from 1st Apr 2025
List of financial and tax rules or best practices (Income Tax, GST TDS) that a taxpayer must follow starting with FY 2025–26 to save and be compliant from 1st April 2025 or to be completed by March 31st 2024.
1. Updated Income Tax Returns for AY 2022-23
Originally the due date to file Updated Income Tax Returns for FY 2021-22 (AY 2022-23) should be completed by 31st March 2025. Budget 2025 has extended the due date to file Updated Income Tax returns until 4 years from the end of relevant assessment year.
Now you can file updated income tax returns for FY 2021-22 (AY 2022-23) until 31st March 2027 with a penalty of 60% (filed between 01st April 2025 to 31st March 2026) and 70% (filed between 01st April 2026 to 31st March 2027)
Refer Updated Return for more information.
2. Updated Income Tax Returns for AY 2023-24
If you want to file Updated Income Tax Returns for FY 2022-23 (AY 2023-24), the penalty will be 50% of your tax payable w.e.f 01st April 2025.
Refer Updated Return for more information.
3. Advance Tax for FY 2024-25
31st March 2025 is the last date to pay Advance Tax for FY 2024-25. W.e.f 01st April 2025, the taxpayers are required to pay interest @ 1% u/s 234B on the tax payable.
Refer Advance Tax: What, When & How to Pay? for more information.
4. Applicability of New Tax Slabs and rebate upto Rs 12 lakhs income under new tax regime
The changes announced by Budget 2025 will be applicable from 01st April 2025 and effective for FY 2025-26. The taxpayers with an income of Rs 12 lakhs(12.75 lakhs for Salaries) are not required to pay any taxes. Also the new tax slabs announced by Budget 2025 will be applicable from 01st April 2025.
- Refer Rebate u/s 87A and Marginal Tax Relief — Explained for more information.
- Refer Old vs New Tax Regime | Explained for Salaried & Business Taxpayers for more information.
5. Increased limit under LRS
Currently the taxpayers who wants to send money to foreign countries can send upto Rs 7,00,000 under LRS. Now the limit has been increased to Rs 10 lakhs w.e.f 01st April 2025.
- Refer TCS on Foreign Remittances Under LRS for more information.
- Refer TCS Remittance Calculator for more information.
6. Applicability of TDS on payments to Partners
W.e.f 01st April 2025, the partnership Firms/LLP's are required to deduct TDS @ 10% on the payments made to partners if their payments exceeds Rs 20,000 per year.
Refer How to Calculate Remuneration, Interest to Partners? for more information
7. Tax Declaration for FY 2025-26
As the new financial year begins from FY 2025-26, the employees are required to give tax declaration on their savings and type of regime to their employers in April 2025.
Refer Expert Tax Consultation made Affordable
8. Respond to Income Tax Notices
31st March 2025 is the limitation date for most of the scrutiny notices. Hence it is advisable for the taxpayers whose PAN got selected for Scrutiny u/s 143(2), 147 etc to be more conscious and respond to notices on time to avoid penalties and huge outstanding demands. Also if any taxpayers are against the orders issued by Income tax department, they are required to file an appeal.
Refer How to Handle Income Tax (IT) Department Notices? for more information
9. Starting a New Business
If you want to start a new business in new financial years, the registrations like business registration, GST, PAN etc and paper work needs to be completed by 31st March 2025 to ensure smooth compliance.
Refer Starting a new business steps for more information.
10. Conversion of Regular GST to Composition Scheme
If you are a taxpayer who is registered under regular GST and wants to convert to Composition scheme for FY 2025-26, you are required to file CMP- 02 before 31st March 2025. W.e.f 01st April 2025, you cannot opt to composition scheme for FY 2025-26.
Refer Regular GST to Composition Scheme for more information.
11. File Letter of Undertaking (LUT) for FY 2025-26
If you are a taxpayer registered under GST and having exports and sales to SEZ, file LUT for FY 2025-26
12. Reconciliation of Income Tax, GST etc
The taxpayers are required to reconcile the sales reported in GSTR 1 , GSTR 3B , Form 26AS , invoices issued and Bank Statements and need to do corrections if any required
13. Deactivation of UPI IDs Linked to Inactive Mobile Numbers
- W.e.f 01st April 2025, Banks and payment service providers (PSPs) will unlink UPI IDs associated with mobile numbers that have been inactive, closed, or reassigned to new users.
- Hence the users of UPI are required to activate their UPI ID which has been inactive for a long time. Otherwise those UPI Id's will be removed. Also , banks are required to submit monthly reports to NPCI detailing total UPI IDs, active users, transactions via updated numbers, and locally resolved number-based transactions
14. Removal of Higher TDS/TCS for Non-Filers
Previously, non-filers of Income Tax Returns (ITR) faced higher TDS/TCS rates (twice the normal rate or 5%). This provision is removed w.e.f 01st April 2025. Filing of Income tax returns is not a condition for deduction of TDS w.e.f 01st April 2025