**No Tax on ₹20 Lakh Rent in Budget 2025 – Here’s How!**

Budget 2025 has introduced significant changes in the new tax regime, making rental income more tax-efficient than ever. With the increased tax-free limit of ₹12 lakh, higher TDS thresholds, and deductions available under Section 24(b), individuals earning rental income can pay zero tax on annual earnings of up to ₹20 lakh.

New Tax Regime (Budget 2025) – Latest Slabs

The new tax regime (Section 115BAC) has been modified in Budget 2025. Below are the latest slab rates:

🔹 Maximum rebate available: ₹60,000 (Applicable for income up to ₹12 lakh).
🔹 No rebate under Section 87A on special rate income like capital gains, lottery, betting, etc.

Tax Deductions on Rental Income Under Section 24(b)

1️⃣ Standard Deduction (30%) – Available for all rental income.
2️⃣ Home Loan Interest Deduction (without any limit) – Available for let-out properties, under New Regime

Example 1: Rental Income ₹20 Lakh with Home Loan

✅ No tax payable because taxable income is below ₹12 lakh!

Important Restrictions Under Section 115BAC(2) (New Tax Regime)

Under the new tax regime, certain deductions and set-offs are not allowed, including:

✅ No deduction for loss from house property against other income.
✅ No additional exemptions like HRA, Deductions under Chapter VIA

👉 Example: If your taxable income from salary is ₹10 lakh and rental income has a loss of ₹1 lakh (after deductions), you CANNOT set off this ₹1 lakh loss against salary under the new tax regime.

However, the standard deduction (30%) on rental income and home loan interest (without any limit) are still available.

Other Tax Benefits on Rental Income in Budget 2025

🔹 TDS on Rent Threshold Increased:
✔ Section 194I (TDS on Rent): Limit increased from ₹2,40,000/year to ₹50,000/month.
✔ This brings Section 194I in line with Section 194IB.

🔹 Higher TDS Exemption for Senior Citizens:
✔ Section 194A (TDS on Interest Income for Senior Citizens): Limit increased from ₹50,000 to ₹1,00,000.

FM Sitharaman :GST Council to soon take decision on rates, number of slabs

The GST Council will soon take a decision on having fewer and lower rates as the review work is almost complete, Finance Minister Nirmala Sitharaman said on Tuesday. Currently, Goods and Services Tax (GST) is a four-tier tax structure with slabs at 5, 12, 18 and 28 per cent. Luxury and demerit goods are taxed at the highest bracket of 28 per cent, while packed food and essential items are in the lowest 5 per cent slab.

The Council, chaired by Sitharaman and comprising her state counterparts, has set up a group of ministers (GoM) to suggest changes in GST rates as well as reduce slabs.

“To be fair to the GST and the ministers who are all in the council, the work on rationalizing and simplifying GST rates has already commenced. In fact, it had commenced nearly three years ago,” she said at the India Today-Business Today Post Budget Round Table.

Sitharaman said later the scope was widened and now the work is almost complete.

Mentioning that she told ministers in the Council to have a more in-depth look at the rates since they relate to everyday items consumed by common people, the minister said it was important to ensure that an opportunity was not lost.

“For me, it was also important that we don’t lose an opportunity, that we can even bring down the number of rates, which is also the original intent that we wanted fewer rates and lower rates. So work has got to happen on that, and I hope the GST Council will decide on it soon,” Sitharaman said.

Days after presenting the Union Budget 2025-26 that also provides significant income tax relief to the middle class, the minister asserted the country’s economic fundamentals are strong and there is no structural slowdown.

Tax relief in the Budget is a reflection of the prime minister’s commitment to the taxpayers, Sitharaman said and refuted speculations that the move was aimed at Delhi assembly elections.

She also told the gathering that there is no proposal to “shut down” the old tax regime.

“GSTN removes E-Way Bill requirement for select goods.”

Clarification on E-Way Bill Requirement for Goods under Chapter 71

Rule 138(14) of the Central Goods and Services Tax (CGST) Rules, 2017, read with its Annexure S.Nos. 4 and 5, states that goods covered under Chapter 71 viz., Natural or cultured pearls and precious or semi-precious stones; precious metals and metals clad with precious metal, Jewellery, goldsmiths’, and silversmiths’ articles, except those classified under HSN 7117 (Imitation Jewellery), are exempt from the mandatory requirement of generating an E-Way Bill.

Pursuant to the introduction of the E-Way Bill (EWB) for goods classified under Chapter 71, excluding HSN 7117 (Imitation Jewellery), in the state of Kerala for intra-state movement, the National Informatics Centre (NIC) has provided an option to generate EWBs for goods covered under Chapter 71 except 7117 under the category “EWB for Gold” on the EWB portal.

It has been observed that various industry stakeholders have voluntarily been generating EWBs for goods under Chapter 71 due to the availability of this option in the EWB system. In this regard, it is clarified that while the system previously allowed EWB generation for goods under Chapter 71, this facility has now been withdrawn.

Accordingly, taxpayers and transporters engaged in the movement of goods under Chapter 71 (except HSN 7117) are advised that EWB generation is not required. However, it may be noted that for the intrastate movement of such goods within the state of Kerala, the generation of an EWB has been mandated vide Notification No.10/24-State Tax dated 27/12/24 issued by the state of Kerala. An advisory dated 27.01.2025 has already been issued in this regard.

Industry stakeholders are requested to take note of this clarification and ensure compliance with the applicable regulatory provisions.

Highlights of the Advisory on E-Way Bill for Chapter 71 Goods

Impact of This Advisory

1. Relief for Businesses Nationwide – No need to generate EWB for Chapter 71 goods, reducing compliance burden.
2. Exception for Kerala – Businesses in Kerala must comply with local requirements and generate EWB for intra-state movement.
3. Prevention of Unnecessary Compliance – The system no longer allows voluntary EWB generation for these goods, preventing confusion.

Conclusion: Businesses dealing with jewellery, precious stones, and metals should ensure compliance with this update. EWB is not required for these goods except in Kerala, where state-specific rules apply. Stakeholders must take note of the changes and follow the correct procedures to avoid any penalties or non-compliance issues.

“₹12 lakh tax-free: Middle class cheers Budget boost”

Source link

Retro GST input tax credit change to hit commercial real estate.

The government’s proposal to amend the Finance Bill 2025 with respect to input tax credit (ITC) on construction expenses for leased properties is expected to impact real estate developers of commercial properties.

The Supreme Court ruling of October 2024 allowed ITC on such leased properties, providing financial relief to property developers by lowering their cost of commercial leasing. Following the ruling, tax authorities reassessed cases, leading to the issuance and withdrawal of multiple tax demands.

GST collections for January stand at 1.95 lakh crore, highest since April 2024

India’s Goods and Services Tax (GST) Revenue for January 2025 stood at Rs. 1,95,506 crores, marking a 12.3% increase from Rs. 1,74,106 crores in January 2024, as indicated by the country’s gross and net GST collections data. This number marks the country’s highest GST revenue, since April 2024.

In December 2024, the nation’s total GST earnings stood at Rs. 1,76,857 crores.

GST collections for the month of December grew 7.3 per cent year-on-year at Rs 1.77 Lakh Crore witnessing a dip compared to Rs 1.82 Lakh Crore in November 2024. Maharashtra recorded the highest GST collections among all states, registering Rs 29,260 crore, a 9 per cent year-on-year increase compared to December 2023.

Commenting on the GST collections, Abhishek Jain, Indirect Tax Head & Partner, KPMG says, “GST collections in January 2025 have shown an impressive growth of 12.5 percent year on year. This consistent increase could indicate an uptick in economic growth and sustained tax compliance by businesses. Notably, the growth in collections despite higher refunds is commendable, suggesting improved efficiency in refund processing by the department—an encouraging step toward enhancing ease of doing business.”

Domestic Revenue

India’s gross domestic revenue was recorded to Rs. 1,47,124 crore, marking a 10% increase from Rs. 1,33,705 crore in January 2024.

Revenue from Imports

The gross import revenue stood at Rs. 48,382 crores, showing a 19.8% increase from 40,401crore in January 2024. The IGST collections alone amounted to Rs. 47,453 crores, highlighting an increase in trader activities. The amount of cess collected on imports also grew to Rs. 929 crores, from Rs. 803 crores in January 2024.

Net Revenue Collections

After accounting for refunds, the Net GST Revenue for January 2025 stood at Rs. 1,71,653 crore, marking a 10.9% increase from Rs. 1,54,851 in January 2024.

The Net GST Revenue in December 2024 stood at Rs. 1,54,366 crore, highlighting a substantial increase in revenue.

Regional Growth Variations

The state wise GST collections for the month of January were led by Maharashtra at Rs. 32,335 crore, followed by Gujarat at Rs. 12,135 crore, Karnataka at Rs. 14,353 crore, Tamil Nadu at Rs. 11,496 crore and Haryana at Rs. 10,284 crore.

Clarificatory Circular 46/03/2025 Issued by GSTN Regarding Late Fees on GSTR-9C

GST Circular No. 46/03/2025-GST, Dated 30 January 2025

Clarification on Applicability of Late Fee for Delay in Furnishing FORM GSTR-9C

Background

Representations have been received seeking clarification on the levy of late fees for the delayed filing of the reconciliation statement in FORM GSTR-9C. Specifically, it has been requested to clarify whether late fees under Section 47 of the CGST Act, 2017 will be applicable when FORM GSTR-9C is not furnished along with the annual return in FORM GSTR-9, but is filed subsequently after the due date.

To ensure uniform implementation across all field formations, the Board, exercising its powers under Section 168(1) of the CGST Act, provides the following clarifications.

Statutory Provisions Governing GSTR-9C Filing

Mandatory Filing of GSTR-9C with GSTR-9

Understanding the Relationship Between GSTR-9 and GSTR-9C

Both before and after the amendment, the law mandates that registered persons required to file FORM GSTR-9 for a financial year must also furnish a duly certified or self-certified reconciliation statement in FORM GSTR-9C, where applicable.

If FORM GSTR-9C is required but not furnished, the annual return filing is considered incomplete under Section 44 of the CGST Act.

Applicability of Late Fees under Section 47

Sub-section (2) of Section 47 of the CGST Act prescribes a late fee for failure to furnish the annual return under Section 44 by the due date.

• If GSTR-9C is mandatorybut not furnished, the annual return remains incomplete, and late fees continue to accrue.
• Late fees apply from the due date of filing GSTR-9 until both GSTR-9 and GSTR-9C are furnished.

Late Fee Calculation Based on Filing Status

Late Fee Waiver for Delayed Filing up to FY 2022-23

As per Notification No. 08/2025-Central Tax, dated 23.01.2025, the late fee has been waived for any delay in filing GSTR-9C for financial years up to 2022-23, provided the reconciliation statement is furnished on or before March 31, 2025.

Waiver Conditions

🚫 No refund will be provided for any late fee already paid for delayed GSTR-9C filing in past years.

Important GST Rate Updates for Hotel-Based Restaurant and Outdoor Catering Services Effective from 1 April 2025

Effective from April 1, 2025

📜 Notification No. 05/2025-Central Tax (Rate) & 08/2025-Central Tax (Rate) dated January 16, 2025

Key Changes and Impact

1. Omission of “Declared Tariff”

The definition of “declared tariff” has been omitted.

2. Revised Definition of “Specified Premises”

The definition has been updated to provide more clarity and flexibility for hotel operators.

3. Classification of “Specified Premises”

4. GST on Restaurant Services Provided Through E-Commerce Operators (ECOs)

As per Notification No. 17/2017-Central Tax Rate dated June 28, 2017, Electronic Commerce Operators (ECOs) are required to pay GST on restaurant services provided through their platforms. However, this rule does not apply when supplied by restaurants, eating joints, or similar establishments located at “specified premises.”

🔹 Changes in Definition of Specified Premises for E-Commerce Operators
📌 Explanation (c) of the notification has been amended to align with the new definition of “specified premises” as stated above.

📢 Key Takeaway:
These changes ensure better clarity in tax applicability for hotel and restaurant services while allowing businesses to choose tax structures that best suit their operations.

CBIC clarifies: Penal charges imposed by banks are not subject to GST:

Goods and Services Tax (GST) will not be applicable on penal charges levied by banks and non-banking finance companies (NBFCs), the CBIC has said. The Central Board of Indirect Taxes and Customs (CBIC) through a circular has also clarified that GST will not be levied on transactions of up to Rs 2,000 facilitated by payment aggregators on online platforms.

Clarifying the issue of GST applicability on penal charges levied by banks and NBFCs, the CBIC said penal charges levied by Regulated Entities governed by the RBI are essentially in the nature of charges for breach of terms of contract and hence, do not attract GST.

“As recommended by the 55th GST Council, it is hereby clarified that no GST is payable on the penal charges levied by Regulated Entities… for non-compliance with material terms and conditions of loan contract by the borrower,” the CBIC said.

Experts said this clarification is significant as it settles interpretational disputes at the field level.

“By reiterating the essence of contractual obligations’ that contracts are meant for performance and not breach’ the GST Council has eliminated ambiguity regarding the taxability of such charges. The exclusion of penal charges from the GST ambit ensures compliance with RBI directives and prevents undue financial burdens on regulated entities and borrowers,” He added.

With regard to taxation on payment aggregators, the CBIC said it has received representations seeking clarity on the applicability of GST exemption to Payment Aggregators (PAs) in relation to settlement of up to Rs 2,000 in a single transaction, transacted through credit card, debit card, charge card or other payment card services.

Payment Aggregators (PAs) are entities that facilitate e-commerce sites and merchants to accept various payment instruments from their customers without the need for the e-commerce sites and merchants to create a separate payment integration system of their own. In the process, PAs receive payments from customers, pool and transfer them on to the merchants within a specified time period.

The CBIC also quoted RBI guidelines which distinguish PAs and Payment Gateways, which provide technology infrastructure to route and facilitate processing of an online payment transaction without any involvement in handling of funds.

“It is hereby clarified that GST exemption … is available to RBI regulated Payment Aggregators (PAs) in relation to settlement of an amount, up to Rs 2,000 in a single transaction, transacted through credit card, debit card, charge card or other payment card services, as PAs fall within the definition of ‘acquiring bank’,” the CBIC said.

The CBIC also clarified that this GST exemption is limited to payment settlement function only, which involves handling of money, and does not cover Payment Gateway services.

Expert said the clarifications issued by the CBIC on interpretative issues demonstrate the Government’s commitment to foster a predictable tax environment for businesses. This approach is likely to lead to greater tax certainty and a more conducive business environment.

Source link

20 Essential GST Tasks Starting February 2025 for the New Financial Year 2025–26: Latest Updates on GST Portal

As the financial year 2025-26 approaches, it’s essential for businesses to ensure compliance with Goods and Services Tax (GST) regulations. Below is a comprehensive checklist to guide you through the necessary actions:

File Letter of Undertaking (LUT) for Zero-Rated Supplies

If your business engages in zero-rated supplies, such as exporting goods or services or supplying to SEZ units/developers without payment of IGST, you must submit a Letter of Undertaking (LUT) for the financial year 2025-26. Ensure this is filed by March 31, 2025. Option is now available on GST Portal.

Businesses eligible and wishing to opt for the GST Composition Scheme for FY 2025-26 should file Form CMP-02 by March 31, 2025. If transitioning from the regular scheme to the composition scheme, remember to reverse the Input Tax Credit (ITC) claimed on inputs, work-in-progress, finished goods stock as of March 31, 2025, and capital goods (on a reduced percentage basis) by filing Form ITC-03 by May 30, 2025.

Option is now available on GST Porta

Filing of ITC-03 for Transition to Composition Scheme:

In case of transitioning from a regular taxpayer to a composition taxpayer, ITC-03 is required to be filed within 60 days from the commencement of the financial year, i.e., on or before 30th May 2025.

Opt-In or Out of QRMP Scheme

The Quarterly Return Monthly Payment (QRMP) scheme allows registered persons with an aggregate turnover of up to ₹5 crores to file GST returns quarterly while making monthly tax payments. To opt in or out of the QRMP scheme for FY 2025-26, ensure your selection is made by April 30, 2025.

Obtain Declarations from Goods Transport Agencies (GTA)

For FY 2025-26, collect declarations from Goods Transport Agencies (GTA) that opt to pay GST under the forward charge mechanism. This documentation is crucial to justify the non-payment of GST under the reverse charge mechanism (RCM).

Reset Invoice Number Series

As per GST regulations, businesses should start a new invoice series unique to the financial year. This applies to all documents, including tax invoices, credit notes, debit notes, and bills of supply. Implement the new series from April 1, 2025, to ensure compliance.

Recalculate Aggregate Turnover

Reassess your aggregate turnover for FY 2024-25 to determine eligibility and compliance requirements for FY 2025-26. This evaluation affects decisions related to GST registration, the Composition Scheme, the QRMP scheme, e-invoicing mandates, and Rule 86B concerning 1% cash payment.

Reconcile Input Tax Credit (ITC)

Conduct a thorough reconciliation between your books of accounts, GSTR-2B, and GSTR-3B to identify discrepancies. Ensure all eligible ITC for FY 2024-25 is claimed, ineligible ITC is reversed, and any mismatches are addressed promptly.

Settle Reverse Charge Mechanism (RCM) Liabilities

Review all purchases and expenses to identify transactions subject to RCM. Ensure that RCM liabilities are paid, reported in GSTR-3B, and corresponding ITC is claimed where applicable. Maintain self-invoices for all RCM-applicable transactions.

Update HSN Codes

Verify that the correct Harmonized System of Nomenclature (HSN) codes are used in invoices, especially if there have been changes in turnover thresholds affecting the number of digits required.

By diligently following this checklist, businesses can ensure a smooth transition into the new financial year, maintaining compliance with GST regulations and avoiding potential pitfalls.

Implementation of mandatory mentioning of HSN codes in GSTR-1 & GSTR 1A

After successful implementation of Phase-I & Phase-II now Phase-III regarding Table 12 of GSTR-1 & 1A is being implemented, from return period February 2025. In this phase manual entry of HSN has been replaced by choosing correct HSN from given Drop down. Also, Table-12 has been bifurcated into two tabs namely B2B and B2C, to report these supplies separately. Further, validation regarding values of the supplies and tax amounts involved in the same, have also been introduced for both the tabs of Table-12. However in initial period these validations have been kept in warning mode only, which means failing the validation will not be a blocker for filling of GSTR-1& 1A. To view the detailed advisory please click here

Cross Charge:

Identify the common expenses incurred for related or distinct persons on which ITC has been availed by the taxpayer. The taxpayer needs to cross-charge such expenses to the respective entities / GSTIN of the same entity on the basis of turnover (or such other reasonable method of allocation as applicable to the industry).

Introduction of E-Way Bill (EWB) for Gold in Kerala State

It is hereby informed that a new option for generating E-Way Bills (EWB) for gold has been introduced in the EWB system, effective from January 20, 2025. This feature has been made available to facilitate taxpayers in Kerala State to generate EWB for goods classified under Chapter 71, excluding Imitation Jewellery, for intrastate movement, in compliance with the notification issued by the Government of Kerala.

Waiver Scheme under Section 128A

It is to inform that both Forms GST SPL 01 and GST SPL 02 are available in the GST portal and the taxpayers are advised to file applications under waiver scheme.

One of the eligible conditions for filing application under waiver scheme is to withdraw the appeal applications filed against the demand order/notice/statement for which waiver application is to be submitted. In this regard, it is to inform that for the appeal applications (APL 01) filed before First Appellate authority, withdrawal option is already available in the GST portal. However, for the appeal applications (APL 01) filed before 21.03.2023, withdrawal option is not available in GST portal. For such cases, the taxpayers are advised to submit their request for withdrawal of appeal applications to the concerned Appellate Authority. The Appellate authority will forward such requests to GSTN through State Nodal officer for withdrawal of such appeal applications (i.e. filed before 21.03.2023 and not disposed off) from backend.

Difficulty if any faced by the taxpayers may be reported to https://selfservice.gstsystem.in by raising a ticket under category “Issues related to Waiver Scheme”.

Filing of Application for Rectification as per Notn. 22/2024-CT, dtd. 08/10/24, 2024

The Central Government, on the recommendations of the 54th GST Council, had issued Notification No. 22/2024 – CT dated 08.10.2024 and notified that any registered person against whom any order confirming demand for wrong availment of ITC, on account of contravention of provisions of sub-section (4) of section 16 of the said Act had been issued, but where such ITC is now available as per the recently inserted sub-sections (5) and/or (6) of section 16 of the Act, would now be able to file an application for rectification of such demand orders.

A functionality has now been made available on the Portal for taxpayers to file an application for rectification of such orders issued under section 73/74. They can file it, post login, by navigating Services > User Services > My Applications, selecting “Application for rectification of order” in the Application Type field, and clicking on the NEW APPLICATION button. A hyperlink has also been provided on the Portal to download the proforma in Annexure A in word format, required to be uploaded after entering details of the demand order of the ITC wrongly availed on account of contravention of sub-section (4) of section 16 of the CGST Act, now eligible as per sub-section (5) and/or (6) of section 16 of the CGST Act, while filing the application for rectification.

Please click on: https://tutorial.gst.gov.in/downloads/news/step_by_step_process_filing_rectification_application.pdf to view detailed step by step process on filing of rectification application.

Advisory for Form GST DRC-03A

1. It has been observed that some taxpayers have paid the demanded amount vide DRC 07/DRC 08/MOV 09/MOV 11/APL 04 through DRC-03 instead of using payment facility ‘Payment towards demand’ available on GST portal. This led to a situation where demand has been paid by the taxpayer, however the demand is not closed in the electronic liability register. To address this issue, the government has notified a new form named GST DRC-03A which was notified vide Notification No. 12/2024 dated. 10th July 2024.
2. Accordingly, GSTN has developed the new Form GST DRC-03A on GST portal which is available now to adjust the paid amount through DRC-03 against the corresponding demand order. Therefore, it is advised to the taxpayers to use the DRC-03A form to link the payment made vide DRC-03 with the demand order. Only DRC-03 forms where the cause of payment is either ‘Voluntary’ or ‘Others’ can be used in the Form GST DRC-03A.
3. Taxpayers will be required to enter the ARN of the DRC-03 along with the relevant demand order number on the portal. Upon entering the ARN and selecting the demand order number of any outstanding demand, the system will auto-populate relevant information of the DRC-03 form as well as from the specified demand order against which the payment is to be adjusted.
4. Once the adjustment is made, corresponding entries will automatically be posted in the taxpayer’s liability ledger to reflect the updated status of demands.
5. For detailed process, please click on Detailed Advisory.
6. Taxpayer may refer to the FAQson the same topic.
7. In case taxpayers face any technical issue, a ticket shall be raised under category ‘DRC-03A-Filing’ on Grievance Redressal Portal:https://selfservice.gstsystem.in

Time Limit for Reporting e-Invoice on the IRP Portal – Lowering of Threshold to AATO 10 Crores and Above

With reference to the earlier advisory dated 13th September 2023 (https://einvoice.gst.gov.in/einvoice/newsandupdates/read-602), where a time limit of 30 days for reporting e-Invoices on IRP portals for taxpayers with an AATO of 100 crores and above was implemented, the threshold has now been lowered to cover taxpayers with an AATO of 10 crores and above.

Therefore, from 1st April 2025, taxpayers with an AATO of 10 crores and above would not be allowed to report e-Invoices older than 30 days from the date of reporting on IRP portals.

This restriction would apply to all document types (Invoices/Credit Notes/Debit Notes) for which an IRN is to be generated.

For example, if an invoice is dated 1st April 2025, it cannot be reported after 30th April 2025. The validation built into the invoice registration portals (IRP) would disallow the user from reporting the e-Invoice after the 30-day window. Hence, it is essential for taxpayers to ensure that they report the e-Invoice within the 30-day window provided by the new time limit.

It is further clarified that there would be no such reporting restriction on taxpayers with an AATO of less than 10 crores as of now

To provide sufficient time for taxpayers to comply with this requirement, the above limit would come into effect from 1st April 2025 onwards.