Income Tax Compliance Tightens in Budget 2025

Enhanced Digital Surveillance for Tax Compliance

The Income Tax Bill, 2025, proposes granting tax authorities broader powers to access taxpayers' digital footprints, including emails, social media accounts, and online financial platforms, during investigations. This move aims to curb tax evasion by aligning declared income with visible lifestyle indicators. [Source]

Revised TDS Thresholds and Rates

The budget introduces changes to Tax Deducted at Source (TDS) thresholds across various sections to streamline tax collection:

• Section 194A: TDS on interest income threshold increased from ₹40,000 to ₹50,000 for individuals below 60 years, and from ₹50,000 to ₹1,00,000 for senior citizens.
• Section 194D: TDS on insurance commission threshold raised from ₹15,000 to ₹20,000.
• Section 194H: TDS on commission or brokerage threshold increased from ₹15,000 to ₹20,000.

Extended Timeframe for Filing Updated Returns

Taxpayers now have up to four years to file updated returns under Section 139(8A), doubling the previous limit. This extension provides additional time for taxpayers to rectify omissions or errors in their filings.

Simplification of Deductions and Merging of Sections

The budget simplifies deductions under Chapter 6A by consolidating provisions and merging Sections 80TA and 80TTB, which pertain to deductions on interest income. This streamlining aims to reduce complexity and improve compliance.

Revised Reporting for Securitisation Trusts

Securitisation trusts are now required to submit Form 64E to tax authorities by June 15, earlier than the previous deadline of November 30. Investors must receive Form 64F by June 30, ensuring timely and transparent reporting.

These measures reflect the government's commitment to enhancing tax compliance, leveraging digital tools for monitoring, and simplifying tax processes for better transparency and efficiency.