{"id":27773,"date":"2024-11-13T14:18:08","date_gmt":"2024-11-13T08:48:08","guid":{"rendered":"https:\/\/carajput.com\/blog\/?p=27773"},"modified":"2024-11-13T17:40:25","modified_gmt":"2024-11-13T12:10:25","slug":"direct-tax-code-2025-brings-making-compliance-easier","status":"publish","type":"post","link":"https:\/\/carajput.com\/blog\/direct-tax-code-2025-brings-making-compliance-easier\/","title":{"rendered":"Direct Tax Code 2025 brings making compliance easier"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_58 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Page Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69d4df97c9a93\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #000000;color:#000000\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #000000;color:#000000\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69d4df97c9a93\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/carajput.com\/blog\/direct-tax-code-2025-brings-making-compliance-easier\/#Direct_Tax_Code_2025_brings_making_compliance_Easier\" title=\"Direct Tax Code 2025 brings making compliance Easier\">Direct Tax Code 2025 brings making compliance Easier<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/carajput.com\/blog\/direct-tax-code-2025-brings-making-compliance-easier\/#Benefits_of_the_Direct_Tax_Code_2025\" title=\"Benefits of the\u00a0Direct Tax Code 2025\">Benefits of the\u00a0Direct Tax Code 2025<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/carajput.com\/blog\/direct-tax-code-2025-brings-making-compliance-easier\/#key_updates_from_Direct_Tax_Code_2025\" title=\"key updates from Direct Tax Code 2025 :\">key updates from Direct Tax Code 2025 :<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/carajput.com\/blog\/direct-tax-code-2025-brings-making-compliance-easier\/#Comparison_of_the_DTC_and_Income_Tax_Act_1961\" title=\"Comparison of the DTC and Income Tax Act, 1961\">Comparison of the DTC and Income Tax Act, 1961<\/a><\/li><\/ul><\/nav><\/div>\n<h2><img loading=\"lazy\" decoding=\"async\" class=\"alignnone  wp-image-27778\" src=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2024\/11\/Direct-tax-code-2025.png\" alt=\"Direct tax code 2025\" width=\"703\" height=\"414\" srcset=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2024\/11\/Direct-tax-code-2025.png 530w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2024\/11\/Direct-tax-code-2025-300x177.png 300w\" sizes=\"(max-width: 703px) 100vw, 703px\" \/><\/h2>\n<h2><span class=\"ez-toc-section\" id=\"Direct_Tax_Code_2025_brings_making_compliance_Easier\"><\/span><span style=\"color: #000080;\"><strong>Direct Tax Code 2025 brings making compliance Easier<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The Direct Tax Code 2025 brings several significant changes aimed at simplifying the tax system and making compliance easier. These changes aim to modernize India\u2019s direct tax system, simplify filing, improve compliance, and attract investment, especially by aligning the tax code more closely with global standards.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Benefits_of_the_Direct_Tax_Code_2025\"><\/span><span style=\"color: #000080;\">Benefits of the\u00a0<strong>Direct Tax Code 2025<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ul>\n<li>Improved GDP Growth: Simplified tax codes may improve business compliance and efficiency, contributing to GDP growth.<\/li>\n<li>Broader Tax Base: Expanding the taxpayer base by reducing deductions and minimizing exemptions encourages broader participation.<\/li>\n<li>Clearer Tax Laws: Enhanced clarity and stability in tax laws reduce disputes and make compliance simpler for all taxpayers.<\/li>\n<li>Fairness and International Standards: Aligns Indian tax standards with global norms, promoting equitable treatment across taxpayer groups.<\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"key_updates_from_Direct_Tax_Code_2025\"><\/span><span style=\"color: #000080;\">key updates from Direct Tax Code 2025 :<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ol>\n<li><span style=\"color: #000080;\"><strong>Unified Financial Year Concept<\/strong>:<\/span> The terms \u201cAssessment Year\u201d and \u201cPrevious Year\u201d are eliminated. Only the term \u201cFinancial Year\u201d will be used for tax filing, reducing confusion and aligning with global tax norms.<\/li>\n<li><span style=\"color: #000080;\"><strong>Capital Gains Tax Changes<\/strong>:<\/span>\n<ul>\n<li><strong>Short-Term Gains<\/strong>: Taxed at 20% (up from 15%), standardizing with regular income tax rates.<\/li>\n<li><strong>Long-Term Gains<\/strong>: Reduced to 12.5% (from 20%), encouraging long-term investments.<\/li>\n<\/ul>\n<\/li>\n<li><span style=\"color: #000080;\"><strong>Simplified Residential Status<\/strong>:<\/span> The \u201cResident but Not Ordinarily Resident (RNOR)\u201d category is removed, leaving only two classifications: residents and non-residents.<\/li>\n<li><span style=\"color: #000080;\"><strong>Renamed Income Categories<\/strong>:<\/span>\n<ul>\n<li>\u201cIncome from Salary\u201d is renamed Employment Income.<\/li>\n<li>\u201cIncome from Other Sources\u201d is now Income from Residuary Sources.<\/li>\n<\/ul>\n<\/li>\n<li><span style=\"color: #000080;\"><strong>Expanded Tax Audit Roles<\/strong><\/span>: Company Secretaries (CS) and Cost and Management Accountants (CMA) are now eligible to conduct tax audits, previously restricted to Chartered Accountants (CAs). This change increases access to qualified auditors.<\/li>\n<li><span style=\"color: #000080;\"><strong>Unified Company Tax Rates<\/strong><\/span>: Domestic and foreign companies will now pay the same tax rate, which could enhance ease of compliance and make India more attractive for foreign investments.<\/li>\n<li><span style=\"color: #000080;\"><strong>Broader TDS and TCS Coverage<\/strong>:<\/span>\n<ul>\n<li>TDS and TCS now apply to nearly all types of income, ensuring more regular tax collections.<\/li>\n<li><strong>Reduced TDS Rates<\/strong>: General TDS rate drops from 5% to 2%, providing relief for taxpayers.<\/li>\n<li><strong>E-commerce Relief<\/strong>: TDS for e-commerce operators decreases from 1% to 0.1%, easing compliance for the digital economy.<\/li>\n<\/ul>\n<\/li>\n<li><span style=\"color: #000080;\"><strong>Fewer Deductions and Exemptions<\/strong>:<\/span> Most deductions and exemptions are removed, streamlining the filing process and reducing complexity.<\/li>\n<li><span style=\"color: #000080;\"><strong>Increased Standard Deduction<\/strong>:<\/span> The standard deduction for salaried employees under the new tax regime increases by 50% to \u20b975,000, offering added relief.<\/li>\n<li><span style=\"color: #000080;\"><strong>Revised Income Tax Slabs for Individuals<\/strong>:<\/span>\n<ul>\n<li>Income between \u20b92 lakh and \u20b95 lakh: Taxed at 10%<\/li>\n<li>Income between \u20b95 lakh and \u20b910 lakh: Taxed at 20%<\/li>\n<li>Income above \u20b910 lakh: Taxed at 30%<\/li>\n<\/ul>\n<\/li>\n<li><span style=\"color: #000080;\"><strong>Corporate Tax Rates<\/strong>:<\/span>\n<ul>\n<li>Domestic companies: Taxed at 30%<\/li>\n<li>Foreign companies: An additional branch profits tax of 15%<\/li>\n<li>Non-profit organizations: Taxed at 15%<\/li>\n<\/ul>\n<\/li>\n<li><span style=\"color: #000080;\"><strong>Simplified Capital Gains<\/strong>:<\/span>\n<ul>\n<li>The distinction between short-term and long-term capital gains is removed for all assets except listed securities. Capital gains will be taxed as part of regular income, with short-term financial gains taxed at 20% and long-term gains reduced to 12.5%.<\/li>\n<\/ul>\n<\/li>\n<li><span style=\"color: #000080;\"><strong>Increased Wealth Tax Exemption<\/strong>:<\/span>\n<ul>\n<li>The exemption limit for wealth tax is raised from \u20b915 lakh to \u20b91 crore.<\/li>\n<\/ul>\n<\/li>\n<li><span style=\"color: #000080;\"><strong>Unified Tax Framework<\/strong>:<\/span>\n<ul>\n<li>Combines various direct taxes, such as income tax, dividend distribution tax, fringe benefits tax, and wealth tax, into a single framework for efficiency.<\/li>\n<\/ul>\n<\/li>\n<li><span style=\"color: #000080;\"><strong>Removal of Most Deductions<\/strong>:<\/span>\n<ul>\n<li>Corporate tax deductions are largely removed, while most individual deductions are retained. The standard deduction for salaried employees in the new tax regime has increased by 50%, reaching \u20b975,000.<\/li>\n<\/ul>\n<\/li>\n<li><span style=\"color: #000080;\"><strong>General Anti-Avoidance Rules (GAAR)<\/strong>:<\/span>\n<ul>\n<li>Introduces GAAR, empowering tax authorities to investigate arrangements primarily aimed at tax avoidance.<\/li>\n<\/ul>\n<\/li>\n<li><span style=\"color: #000080;\"><strong>Redefinition of Tax Residency<\/strong>:<\/span>\n<ul>\n<li>Simplifies residential status by categorizing taxpayers as either residents or non-residents, eliminating the RNOR (Resident but Not Ordinarily Resident) classification.<\/li>\n<\/ul>\n<\/li>\n<li><span style=\"color: #000080;\"><strong>Simplified Financial Terminology<\/strong>:<\/span>\n<ul>\n<li>Replaces \u201cAssessment Year\u201d and \u201cPrevious Year\u201d with \u201cFinancial Year\u201d to reduce confusion.<\/li>\n<\/ul>\n<\/li>\n<li><span style=\"color: #000080;\"><strong>Standardized Corporate Tax Rates<\/strong>:<\/span>\n<ul>\n<li>Domestic and foreign companies will now be taxed at the same rate, which simplifies compliance and supports foreign investment.<\/li>\n<\/ul>\n<\/li>\n<li><span style=\"color: #000080;\"><strong>Updated Reassessment and Mediation Mechanism<\/strong>:<\/span>\n<ul>\n<li>Implements revised reassessment rules and introduces a mediation system between taxpayers and the Central Board of Direct Taxes (CBDT) to reduce legal disputes.<\/li>\n<\/ul>\n<\/li>\n<li><span style=\"color: #000080;\"><strong>Enhanced Audit Roles<\/strong>:<\/span>\n<ul>\n<li>Expands audit capabilities by allowing Company Secretaries (CS) and Cost and Management Accountants (CMA) to perform tax audits, alongside Chartered Accountants (CA).<\/li>\n<\/ul>\n<\/li>\n<\/ol>\n<h2><span class=\"ez-toc-section\" id=\"Comparison_of_the_DTC_and_Income_Tax_Act_1961\"><\/span><span style=\"color: #000080;\">Comparison of the DTC and Income Tax Act, 1961<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<table>\n<thead>\n<tr>\n<th><strong>Parameter<\/strong><\/th>\n<th><strong>Income Tax Act, 1961<\/strong><\/th>\n<th><strong>Direct Tax Code (DTC), 2025<\/strong><\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Residential Status<\/td>\n<td>ROR, RNOR, NR<\/td>\n<td>Resident and Non-Resident<\/td>\n<\/tr>\n<tr>\n<td>Audit Authority<\/td>\n<td>Chartered Accountant<\/td>\n<td>Chartered Accountant, CS, CMA<\/td>\n<\/tr>\n<tr>\n<td>Year Terminology<\/td>\n<td>Previous Year and Assessment Year<\/td>\n<td>Financial Year<\/td>\n<\/tr>\n<tr>\n<td>Dividend Tax<\/td>\n<td>DDT at 15%<\/td>\n<td>Taxed at 15% (no DDT)<\/td>\n<\/tr>\n<tr>\n<td>Distributed Income<\/td>\n<td>LIC and mutual fund income exempted<\/td>\n<td>Taxable at 5%<\/td>\n<\/tr>\n<tr>\n<td>High-Income Tax Rate<\/td>\n<td>30% + 15% surcharge for income &gt; \u20b910 crore<\/td>\n<td>35% for income &gt; \u20b910 crore<\/td>\n<\/tr>\n<tr>\n<td>Capital Gains Tax<\/td>\n<td>Special rates applied<\/td>\n<td>Normal income taxation<\/td>\n<\/tr>\n<tr>\n<td>Income Categories<\/td>\n<td>Income from Salary, Other Sources<\/td>\n<td>Employment Income, Residuary Income<\/td>\n<\/tr>\n<tr>\n<td>Structural Complexity<\/td>\n<td>298 sections with sub-sections<\/td>\n<td>319 simplified sections, no sub-clauses<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Direct Tax Code 2025 brings making compliance Easier The Direct Tax Code 2025 brings several significant changes aimed at simplifying the tax system and making compliance easier. These changes aim to modernize India\u2019s direct tax system, simplify filing, improve compliance, and attract investment, especially by aligning the tax code more closely with global standards. Benefits &hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[150],"tags":[],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/27773"}],"collection":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/comments?post=27773"}],"version-history":[{"count":5,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/27773\/revisions"}],"predecessor-version":[{"id":27775,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/27773\/revisions\/27775"}],"wp:attachment":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/media?parent=27773"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/categories?post=27773"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/tags?post=27773"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}