As the Union Budget 2025-26 approaches, the Ministry of Finance presented a report on Thursday detailing the achievements and progress made on last year’s budget announcements.
Key announcements from the 2024-25 budget, including efforts to simplify taxation, reduce litigation, and improve tax certainty, have shown significant progress.
In a post on social media platform ‘X’, the finance ministry stated: "Let’s reflect on the significant #UnionBudget announcements and other #MajorInitiatives, and the progress made under them over time."
Reduction in Litigation and Appeals
The Central Board of Direct Taxes (CBDT) has introduced the Vivad Se Vishwas Scheme 2024, aimed at resolving pending income tax disputes. To expedite the disposal of first appeals, additional officers have been deployed. The monetary limits for filing appeals have been raised to Rs 60 lakh for Tax Tribunals, Rs 2 crore for High Courts, and Rs 5 crore for the Supreme Court, according to CBDT’s guidelines.
The scope of safe harbour rules has been expanded, and transfer pricing assessments are being streamlined to reduce international tax disputes.
Simplification of Capital Gains Taxation
The ministry highlighted major changes in capital gains taxation, including the introduction of only two holding periods: one year for listed assets and two years for unlisted and non-financial assets. Long-term gains now attract a reduced tax rate of 12.5%, while short-term gains are taxed at 20%.
To benefit middle- and lower-income groups, the exemption limit for capital gains on certain financial assets has been increased to Rs 1.25 lakh per year from Rs 1 lakh. The rationalisation of tax rates and removal of indexation have simplified calculations.
Reassessment and Reopening of Cases
The provisions for reassessment have been thoroughly revised. Assessments can now only be reopened beyond three years if the escaped income exceeds Rs 50 lakh, with a maximum period of five years. For search cases, the reassessment window has been reduced to six years. This move is expected to enhance tax certainty and reduce disputes.
Comprehensive Review of the Income Tax Act, 1961
The government has initiated a complete overhaul of the Income Tax Act, 1961, to make it more concise and easier to understand. Over 6,500 suggestions have been received from stakeholders, and 22 specialised committees are reviewing various aspects of the Act. The goal is to complete this exercise within six months.
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