Direct Taxation

The Income Tax Act, 2025 modernizes and streamlines direct taxation in India, establishing digital-first statutory definitions while preserving established judicial jurisprudence. Familiar provisions of the 1961 Act (such as Section 115BAA corporate rates, Section 44AB tax audits, Section 115BAC individual slabs, and Section 92 transfer pricing) are reorganized under corresponding sections in the 2025 Act. Ongoing assessments, appeals, and compliance calendars maintain full transitional continuity.

Section 200 provides a concessional base tax rate of 22% for domestic corporate entities, subject to a mandatory 10% surcharge and 4% health & education cess, resulting in an effective tax rate of approximately 25.17%. Companies opting for this regime are completely exempt from Minimum Alternate Tax (MAT) under the predecessor Section 115JB framework.

A statutory tax audit is mandatory for businesses whose total sales, turnover, or gross receipts exceed ₹1 Crore in a financial year (extended to ₹10 Crores where cash receipts and cash payments do not exceed 5% of aggregate transactions). For professionals, the threshold is ₹50 Lakhs (or ₹75 Lakhs under presumptive taxation where cash transactions are <= 5%). The audit report must be filed in Form 3CA/3CB with Form 3CD by a practicing Chartered Accountant by September 30th / October 31st.

Under statutory deduction rules (formerly Section 43B(h)), any sum payable to an enterprise registered as a Micro or Small enterprise under the MSMED Act, 2006 must be paid within 15 days (where no written agreement exists) or within 45 days (if stipulated in a written contract). Failure to pay within the statutory window results in the expenditure being disallowed as a deduction in the relevant financial year, triggering higher taxable profit.