Taxation Laws (Amendment) Act, 2025: Key Highlights

Taxation Laws (Amendment) Act, 2025: Key Highlights

The Ministry of Law and Justice released an official Gazette notification, dated 21st August 2025, announcing the Taxation Laws (Amendment) Act, 2025. This Act amends the existing Income-tax Act, 1961 and the Finance Act, 2025. It received the assent of the President of India on August 21, 2025. Starting from 1st April 2025, this amendment brings important updates to the Income-tax Act, 1961, in section 10. Some of the key changes are as follows:

1. Unified Pension Scheme: Now, payments from the National Pension System Trust to people under the Unified Pension Scheme (UPS) will be exempt from tax up to 60% of their individual corpus, as specified in the notification number FX-1/3/2024-PR, dated the 24th January 2025, of the Department of Financial Services. Lump-sum amounts received under UPS are also exempt under similar conditions.

2. Public Investment Fund: The clause (23FE), in Explanation 1, after clause (c), now includes:

• The Public Investment Fund of the Government of the Kingdom of Saudi Arabia, and
• It is a fully owned subsidiary if it is a resident of Saudi Arabia and invests using government funds.

3. “Pool Corpus” and “individual corpus” will have the same meaning as per notification number FX-1/3/2024-PR, dated the 24th January, 2025, of the Department of Financial Services.

5. “Salary” also includes dearness allowance, but does not include other allowances and perquisites.

6. In the Finance Act, 2025, Section 49 has also been amended.

Refer to the official notification for more information