Budget 2025: The Deal Maker's Lens

Key Takeaways

• Sovereign Wealth Funds and Pension Funds – tax exemption extended for 5 years
• LTCG income of InvITs/ REITs harmonized – taxable at 12.5% and not maximum marginal rate
• Welcome clarification on tax rate applicable on transfer of securities by a Cat I or Cat II AIF
• Provision on carry forward of losses amended – is the Finance Bill, 2025 throwing the baby out with the bathwater?

Finance Minister Nirmala Sitharaman announced several important changes to the Income Tax Act, 1961 (Act) on February 1. Most important was the announcement on revamping and simplifying the six-decade old Act by introducing a Income Tax Bill soon. It's perhaps why the amendments on February 1 are mostly limited to clarifying certain provisions, except one that comes as a challenge for corporate structuring.