What Changes for Taxpayers Starting Today—Everything You Need to Know

The Union Budget 2025 has introduced several significant amendments to the Income Tax Act 1961. Announced by Finance Minister Nirmala Sitharaman during her budget speech, these changes aim to simplify India's tax system. Effective today, April 1, these modifications mark the beginning of FY 2025-26. Here’s an overview of the major changes:

Income Tax Slabs for FY 2026-27

The Budget 2025 has proposed new tax slab rates effective from April 1, 2025. The tax exemption limit has been raised from Rs 7 lakh to Rs 12 lakh, providing significant relief to taxpayers and encouraging spending to boost the economy.

The government has also revised the tax slabs under the New Tax Regime, while the old regime remains unchanged. The updated slab rates under the new tax regime for FY 2025-26 are as follows:

  • 0 to Rs 4 lakh – NIL
  • Rs 4 lakh to Rs 8 lakh – 5%
  • Rs 8,00,001 to Rs 12,00,000 – 10%
  • Rs 12,00,001 to Rs 16,00,000 – 15%
  • Rs 16,00,001 to Rs 20,00,000 – 20%
  • Rs 20,00,001 to Rs 24,00,000 – 25%
  • Above Rs 24,00,000 – 30%

Tax Rebate Under Section 87A

In the new tax regime, the tax rebate under Section 87A has been increased from Rs 25,000 to Rs 60,000, applicable to taxable income up to Rs 12 lakh. This means that income up to Rs 12 lakh will be tax-free. For salaried individuals, this exemption limit is extended to Rs 12.75 lakh with a Rs 75,000 standard deduction. The old tax regime's rebate remains unchanged.

Changes in Tax Deducted at Source (TDS) Rules

Starting April 1, the TDS limits have been increased in several sections. For senior citizens, the threshold for TDS on interest income has been raised from Rs 50,000 to Rs 1 lakh.

Changes in Tax Collected at Source (TCS) Rules

TCS rates have been revised, affecting foreign travel, investments, and other transactions. The threshold for TCS applicability has been increased from Rs 7 lakh to Rs 10 lakh.

Updated Time Limit for Filing Tax Returns (ITR-U)

The time limit for filing an updated ITR has been extended from 12 months to 48 months (4 years). This allows taxpayers more time to revise their returns if necessary.

Taxation on ULIPs

Under the new regime, proceeds from ULIPs (Unit Linked Insurance Plans) with premiums exceeding 10% of the assured amount or Rs 2.5 lakh per year will be treated as capital gains and taxed accordingly.


Source - NDTVProfit