The Centre has announced many changes in the income tax rules, to be effective from April 1, 2025. Among these changes, many were announced in the Union Budget presented in February this year. If you are a taxpayer, then the changes in the income tax rules will matter to you.
In Budget 2025, Finance Minister Nirmala Sitharaman announced several important changes to make the existing tax system simple and effective. These new tax rules will come into effect from April 1, impacting your investment and tax planning.
Tax rule changes: 10 major changes to be effective from April 1, 2025
New Income Tax Slabs and Rates for FY 2025-26 (New Tax Regime)
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%
(Note: No changes announced in the Old Tax Regime)
Increased exemption under section 87A
The Modi government in the recent budget hiked the rebate under 87A from Rs 25,000 to Rs 60,000. This rebate ensures that an income up to Rs 12 lakh has no income tax liability.
Changes in TDS rules
From April 1, 2025, TDS limits have been increased in many sections, which will provide relief to small taxpayers. The TDS limit on interest income for senior citizens will increase to Rs 1 lakh.
Changes in TCS rules
TCS rates have also been changed from April 1, 2025, which will affect foreign travel, investments and other transactions. Earlier, TCS had to be paid on sending an amount of more than Rs 7 lakh, but now this limit has been increased to Rs 10 lakh.
Time limit for updated tax return (ITR-U) increased
Now the time limit for filing updated ITR has been increased from 12 months to 48 months (4 years). If the return is missed for any reason, it can now be updated for four years.
Extension of tax exemption for IFSC
The deadline for tax exemption under the International Financial Services Center (IFSC) has been extended to March 31, 2030.
Tax exemption for startups
Now startups registered till April 1, 2030 will get 100% tax exemption for three years under Section 80-IAC, provided they fulfill the prescribed conditions.
Sections 206AB and 206CCA removed
Sections 206AB and 206CCA have been completely removed to make compliance easier. Now tax deductors and collectors will have to face less problems.
New limit on salary paid to partner
The maximum deduction limit on salary paid to partner has been fixed for partnership firms.
ULIPs will be taxed as capital gains
Now if any ULIP policy whose annual premium is more than Rs 2.5 lakh or 10% of the sum assured, it will be taxed as capital gains.
Conclusion:
These tax changes, which will come into effect from April 1, 2025, can affect your savings, investments and financial plans. If you plan your FY 2025-26 keeping these changes in mind, then you can reduce the tax burden and strengthen your financial position.
