As the new financial year begins on April 1, 2025, several key changes in income tax rules will take effect. Announced by Finance Minister Nirmala Sitharaman in the Union Budget 2025, these updates aim to simplify the tax system and provide relief to salaried employees.
Higher Tax-Free Income Limit Under New Regime
One of the most significant changes is the increase in the tax-free income limit under the new tax regime. From April 1, individuals earning up to ₹12 lakh annually will not have to pay any income tax, up from the previous limit of ₹7 lakh.
Additionally, salaried employees will benefit from a ₹75,000 standard deduction, effectively making income up to ₹12.75 lakh tax-free. However, capital gains will continue to be taxed separately.
Revised Tax Slabs Under New Regime
The government has introduced updated tax slabs, while the old tax regime remains unchanged. Under the new tax regime:
- Income up to ₹4 lakh is tax-free.
- Earnings between ₹4 lakh and ₹8 lakh will be taxed at 5%.
- Tax rates gradually increase, reaching 30% for income above ₹24 lakh.
Additionally, the rebate limit under Section 87A has been increased from ₹25,000 to ₹60,000, benefiting individuals earning up to ₹12 lakh under the new tax regime. Combined with the standard deduction, this effectively raises the tax-free threshold to ₹12.75 lakh.
TDS and Perquisites Taxation Changes
- The TDS threshold on bank deposit interest has been raised from ₹40,000 to ₹50,000, meaning interest earnings up to ₹50,000 will no longer be subject to TDS deductions.
- Employer-provided benefits and allowances will no longer be classified as taxable perquisites.
- If an employer covers medical treatment expenses abroad for an employee or their family, this will not be considered a taxable benefit.
👉 Click here to read the latest Gujarat news on TheLiveAhmedabad.com