Tax Shake-Up 2025: New Income Tax Rules from April 1 That Will Impact Your Salary

While presenting the Union Budget 2025-26, Finance Minister Nirmala Sitharaman announced the introduction of certain tax benefits to ease compliance and boost economic growth. The budget focussed on increasing disposable income, simplifying tax compliance, and promoting economic growth.

Here are the key changes effective from April 1, 2025:

1. Higher Tax Rebate

The tax rebate under Section 87A has been raised from Rs 25,000 to Rs 60,000 in the new tax regime.

Annual Income of up to Rs 12 lakh (Rs 12.75 lakh for salaried employees with standard deduction) will be tax-free.

No changes made in the old tax regime.

2. Revised Tax Slabs

Basic exemption limit raised from Rs 3 lakh to Rs 4 lakh.

30 percent tax rate would be levied on income above Rs 24 lakh.

3. Increased TDS Thresholds

TDS on bank deposits will now be applicable above Rs 50,000 (from Rs 40,000).

4. ULIP Taxation

Unitec Linked Insurance Plan (ULIP) proceeds above Rs 2.5 lakh will be taxed as capital gains under Section 112A.

6. NPS Vatsalya Tax Benefit

Rs 50,000 deduction for contributions to a child’s New Pension Scheme (NPS) Vatsalya account under the old tax regime.

7. Property Taxation Simplified

Up to two properties can be declared as ‘self-occupied’ with nil annual value, even if vacant.

Apart from the above, other notable changes include easier access to DigiLocker for investment records and a new assured pension scheme option for government employees.