Budget 2025 introduced several changes on the Income Tax front that will take effect from 1st April 2025. These updates are expected to leave more money in your hands. Here’s how:
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Increased rebate u/s 87A
From FY 2025-26, your income will be tax-free up to ₹12 lakh due to the raised tax rebate under the new regime.
- The rebate threshold has been increased from ₹7 lakh to ₹12 lakh, meaning anyone earning up to ₹12 lakh (only for incomes taxable at slab rate) won’t have to pay any tax.
- If you’re a salaried individual, you also get a standard deduction of ₹75,000—so your salary will be tax-free up to ₹12.75 lakh.
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Revised tax slabs
The tax slabs under the new regime have also been revised. These are the new rates.
- The basic exemption has been raised from ₹3 lakh to ₹4 lakh.
- You can now save up to ₹1.14 lakh in taxes compared to the old slabs.
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Increased TDS thresholds
Some TDS (Tax Deducted at Source) limits have been raised from FY 2025-26:
- For senior citizens, TDS on bank interest will now apply only if it exceeds ₹1 lakh (earlier ₹50,000). For those below 60 years of age, TDS will be deducted if interest exceeds ₹50,000 (earlier ₹40,000).
- The TDS threshold for dividend income has been increased from ₹5,000 to ₹10,000.
- For those earning professional income, the limit for TDS compliance was ₹30,000 which has now been increased to ₹50,000.
- Raised TCS limit for foreign remittances
- The TCS threshold for foreign remittances under LRS has been raised from ₹7 lakh to ₹10 lakh. This allows you to send up to ₹10 lakh abroad without incurring TCS.
- For remittances exceeding ₹10 lakh, a 20% TCS will be applicable, which will be collected by the bank at the time of transfer.
Overall, these updates make the new tax regime more attractive and are likely to reduce the tax outgo for many taxpayers starting FY 2025-26.
If you’re still under the old regime and want to compare the regimes for this FY, you can refer to this topic.