Budget 2025: 5 Tax-Saving Proposals in Budget that Simplify Compliance and Reduce Burden:

Budget 2025: 5 Tax-Saving Proposals in Budget that Simplify Compliance and Reduce Burden Finance Minister brought good news for individual taxpayers, especially those in the lower and middle class, making Budget Day on February 1, 2025, a memorable one. The most important announcement was about the introduction of a New Income Tax Bill next week. This bill focuses on simplifying tax laws by removing nearly half of the existing 298 sections. The main objective is to make tax rules easier to understand for both taxpayers and the tax administration, ensuring clarity and reducing legal disputes. This new Budget proposal focuses on giving major relief to the taxpayers. The approach is based on trusting taxpayers first and reviewing their cases only when necessary.

1. Enhancing the Income Limit to Rs.12 lakh for full Tax Exemption

The government has increased the income limit for a full tax exempt under the new tax regime from Rs.7 lakh to Rs.12 lakh. This means that if your total income (excluding special taxable incomes like capital gains) is up to Rs.12 lakh, you will not have to pay any income tax. However, you must file your income tax return to claim this exemption.

2. Increasing Basic Exemption Limit to Rs.4 Lakh

The basic exemption limit under the new tax regime increased from Rs.3 lakh to Rs.4 lakh. This means if your taxable income is up to Rs.4 lakh per year, you do not have to pay any income tax. The good news is, If you choose the new tax regime, you will not have to file an income tax return if your taxable income is below the set limit. However, you must file a return if you meet certain conditions, like depositing over Rs.1 crore in a current account, spending more than Rs.2 lakh on foreign travel, or paying over Rs.1 lakh for electricity.

3. Updated Income Tax Rates in New Tax Regime

The government increased the number of tax slabs from 6 to 7 under the new tax regime. A new 25% tax bracket introduced in Budget, and the income limits for each slab is revised. The updated tax slabs are as follows:

Rs.0 - Rs.4,00,000	0%
Rs.4,00,001 - Rs.8,00,000	5%
Rs.8,00,001 - Rs.12,00,000	10%
Rs.12,00,001 - Rs.16,00,000	15%
Rs.16,00,001 - Rs.20,00,000	20%
Rs.20,00,001 - Rs.24,00,000	25%
Rs.24,00,001 and above	30%

 

4. New Tax Filing Deadline Announced

If you missed filling the revised return you still have the option to file an updated return. Currently, you can file an updated return of 3 years from the end of the relevant financial year (FY). However, a proposal suggests extending this time limit to 5 years, giving you 2 extra years to file. However, keep in mind that for each additional year, you may have to pay extra taxes at a rate of 60% or 70%, depending on when you file the updated return.

5. TCS Limit on Foreign Remittance extended to Rs..10 lakh

The government increased the limit for charging a 20% Tax Collected at Source (TCS) on money sent abroad under the Liberalised Remittance Scheme (LRS). Currently, TCS applies if the total amount sent in a year exceeds Rs. 7 lakh. This limit is now proposed to be raised to Rs.10 lakh, allowing you to send more money without TCS. Additionally, the Budget decided removing TCS on money sent abroad for education if the funds come from a loan taken from a recognized financial institution and that institution is covered under Section 80E.