Income Tax Changes from April 1: What You Need to Know

Important changes in the Income Tax regulations, declared by Finance Minister Nirmala Sitharaman in the Union Budget 2025, will be effective from the new financial year that begins on April 1. These changes are expected to be beneficial for taxpayers across India.

Key Updates in the New Tax Regime

From April 1, people earning up to Rs. 12 lakh per year will not have to pay any income tax, which is higher than the previous limit of Rs. 7 lakh. Salaried employees will also get a standard deduction of Rs. 75,000, taking their tax-exempt income threshold to Rs. 12.75 lakh. This advantage is not available for capital gains, which will continue to be taxed separately.

Updated Tax Slabs

Under the new tax rules, income up to Rs. 4 lakh will be completely tax-free. For income between Rs. 4 lakh and Rs. 8 lakh, a 5% tax will apply. Earnings from Rs. 8 lakh to Rs. 12 lakh will be taxed at 10%, while income between Rs. 12 lakh and Rs. 15 lakh will attract a 15% tax. If your income falls between Rs. 15 lakh and Rs. 24 lakh, you’ll pay 20% tax. For any income above Rs. 24 lakh, the tax rate will be 30%.

Higher Tax Exemption Limits

The limit of tax exemption under Section 87A has been raised from Rs. 25,000 to Rs. 60,000 and will benefit those earning up to Rs. 12 lakh under the new tax system. Including the standard deduction, the income limit for tax-free income rises to Rs. 12.75 lakh. The changes will not affect the old tax regime.

Updates on TDS and Employee Benefits

An additional important update is the raising of the tax deduction at the source threshold on bank interest. Previously, TDS was deducted on interest exceeding Rs. 40,000, but now the threshold has been raised to Rs. 50,000. This implies that if your interest income is up to Rs. 50,000, no TDS will be deducted.

Starting April 1, benefits and allowances given by employers will no longer be taxed. Also, if an employer pays for an employee or their family’s medical treatment abroad, it will not be considered a taxable benefit.

More Time to File Tax Returns

Taxpayers now have four years instead of two to file updated income tax returns (ITR-U). This means you get extra time to correct any mistakes or missing details in your tax filings.

Latest Tax Relief Plan for Parents

Parents now have a new way to save on taxes! If you make a contribution to your child’s NPS Vatsalya account, you can avail an additional tax deduction of Rs. 50,000 in the new tax regime.

Make sure to keep yourself informed and make smart financial plans because these changes will become effective from April 1.