New Income Tax Rules From April 2025: What to Know:

New Income Tax Rules From April 2025: What to Know The 2025 Budget has made important changes to India's Income Tax Act to make the tax system easier than before. The new rules will start from 1st April 2025, and will be applicable to FY 2025-26.

Slab Change under the New Tax Regime

The budget has revised the tax slabs under section 115BAC, known as New Tax Regime or Default Tax Regime. This will allow people to save more and spend more. This tax will apply to income earned from FY 2025-2026.

New Income Tax Slabs for FY 2025-26

Income Range	Tax Rate
Up to Rs 4 lakh	NIL
Rs 4 lakh - Rs 8 lakh	5%
Rs 8 lakh - Rs 12 lakh	10%
Rs 12 lakh - Rs 16 lakh	15%
Rs 16 lakh - Rs 20 lakh	20%
Rs 20 lakh - Rs 24 lakh	25%
Above Rs 24 lakh	30%

Higher Tax Rebate Under Section 87A

The tax benefit under sec 87A for those who are using the New Tax Regime has increased from Rs. 25,000 to Rs. 60,000. Now, taxpayers whose income is up to Rs. 12 lakhs are not required to pay any tax under the new system. For those who are using the Old Tax Regime, the tax benefit stays the same at Rs. 12,500.

TDS Limits Increased From April 2025

From April 2025, the TDS limits for both individuals and businesses will be increased. For example, the interest income for senior citizens increased from Rs. 50,000 to Rs. 1 lakh. Same goes for the rent and commission limits. The new higher TDS limits for different sections are shown in the table below:

---

TDS Threshold Limits: Before and From 1st April 2025

Section	Nature of Payment	Before 1st April 2025	From 1st April 2025
193	Interest on securities	NIL	Rs 10,000
194A	Interest other than Interest on securities	(i) Rs 50,000 for senior citizens (ii) Rs 40,000 for others (when payer is bank, cooperative society, or post office) (iii) Rs 5,000 in other cases	(i) Rs 1,00,000 for senior citizens (ii) Rs 50,000 for others (when payer is bank, cooperative society, or post office) (iii) Rs 10,000 in other cases
194	Dividend, for an individual shareholder	Rs 5,000	Rs 10,000
194K	Income in respect of units of a mutual fund	Rs 5,000	Rs 10,000
194B / 194BB	Winnings from lottery, crossword puzzle, etc. / Winnings from horse race	Aggregate of amounts exceeding Rs 10,000 during the financial year	Rs 10,000 in respect of a single transaction
194D	Insurance commission	Rs 15,000	Rs 20,000
194G	Income by way of commission, prize, etc. on lottery tickets	Rs 15,000	Rs 20,000
194H	Commission or brokerage	Rs 15,000	Rs 20,000
194I	Rent	Rs 2,40,000 (in a financial year)	Rs 50,000 per month
194J	Fee for professional or technical services	Rs 30,000	Rs 50,000
194LA	Income by way of enhanced compensation	Rs 2,50,000	Rs 5,00,000
194T	Remuneration, Interest, and Commission paid to partners	NIL	Rs 20,000

Changes to Tax Collected at Source (TCS) From April 2025

The limit set for TCS for sending money abroad through LRS has been increased from Rs. 7 lakhs to Rs. 10 lakhs. There will be no TCS charges on the educational loan remittances. Earlier, 0.5% TCS was applicable if the amount was over Rs. 7 lakhs. Also, from 1st April 2025, sellers will not require to collect TCS on goods sold above Rs. 50 lakhs as this rule is no longer applicable.

TCS Threshold Limits: Before and From 1st April 2025

Section	Nature of Transaction	Before 1st April 2025	From 1st April 2025
206C(1G)	Remittance under LRS and overseas tour program package	Rs 7 Lakhs	Rs 10 Lakhs
206C(1G)	Remittance under LRS for education (if financed through educational loans)	Rs 7 Lakhs	Nil (No TCS Applicable)
206C(1H)	Sale of Goods	Rs 50 Lakhs	Nil (No TCS Applicable)

Extended Time to File Updated Tax Return

For filing an Updated Tax Return the deadline has been extended from 12 months to 48 months after the AY. This provides taxpayers more time to report any missed income and pay the taxes due. The extra tax required to be paid depends on when the updated return is filed as follows:

---

ITR-U Filing Timeline and Additional Tax Payable

If ITR-U is filed within	Additional Tax Payable
12 months from the end of the relevant Assessment Year	25% of additional tax (tax + interest)
24 months from the end of the relevant Assessment Year	50% of additional tax (tax + interest)
36 months from the end of the relevant Assessment Year	60% of additional tax (tax + interest)
48 months from the end of the relevant Assessment Year	70% of additional tax (tax + interest)

Benefits for IFSC

Benefits for IFSC The deadline for IFSC units has been extended to 31 March 2030 to start operations with tax benefits. Life insurance premiums paid by the non-residents at IFSC offices are completely tax free now, with no maximum limit. Tax Break for Start-ups Those start-ups who set up before 1 April 2030 can get 100% tax deduction on profits earned for 3 years within 10 years of starting, under specific conditions. Removal of Sections 206AB and 206CCA Sections 206AB and 206CCA will be removed from April 2025, to make it easier for the deductors to follow the rules. Before, the deductors had to check if recipients filed the tax returns before deducting the tax, this resulted in delays and higher tax rates. This rule is now removed.

Higher Deduction on Partner’s Remuneration

Partnership firms and LLPs are now able to claim a higher deduction for the salary paid to partners. The rules for calculation have been updated to allow more deduction while filing the taxes. The new limits to calculate the maximum deduction are as follows:

---

Book Profit-Based Computation Table

Component	Rate/Limit
On the first Rs.6,00,000 of book profit or loss	Rs.3,00,000 or 90% of the book profit, whichever is higher
On the remaining balance of book profit	60% of the book profit

Tax on ULIP Returns

If the yearly premium for a ULIP is more than Rs. 2.5 lakhs or over 10% of the sum assured, from April 2025, then the amount received will be taxed as capital gains. 20% from short term and 12.5% for long term. But it will stay tax free if the premium is within the limit. Relaxed Rule for Self-Occupied Properties Earlier, only two homes were considered as self-occupied (with no tax or rental value), only if the owner stayed away due to work reasons. But now, from FY 2025-26, this benefit will be given even without this reason. People can have up to two homes as self-occupied and show zero income. Equalization Levy Removed The 6% tax (equalization levy) on digital ads paid to foreign service providers (if payment was over Rs. 1 lakh) will no longer apply from April 1, 2025. These new tax rules are important for the FY 2025–26. Taxpayers should understand them properly and plan their income and taxes according to them.