New FY 2025: New income tax slabs, zero tax on income upto Rs 12 lakh, 9 other income tax laws effective from April 1, 2025 With the new year, a lot of changes are effective. This includes new income tax slabs and other new tax laws, such as tweaks in ULIPs taxation, no higher TDS for non-ITR filers etc. Know the eleven tax changes are effective from today
April 1, 2025, marks the beginning of the new fiscal year. With the start of the new financial year, many new income tax laws come into effect. It is important to keep a note of these new income tax laws. This is because the new income tax laws impact how tax is deducted from various sources of income, such as salary, interest income, etc. Further, how much tax you will pay for incomes earned during FY 2025-26.#sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;}
Income Tax Guide
Income Tax Slabs FY 2025-26
Income Tax Calculator 2025
New Income Tax Bill 2025
Here are the eleven income tax laws that become effective today.
1. New income tax slabs under new tax regime
The new tax regime will have new income tax slabs. The highest tax rate of 30% will apply to income above Rs 24 lakh.
New income tax slabs for FY 2025-26
Income tax slabs (In Rs)
Income tax rate (%)
0-4,00,000
0
4,00,001-8,00,000
5
8,00,001-12,00,000
10
12,00,001-16,00,000
15
16,00,001-20,00,000
20
20,00,001-24,00,000
25
24,00,001 and above
30
Also Read: How to calculate income tax for FY 2025-26?
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2. Zero tax on income upto Rs 12 lakhApart from changing income tax slabs, the government also announced zero tax on income up to Rs 12 lakh. However, this will be applicable if an individual opts for the new tax regime in FY 2025-26. This does not mean that you are not required to file an income tax return (ITR). Zero tax is payable due to a tax rebate available under Section 87A of the Income Tax Act, 1961.
ITR must be filed by an individual to claim the tax rebate under Section 87A.
Also Read: No tax payable on incomes up to Rs 12.75 lakh
3. Tweak in certain ULIPs taxation
Budget 2025 has tweaked the taxation for certain ULIPs. According to the amendment, ULIPs' proceeds that are not exempt under Section 10 (10D) will now be considered capital assets. Further, it would be included under the definition of equity-oriented funds.
Hence, any gains from ULIP proceeds, which are not exempt under Section 10 (10D), will be taxed as capital gains. The short-term gains will be taxed at 20%, and the long-term gains will be taxed at 12.5% without indexation benefit.
Also Read: These Ulips to be taxed as equity funds
ULIPs' proceeds are exempt from tax under Section 10 (10D) if the annual premium does not exceed Rs 2.5 lakh.
According to tax experts, previously, there was no clear taxation rule for the redemption of ULIPs with a premium above Rs 2.5 lakh. This was because, unlike traditional policies, Ulips invest a significant portion of premiums in the stock market. Hence, taxing them the same as traditional policies was inappropriate.
The new tax rule will be applicable from FY 2025-26.
4. Rationalisation of TDS rates and thresholds
Budget 2025 amended certain TDS provisions. This includes the rationalisation of TDS rates and increasing thresholds for the applicability of those provisions.
Following the amendments made related to TDS:
a) TDS rate reduction for Section 194LBC: This TDS rate is related to any income payable by securitisation trust to an investor, being a resident, in respect of an investment in securitisation trust. TDS is applicable on the income paid to the investor. Till March 31, 2025, the TDS rate of 25% is applicable for individuals or Hindu Undivided families and 30% for any other person. However, from April 1, 2025, a TDS rate of 10% will be applicable.
b) Threshold rationalisation for Sections 193, 194A, 194, 194K, 194B, 194BB, 194D, 194G, 194H, 194-I, 194J, 194LA: From April 1, 2025, the thresholds for all the sections 193, 194A, 194, 194K, 194B, 194BB, 194D, 194G, 194H, 194-I, 194J and 194LA will be hiked. This would help taxpayers to have more money in their hands.
Section Current ThresholdNew Threshold193-Interest on SecuritiesNilRs 10,000194A – Interest other than Interest on SecuritiesRs 50,000 for senior citizens, Rs 40,000 for other taxpayers for interest from bank and Rs 5,000 in other casesRs 1 lakh for senior citizens, Rs 50,000 for other taxpayers for interest from bank and Rs 10,000 in other cases194 – Dividend for individual shareholderRs 5,000Rs 10,000194K – Income in respect of units of mutual funds or specified company or undertakingRs 5,000Rs 10,000194B-Winnings from lottery, crossword puzzle, etc.Aggregate of amounts exceeding Rs 10,000 during the financial yearRs 10,000 in respect of a single transaction194BB-Winnings from horse raceAggregate of amounts exceeding Rs 10,000 during the financial yearRs 10,000 in respect of a single transaction194D- Insurance commissionRs 15,000Rs 20,000194G-Income by way of commission, prize, etc. on lottery ticketsRs 15,000Rs 20,000194H-Commission or brokerageRs 15,000Rs 20,000194-I RentRs 2,40,000 during the financial yearRs 50,000 per month or part of a month194J-Fee for professional or technical servicesRs 30,000Rs 50,000194LA-Income by way of enhanced compensationRs 2,50,000Rs 5,00,000
5. Removal of higher TDS/TCS for non-filers of ITR
The government has removed the income tax law that asked for the higher TDS and TCS on non-filers of ITRs. The new law will be applicable from April 1, 2025. This would mean that if you have not filed ITR in the specified years, then higher TDS and TCS would not applicable on your income from April 1, 2025.
According to the memorandum of Budget 2025, "Section 206AB of the Act, requires deduction of tax at higher rate when the deductee specified therein is a non-filer of income-tax return. Section 206CCA of the Act, requires for collection of tax at higher rate when the collectee specified therein is a non-filer of income-tax return. This is subject to other conditions specified in the two sections. Representations were received from various stakeholders that it is difficult for the deductor/collector, at the time of deduction/collection, to verify whether returns have been filed by the deductee/collectee, resulting in application of higher rates of deduction/collection, blocking of capital and increased compliance burden. Accordingly, to address this issue and reduce compliance burden for the deductor/collector, it is proposed to omit section 206AB of the Act and section 206CCA of the Act."
6. Deduction under Section 80CCD for NPS Vatsalya contributions
Budget 2025 has brought NPS Vatsalya contributions under Section 80CCD. This would mean that an individual can claim a Section 80CCD deduction on the NPS Vatsalya contributions. However, this deduction is available only if an individual opts for the old tax regime.
7. Increase in limits of medical treatments for calculating perquisites
Budget 2025 increased the limits for a tax-free perquisite for salaried employees. According to the new law, applicable from April 1, 2025, an employee is eligible for tax-free perquisite for any expenditure incurred by the employer for travel outside India on the medical treatment of an employee or any member of the employee's family.
8. Calculation of annual value of self-occupied property simplified
The government has simplified the calculation of the annual value of house for income tax purposes. This would help the taxpayers as they can easily file their income tax returns without any calculation. This is because they can claim the value of any two houses as zero.
The government has amended the definition of annual value of self-occupied, making it easier for property owners to determine the annual value of their homes without altering the two-property limitation.
9. Exemption from prosecution for delayed payment of TCS in certain cases
From April 1, 2025, the government has exempted the prosecution of delayed payments of TCS in certain cases. According to the new law, prosecution shall not be instituted against a person, if the payment of the TCS has been made to the credit of the Central Government at any time on or before the time prescribed for filing the quarterly statement.
10. Deadline to file updated return extended
The deadline to file the updated return has been extended. As per the new law applicable from April 1, 2025, a taxpayer will get time till 48 months from the end of the assessment year. Earlier, a taxpayer had 24 months from the end of the assessment year to file the updated return. Now, a taxpayer will get 24 months to file the updated return.
11. Tax dept to compare current ITRs with old ITRs for irregularities
From April 1, 2025, the income tax department will be able to compare the current year's ITR with the previous year's ITR to check for irregularities. The new law will be applicable from April 1, 2025. Though the new law will be applicable from April 1, 2025, the income tax department has yet to specify the irregularities that will be checked in both the ITRs.
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This story originally appeared on: India Times - Author:Faqs of Insurances
