6 Income Tax Rules That Changed from April 1, 2025

6 Income Tax Rules That Changed from April 1, 2025: A Must-Read for All Taxpayers

6 Income Tax Rules The beginning of a new financial year 2025-26 has brought along major changes in income tax rules that will significantly impact salaried employees, middle-class taxpayers, and investors across India. As of April 1, 2025, six new tax-related provisions have come into effect. These are aimed at simplifying tax compliance, reducing the burden for certain groups, and aligning investments like ULIPs with mutual fund taxation norms.

If you’re a taxpayer, here’s what you need to know about the latest income tax updates for FY 2025-26.

1. Tax Rebate Increased to ₹60,000 – No Tax on Income up to ₹12 Lakh

✅ What’s New?

In the New Tax Regime, the tax rebate under Section 87A has been significantly enhanced.

• 6 Income Tax Rules Earlier, this rebate was limited to ₹25,000 and applicable for income up to ₹7 lakh.
• From FY 2025-26, the rebate has been increased to ₹60,000, and now taxpayers with income up to ₹12 lakh will be eligible for zero tax liability.

✅ Additional Benefit:

• Salaried individuals also get a standard deduction of ₹75,000.
• This means if your gross income is ₹12.75 lakh, you will still pay zero income tax under the New Tax Regime.

📌 Who Benefits?

This is a huge relief for middle-income salaried employees, freelancers, and pensioners who opt for the New Tax Regime. 6 Income Tax Rules

2. New 25% Tax Slab Introduced for Income Between ₹20 Lakh and ₹24 Lakh

✅ What’s New?

The New Tax Regime now includes a new tax slab of 25% for annual income ranging from ₹20 lakh to ₹24 lakh.

✅ Earlier Scenario:

• A flat 30% tax rate was applicable for all income above ₹15 lakh.

✅ Current Scenario:

📌 Who Benefits?

This change is aimed at upper-middle-class taxpayers, particularly self-employed professionals and high-salary earners, as it lowers their effective tax rate.

https://www.incometax.gov.in/iec/foportal/

3. Revised TDS and TCS Thresholds

✅ What’s New?

To reduce unnecessary compliance and paperwork for smaller transactions, the government has revised the thresholds for TDS (Tax Deducted at Source) and TCS (Tax Collected at Source):

• TDS threshold increased from ₹40,000 to ₹50,000
• TCS threshold increased from ₹7 lakh to ₹10 lakh

This means TDS/TCS will now apply only when the transaction amount crosses the new limit.

📌 Who Benefits?

This change offers relief to senior citizens, small depositors, and buyers of foreign services or goods, as smaller transactions will no longer attract automatic tax deductions or collections.

4. Taxation Change in Employee Benefits

✅ What’s New?

The treatment of employee allowances and reimbursements has been revised for better tax clarity.

• Benefits such as overseas travel expenses paid by employers for medical treatment of employees or their family members will not be treated as taxable allowances.
• This update ensures such benefits remain tax-exempt under the revised definitions.

📌 Who Benefits?

6 Income Tax Rules Employees in large corporations and MNCs where such benefits are common will gain from this update, ensuring tax-free reimbursements on essential services.

5. Exemption on Notional Rent for Two Properties

✅ What’s New?

From April 1, 2025, taxpayers can now claim an exemption on two self-owned house properties, even if they are not used for personal residence.

✅ Earlier Rule:

• Exemption was allowed for only one property as self-occupied.
• The second property (if not rented out) attracted notional rent taxation.

✅ New Rule:

• Exemption on notional rent extended to two properties.
• Whether occupied or not, no tax will be levied on these two properties under the head “Income from House Property”.

📌 Who Benefits?

This rule greatly benefits families with multiple homes, NRIs, and retirees who own more than one property but don’t rent them out.

6. Capital Gains Tax Now Applies to High-Premium ULIPs

✅ What’s New?

From FY 2025-26, ULIPs (Unit Linked Insurance Plans) will be treated similarly to mutual funds if their annual premium exceeds a threshold.

• If the annual premium exceeds ₹2.5 lakh, the ULIP is considered a capital asset.
• Capital Gains Tax will now apply upon redemption.

✅ Tax Rate:

• 12.5% if ULIP is held for more than 12 months (LTCG)
• 20% if redeemed before 12 months (STCG)

✅ Why This Change?

This move aims to prevent misuse of ULIPs as tax-free investment vehicles by high-net-worth individuals, aligning them with mutual fund tax rules.

📌 Who’s Affected?

Investors with high-value ULIPs need to now account for capital gains tax and reconsider their insurance-cum-investment strategy.

✅ Final Words: Taxpayers Must Adapt to the New Rules

These six key income tax changes effective from April 1, 2025, are part of the government’s effort to simplify the tax system, promote the New Tax Regime, and increase transparency in investment-linked insurance schemes.

Whether you’re a salaried employee, small business owner, or investor, it’s crucial to:

• Review your tax planning strategy
• Choose the right tax regime
• Keep documentation ready for exemptions
• Consult with a CA or financial planner to optimize benefits

📌 Frequently Asked Questions (FAQs)

Q1. Do I have to pay tax if my income is ₹12 lakh in FY 2025-26?
A: No, under the New Tax Regime, you can avail of a rebate under Section 87A and a standard deduction, making income up to ₹12.75 lakh completely tax-free.

Q2. Will the Old Tax Regime also see any changes?
A: No major changes have been announced in the Old Regime. Most reforms are focused on promoting the New Tax Regime.

Q3. What should I do if I already own two properties?
A: You can now claim zero notional rent for both properties, reducing your tax liability under “Income from House Property.”

Q4. Should I continue with ULIPs now that they are taxable?
A: If your annual premium exceeds ₹2.5 lakh, consider switching to mutual funds or other investment options with better post-tax returns.

For More Information : https://taxgyany.com/