New Income Tax Rules for FY 2025-26: Know All Rates, Slabs, Deductions, and More

New Income Tax Rules for FY 2025-26: Know All Rates, Slabs, Deductions,and More

With the beginning of the new financial year on April 1, 2025, several changes in income tax rules have come into effect. Budget 2025 introduced revised tax slabs, new deductions, updated TDS limits, and various exemptions aimed at simplifying tax compliance and providing relief to taxpayers. Understanding these changes is crucial to avoid penalties and ensure proper tax filing. Let’s explore the key updates in detail.

New Income Tax Slabs for FY 2025-26

The government has revised the income tax slabs under the new tax regime to provide relief to taxpayers and promote compliance. The updated tax rates are as follows:

Zero Tax on Income up to Rs 12 Lakh

A significant highlight of Budget 2025 is that individuals opting for the new tax regime will not have to pay any tax if their income is up to Rs 12 lakh. However, filing an Income Tax Return (ITR) is mandatory to avail of this benefit under Section 87A.

Additionally, salaried individuals can claim a standard deduction of Rs 75,000, effectively making incomes up to Rs 12.75 lakh tax-free. A provision for marginal relief ensures that those earning slightly above Rs 12 lakh pay tax only on the excess amount, preventing disproportionate tax burdens.

Expert Opinion on Tax Benefits

Ajay Lakhotia, Founder & CEO of StockGro, highlighted the impact of these tax reforms:

“Starting April 1, the Finance Act 2025 is transforming India’s tax framework, providing significant relief and simpler compliance for millions of individuals. By making annual incomes up to Rs 12 lakh tax-free, it boosts middle-class purchasing power, encouraging both immediate household savings and broader consumer spending.”

He further added:

“Marginal relief and a restructured slab system ensure balanced tax liabilities across income brackets, while the enhanced standard deduction helps salaried employees avoid excessive paperwork.”

Higher TDS Thresholds

To provide tax relief and simplify compliance, the government has revised the Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) thresholds. Key updates include:

• For Senior Citizens: The TDS threshold on bank interest has increased from Rs 50,000 to Rs 1 lakh, allowing them to retain more of their earnings.
• For Other Individuals: The TDS threshold on bank interest has been raised to Rs 50,000.
• For Dividend Income: The TDS threshold has been doubled from Rs 5,000 to Rs 10,000.
• For Overseas Remittances: The TCS threshold has been increased from Rs 7 lakh to Rs 10 lakh, making it easier for individuals sending money abroad.

Ajay Lakhotia commented on these changes, stating:

“Senior citizens benefit from a higher TDS threshold on bank interest, allowing them to keep more of their earnings—up to Rs 1 lakh. Meanwhile, raised TDS limits on dividends increase liquidity for investors seeking regular income streams.”

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

Simplified Tax Calculation for Self-Occupied Properties

The government has also simplified tax calculations for individuals with self-occupied properties. Under the new rules:

• Taxpayers can now declare the value of up to two self-occupied properties as zero.
• This removes the hassle of calculating notional rent and simplifies tax filing.
• It provides significant relief for homeowners who own multiple properties but do not earn rental income from them.

Conclusion

The income tax changes for FY 2025-26 bring multiple benefits, including lower tax burdens, higher exemption limits, and simplified tax calculations. The key takeaways from the new tax rules include:

• Tax-free income up to Rs 12 lakh with standard deduction benefits.
• Revised tax slabs under the new tax regime.
• Higher TDS and TCS thresholds to ease compliance.
• Simplified tax computation for self-occupied properties.

These changes aim to enhance taxpayer convenience, increase disposable income, and promote economic growth. Taxpayers must stay informed and take advantage of these new provisions while ensuring timely and accurate tax filings.

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