New Tax Slabs From April 1: What Changes For Taxpayers From Today—Everything You Need To Know

The Union Budget 2025 introduced a series of significant amendments to the Income Tax Act 1961. The announcements made by Finance Minister Nirmala Sitharaman during her budget speech this year are aimed to simplify India's tax system.

These modifications have come into effect today, April 1, marking the start of FY 2025-26. As we enter the new financial year, here’s an overview of major income tax changes that you must know.

The Budget 2025 proposed new tax slab rates starting from April 1, 2025. The effective tax exemption limit has been raised to Rs 12 lakh from Rs 7 lakh previously, providing significant relief to taxpayers. This move aimed to boost spending and circulate money in the economy.

The government has also revised the tax slabs under the New Tax Regime. However, no changes have been made to the slabs and taxation rates under the old regime. These amended tax slab rates will apply to income earned beginning in the FY 2025-26. The updated slab rates under the new tax regime for FY 2025-26 are as follows:

• 0 to Rs 4 lakh – NIL

• Rs 4 lakh to Rs 8 lakh – 5%

• Rs 8,00,001 to Rs 12,00,000 – 10%

• Rs 12,00,001 to Rs 16,00,000 – 15%

• Rs 16,00,001 to Rs 20,00,000 – 20%

• Rs 20,00,001 to Rs 24,00,000 – 25%

• Above Rs 24,00,000 – 30%

In the new tax regime, the tax rebate under Section 87A of the Income-tax Act is set to increase from Rs 25,000 to Rs 60,000. The enhanced rebate applies to taxable income of up to Rs 12 lakh. Under the new regime, income up to Rs 12 lakh will be tax-free. For salaried individuals, this exemption limit is pushed to Rs 12.75 lakh with a Rs 75,000 start deduction. 

However, the tax rebate under the old tax regime will stay unaffected.

The TDS limits has also been increased in several sections, starting April 1. The threshold for TDS on interest income for senior citizens will increase to Rs 1 lakh from Rs 50,000 previously.

TCS rates have also changed, impacting foreign travel, investments, and other transactions. Previously, TCS was applicable on amounts exceeding Rs 7 lakh, but this threshold has now been increased to Rs 10 lakh.

The time limit to file an updated ITR has been increased to 48 months (4 years) from the earlier 12 months. If the return is not completed for any reason, it can now be revised for a four-year period.

Under the new regime, proceeds from ULIPs (Unit Linked Insurance Plan) with premiums exceeding 10% of the assured amount or Rs 2.5 lakh per year will be treated as capital gains and taxed accordingly.

Startups registered by April 1, 2030, will now be eligible for a 100% deduction of profits and gains for three consecutive years under Section 80-IAC, subject to certain conditions.

Sections 206AB and 206CCA of the Income Tax Act 1961 will be omitted from April 1 to reduce the compliance burden on tax deductors/collectors.