Budget 2025 India: Full List of Income Tax Changes Announced – Key Updates and Impacts

Budget 2025 Unveils Transformative Tax Reforms for Financial Relief 

The newly announced Budget 2025 introduces a series of impactful changes, such as updated tax brackets, tax breaks for second-home investments, increased support for senior citizens, and revised ULIP tax rules. These initiatives aim to alleviate financial pressure, promote long-term savings, and deliver significant benefits to taxpayers nationwide.

Union Budget 2025 Delivers Significant Tax Benefits for Key Groups

The Union Budget 2025 has unveiled substantial tax relief measures aimed at salaried professionals, senior citizens, and homeowners. A standout change is the increase in the tax-free income threshold from ₹7 lakh to ₹12 lakh under the new tax regime, offering much-needed financial relief to middle-class taxpayers.

Key Announcements in Budget 2025: Tax Reforms and Benefits

The finance minister has introduced significant changes in tax regulations, including updates to TDS rules, ULIP taxation, NPS guidelines, and tax relief for self-occupied houses.

Revised Tax Slabs for Assessment Year 2025-26

Under the new tax regime, the updated tax slabs are as follows:

Income up to ₹4 lakh – No tax

• ₹4 lakh to ₹8 lakh – 5% tax
• ₹8 lakh to ₹12 lakh – 10% tax
• ₹12 lakh to ₹16 lakh – 15% tax
• ₹16 lakh to ₹20 lakh – 20% tax
• ₹20 lakh to ₹24 lakh – 25% tax
• Above ₹24 lakh – 30% tax

How Income Up to ₹12 Lakh Becomes Tax-Free

A taxpayer earning ₹12 lakh would typically owe ₹60,000 in taxes. However, rebates and deductions completely waive this liability.

Additionally, salaried individuals can benefit from a ₹75,000 standard deduction, effectively making income up to ₹12.75 lakh tax-free.

Tax Relief for Second Self-Occupied Homes

Previously, only one self-occupied house was exempt from tax, while the second property was taxed based on notional rental income.

Starting April 1, 2025, both self-occupied properties will be tax-free, eliminating tax on notional rental income and providing relief to homeowners with multiple properties.

Increased Interest Deduction for Senior Citizens

The budget also introduces higher interest deductions for senior citizens, ensuring greater financial stability for retirees.

These tax reforms aim to reduce financial stress, boost savings, and provide greater tax relief to individuals across the country.

Courtesy: India Today

Budget 2025: Key Tax Reforms for Senior Citizens, ULIPs, and TDS/TCS Rules

• Higher Tax Deduction Limit for Senior Citizens

The government has doubled the tax deduction limit on interest income for senior citizens, increasing it from ₹50,000 to ₹1 lakh. This move reduces the tax burden on retirees while promoting higher savings.

TDS and TCS Reforms for Easier Compliance

To simplify tax filing and reduce compliance hassles, the following changes have been introduced:

• Higher TDS threshold on rent – Increased from ₹2.4 lakh to ₹6 lakh per year.
• Higher TCS exemption on LRS transactions – Raised from ₹7 lakh to ₹10 lakh.
• No TCS on education-related remittances – If funded by an education loan, TCS is now completely removed.
• TCS on the sale of goods eliminated, reducing paperwork for businesses.

Tax Exemption on Old NSS Withdrawals

Effective August 29, 2024, senior citizens withdrawing funds from old National Savings Scheme (NSS) accounts will no longer be taxed. This benefits account holders whose NSS deposits have stopped earning interest.

Equal Tax Treatment for NPS Vatsalya Accounts

To ensure fairness in the National Pension System (NPS), Budget 2025 extends the same tax benefits of regular NPS accounts to NPS Vatsalya accounts, subject to overall contribution limits.

ULIP Taxation Changes

• ULIPs with annual premiums exceeding ₹2.5 lakh will now be taxed as capital gains instead of income.
• Long-term capital gains (LTCG) tax rate for ULIPs (holding period over one year) set at 12.5%.
• Previously, ULIP gains were taxed as income from other sources (up to 30%), leading to higher tax liability.
• Aligning ULIP taxation with equity mutual funds provides clarity and removes past uncertainties.

Extended Deadline for Filing Updated ITR

Taxpayers will now have four years instead of two to file an updated Income Tax Return (ITR). This extra time helps individuals correct errors and declare previously missed income without penalties.

Conclusion

The Budget 2025 tax reforms focus on reducing tax burdens, simplifying compliance, and ensuring fair taxation. From higher deductions for senior citizens to streamlined TDS/TCS rules and ULIP tax clarity, these changes benefit a wide range of taxpayers.

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Related Link:

https://www.cnbctv18.com/budget/income-tax-changes-new-regime-deduction-limit-tds-tcs-ulip-second-self-occupied-house-nps-19551182.htm