5 Major Tax Rule Changes in 2025: New Slabs, Exemptions, and Big Reliefs for Taxpayers
Discover the 5 key changes in the 2025 tax rules, including increased tax exemptions, revised slabs, higher tax rebates, extended IT return deadlines, and updated TCS limits for money transfers abroad.
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New Tax Regime:
The central government has delivered significant relief to taxpayers in the 2025 budget, making the new tax regime more attractive. The tax rebate has been increased, tax slabs have been revised, and individuals earning up to ₹12 lakhs will now be exempt from paying taxes. For salaried workers, this exemption extends up to ₹12.75 lakhs, considering the standard deduction. Let’s dive into the key changes introduced in the budget regarding taxes.
1. Increase in Minimum Tax Exemption Limit
Under the new tax regime, the Basic Tax Exemption Limit has been raised from ₹3 lakh to ₹4 lakh, a change that many may have overlooked. Previously, income up to ₹3 lakh was exempt from tax, but now, this exemption applies up to ₹4 lakh. This adjustment not only reduces the tax burden on income above ₹12 lakh but also means that individuals earning below ₹4 lakh may not need to file income tax returns.
2. Increase in Tax Rebate
The tax rebate under the new regime has been significantly enhanced. Earlier, taxpayers could claim a rebate on income up to ₹7 lakh. Now, this has been increased to ₹12 lakh, offering substantial relief to middle-class families. However, to avail of this rebate, it’s important to file tax returns.
3. Changes in Tax Slabs
The number of tax slabs in the new system has increased from 6 to 7, with the introduction of a 25% tax slab. Here’s a breakdown of the revised slabs:
₹0 to ₹4 lakh: 0% tax
₹4 to ₹8 lakh: 5% tax
₹8 to ₹12 lakh: 10% tax
₹12 to ₹16 lakh: 15% tax
₹16 to ₹20 lakh: 20% tax
₹20 to ₹24 lakh: 25% tax
Above ₹24 lakh: 30% tax
4. Extension of the Updated Return Deadline
The timeline for filing updated income tax returns has been extended. Previously, taxpayers had two years to file an updated return, but this deadline has now been increased to four years, providing more flexibility and time for corrections or updates.
5. Increase in TCS Limit for Foreign Remittances
The government has also provided relief for individuals sending money abroad. The Tax Collected at Source (TCS) limit has been raised from ₹7 lakh to ₹10 lakh. This means that remittances up to ₹10 lakh will not attract any TCS, making it more convenient and cost-effective for those transferring funds overseas.
