Starting April 1, 2025, several key amendments to Income Tax, TDS (Tax Deducted at Source), and TCS (Tax Collected at Source) will come into effect. These changes aim to enhance compliance, reduce tax burdens for individuals and businesses, and simplify taxation rules. Here’s a complete breakdown of what’s changing and how it will impact taxpayers.
1. Revised Income Tax Slabs (New Tax Regime)
The government has revised the income tax slabs under the new tax regime to provide relief to taxpayers. Below are the updated slabs for FY 2025-26:
  • Income up to ₹4,00,000 – No Tax 
  • ₹4,00,001 to ₹8,00,000 – 5% 
  • ₹8,00,001 to ₹12,00,000 – 10% 
  • ₹12,00,001 to ₹16,00,000 – 15% 
  • ₹16,00,001 to ₹20,00,000 – 20% 
  • ₹20,00,001 to ₹24,00,000 – 25% 
  • Above ₹24,00,000 – 30% 
👉 The old tax regime remains unchanged and can still be opted for by taxpayers.
2. Increased Rebate Under Section 87A
To provide more benefits to taxpayers, the rebate limit under Section 87A has been revised:
  • New Tax Regime: Rebate limit increased to ₹60,000 for individuals with taxable income up to ₹12,00,000. 
  • Old Tax Regime: Rebate remains at ₹12,500 for individuals with an income up to ₹5,00,000. 
This means taxpayers earning up to ₹12,00,000 under the new tax regime will pay no income tax.
3. Standard Deduction Increase
For salaried employees and pensioners, the standard deduction has been raised:
  • Old Deduction: ₹50,000 
  • New Deduction (from April 1, 2025): ₹75,000 
This will further reduce taxable income, benefiting millions of taxpayers.
4. TDS (Tax Deducted at Source) Threshold Adjustments
To reduce compliance burdens, the government has increased TDS deduction thresholds:
  • Interest Income for Senior Citizens – Limit increased from ₹50,000 to ₹1,00,000. 
  • Rental Income TDS – The Annual threshold increased from ₹2,40,000 to ₹6,00,000. 
  • Bank Deposit Interest – TDS limit increased from ₹40,000 to ₹50,000. 
These changes ensure fewer taxpayers have TDS deducted unnecessarily.
5. TCS (Tax Collected at Source) Rate Changes
The government has also revised TCS (Tax Collected at Source) rates:
  • Foreign Remittances & Overseas Travel – The exemption limit for TCS on foreign remittances has been raised from ₹7,00,000 to ₹10,00,000. 
  • Liberalized Remittance Scheme (LRS) – Higher limits have been introduced to ease foreign transactions. 
These changes aim to simplify international transactions while maintaining tax compliance.
6. Removal of Higher TDS/TCS Rates for Non-Filers
Previously, higher TDS and TCS rates were applied to those who didn’t file income tax returns under Sections 206AB and 206CCA. This provision has now been removed, simplifying tax deductions for individuals and businesses.
7. Capital Gains Tax on ULIPs
From April 1, 2025, ULIPs (Unit Linked Insurance Plans) with an annual premium exceeding ₹2,50,000 will be subject to capital gains tax upon maturity. This aligns ULIPs with mutual funds and ensures a uniform tax policy across investment instruments.
8. Extended Time for Filing Updated Tax Returns
Taxpayers will now have up to four years to file an updated income tax return (previously, the limit was two years). This extension provides more flexibility for correcting past returns and complying with tax laws.
FAQs
1. How will the new tax slabs benefit individuals?
The revised tax slabs lower the tax rates for middle-income groups, reducing their overall tax burden and simplifying taxation.
2. Can I still opt for the old tax regime?
Yes, the old tax regime is still available for those who find it more beneficial due to deductions and exemptions.
3. What is the impact of the higher standard deduction?
Salaried individuals and pensioners will benefit from a higher deduction of ₹75,000, reducing their taxable income.
4. How do the TDS changes help senior citizens?
Senior citizens will have less TDS deducted on interest income, as the threshold has been increased to ₹1,00,000.
5. What should I know about TCS changes on foreign transactions?
If you send money abroad or travel internationally, you should be aware of the increased exemption limit of ₹10,00,000, reducing the impact of TCS.
Final Thoughts
The changes in Income Tax, TDS, and TCS from April 1, 2025, aim to simplify tax compliance and reduce financial burdens. These amendments will benefit taxpayers across India with higher rebates, increased deduction limits, and relaxed TDS rules.
Staying informed about these updates will help individuals and businesses make better tax-saving decisions and avoid unnecessary compliance issues.
📢 Need help with tax planning or filing? Consult a tax expert today!