Amendments applicable from 1st April 2025

The new financial year commencing April 1, 2025, introduces several critical changes in income tax laws impacting individuals, businesses, and investors. Under the revised tax regime, the basic exemption limit has increased to ₹3 lakh, with a tax-free rebate for income up to ₹12 lakh under Section 87A. Additionally, TDS/TCS rules have been updated, including higher exemption limits for interest, dividends, and commissions. Salaried individuals and pensioners benefit from an enhanced standard deduction of ₹75,000, while the timeline for filing updated returns extends to 48 months. Startups gain extended tax benefits under Section 80-IAC, and IFSC incentives now apply until March 31, 2030. For crypto transactions, reporting requirements have tightened with the introduction of Section 285BAA. Changes also affect business trusts, with capital gains now taxed at preferential rates, and the carry-forward period for amalgamated losses adjusted. These updates underscore the importance of reassessing financial plans and tax-saving strategies to navigate the new rules effectively.

Forget January 1 – if you care about your finances, the real new year begins on April 1. While most people associate new beginnings with fireworks and resolutions, for taxpayers and finance professionals, this date marks a far more significant shift: the start of a new financial year. This is when budget announcements turn into reality, tax slabs change, deductions get revised, and new financial rules come into play—many of which directly impact your income, investments, and savings.

This year, the government has introduced several key changes in income tax laws, including a higher exemption limit, new TDS and TCS rules, and extended benefits for startups and salaried individuals. Understanding these updates is crucial to avoid unexpected tax liabilities and make informed financial decisions.

So, what’s changing from April 1, 2025? Let’s dive into the details.

Here are the major changes in income tax which will be effective from 1^st April, 2025 i.e. from FY 2025-26:

1. Basic exemption limit hiked in New Tax Regime:

Under the revamped new tax regime, no tax would be levied for income up to Rs 3 lakh. Income between Rs 3-6 lakh would be taxed at 5%; Rs 6-9 lakh at 10%, Rs 9-12 lakh at 15%, Rs 12-15 lakh at 20% and income of Rs 15 lakh and above will be taxed at 30%.

2. Increase in Rebate under Section 87A:

Taxpayers with income up to ₹12 lakh will pay zero tax under the new tax regime. The rebate limit has been raised from ₹7 lakh to ₹12 lakh​.

To uncover the truth behind the ₹12 lakh tax-free claim, read on.

 Budget 2025: ₹12 Lakh Tax-Free? Claim That Sounds Too Good to Be True! https://taxguru.in/income-tax/budget-2025-rs-12-lakh-tax-free-claim-reality-illusion.html

3. Important and Relevant changes in Tax Deducted at Source (TDS) & Tax Collected at Source (TCS):

 a) TDS on Partners Remuneration, Interest or Commission

• • TDS will be deducted @ 10% on remuneration, commission, and interest on capital paid to partners if it exceeds ₹20,000.
  • Profit-sharing remains exempt under Section 10(2A).

 b) TDS on Interest on Securities (Section 193): Exemption limit increased to ₹10,000​.

c) TDS on Interest on other than Interest on Securities (Section 194):

• • Exemption limit for Interest paid by Bank / Post Office / Co-operative society

√ To senior citizen increased from ₹50,000 to ₹1,00,000​.

√ To others increased from ₹40,000 to ₹50,000​.

• • Exemption limit for Interest paid by others increased from ₹5,000 to ₹10,000​.

d) TDS on Dividend (Section 194): Exemption limit increased from ₹5,000 to ₹10,000​.

e) TDS on Insurance Commission (Section 194D): Exemption limit increased from ₹15,000 to ₹20,000​.

f) TDS on Commission (Section 194H): Exemption limit increased from ₹15,000 to ₹20,000​.

g) TDS on Professional Fees (Section 194J): Exemption limit increased from ₹30,000 to ₹50,000​.

 h) TDS on Rent (Section 194I): Earlier it was applicable if it exceeds ₹2,40,000 p.a. Now applicable only if rent exceeds ₹50,000 per month​.

i) TCS on Sale of Goods (Section 206C(1H)): Omitted to avoid double taxation on the same transaction where TDS under Section 194Q is applicable​.

j) Omission of Sections 206AB & 206CCA: These sections mandated higher TDS/TCS rates for non-filers of ITR​.

4. Standard Deduction Enhancement

Increased from ₹50,000 to ₹75,000 for salaried individuals and pensioners under the new tax regime​.

5. Extended Time Limit for Filing Updated Return:

Taxpayers can now file an updated return up to 48 months from the end of the relevant assessment year (earlier limit was 24 months) ​

6. Tax Benefits for Startups & IFSC

• Section 80-IAC: Tax benefits for startups extended for 5 more years, now applicable to startups incorporated till March 31, 2030​.
• Section 80LA: Incentives for IFSC entities extended till March 31, 2030​.

7. Crypto Taxation & Virtual Digital Assets

• New Section 285BAA: Reporting of crypto transactions made mandatory for exchanges & intermediaries​.
• “Virtual Digital Assets” included in definition of undisclosed income under Section 158B​.

8. Changes in Taxation of Business Trusts (Section 115UA):

Capital gains under Section 112A (on listed equity) now taxed at preferential rates instead of maximum marginal rate​.

To understand the concept of Business Trusts in detail about how it works and its taxability, please read the below article:

Detailed Note on Business Trusts and its taxability (Amended as per Budget 2023): https://taxguru.in/income-tax/note-business-trusts-taxability.html

9. Change in Carry Forward Period for Amalgamated Entities:

he eight-year carry-forward period for accumulated losses will now be counted from the year the loss was first recorded, rather than from the year of amalgamation.

With these changes taking effect from April 1, 2025, taxpayers must reassess their financial plans and tax-saving strategies. The new tax regime offers a higher exemption limit and standard deduction, making it more attractive. Additionally, the TDS and TCS modifications will impact various financial transactions. Whether you are an individual taxpayer, a business owner, or an investor, staying informed about these updates will help you make better financial decisions in the new financial year.