As the new financial year begins, individual taxpayers must take note of several important amendments in the Income Tax Act that come into force from 1st April 2025. These changes are primarily aimed at reducing the tax burden for middle-class earners while also encouraging more individuals to adopt the simplified new tax regime.
1. New Tax Regime Becomes Default
From FY 2025–26, the new tax regime has been made the default option. While taxpayers still have the choice to opt for the old regime, the government has clearly indicated its preference by offering more benefits under the new regime.
2. Revised Tax Slabs Under the New Regime
The tax slabs under the new regime have been revised as follows:
| Income Range (₹) | Tax Rate |
| Up to ₹4,00,000 | Nil |
| ₹4,00,001 – ₹8,00,000 | 5% |
| ₹8,00,001 – ₹12,00,000 | 10% |
| ₹12,00,001 – ₹16,00,000 | 15% |
| ₹16,00,001 – ₹20,00,000 | 20% |
| ₹20,00,001 – ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
This new slab structure is expected to significantly benefit those in the middle-income brackets by offering lower rates at each level.
3. Standard Deduction Increased to ₹75,000
A welcome move for salaried individuals and pensioners is the enhancement of the standard deduction under the new regime. It has now been increased from ₹50,000 to ₹75,000, providing additional relief without the need for any specific investments or documentation.
4. Rebate Under Section 87A – Now Up to ₹12 Lakh
The rebate under Section 87A has been extended to individuals with a taxable income up to ₹12,00,000. This means that if your net taxable income does not exceed ₹12 lakh, your tax liability can be entirely wiped out through rebate.
This is a substantial boost for individuals in the lower and mid-income segments.
5. Basic Exemption Limit – Now ₹4,00,000
Another small but impactful change is the increase in the basic exemption limit under the new regime, which has now gone up to ₹4,00,000 from the earlier ₹3,00,000. This helps ensure that even those with minimal income stay outside the tax net.
6. Choosing Between Old and New Regime
Even though the new regime is now the default, taxpayers still have the flexibility to choose the old regime, especially if they have significant deductions under sections like 80C, 80D, HRA, etc.
Every taxpayer should do a comparative computation before filing the return to see which regime offers more benefits based on their specific income and investments.
Conclusion
The changes applicable from 1st April 2025 reflect a shift toward a simplified, deduction-free taxation system. The government has sweetened the new regime by offering increased deductions and a broader rebate window, encouraging wider adoption.
However, the decision between the old and new regimes must be taken with proper calculation and awareness. Individual taxpayers are advised to review their income structures, plan smartly, and consult professionals wherever needed to make the most of these updates.
Author Bio
Please write an artical for co-operative society Sec. 115BAD and Form -10-IF especially if it’s filed by mistake in FY 24-25 then how can we exit out of this new scheme and claim deduction under Chapter vi under section 80P.