The Union Budget 2025 has introduced several noteworthy changes in direct taxation, aimed at benefiting taxpayers and simplifying the tax structure. These reforms focus on reducing the tax burden, enhancing compliance flexibility, and providing relief to salaried individuals, senior citizens, and small taxpayers. Let’s take a closer look at the key highlights.
1. Withdrawal of Section 206AB
One of the significant changes in this year’s budget is the withdrawal of Section 206AB with effect from April 1, 2025. This section, which imposed a higher Tax Deducted at Source (TDS) rate for non-filers of income tax returns, will no longer be applicable. The move is expected to ease compliance requirements for taxpayers and businesses alike.
2. Revised Income Tax Slabs – A Major Relief
A major highlight of the budget is the revamped income tax slab structure under the new tax regime. The revised tax slabs are as follows:
| Annual Income (₹) | Tax Rate |
| 0 – 4 lakh | Nil |
| 4 lakh – 8 lakh | 5% |
| 8 lakh – 12 lakh | 10% |
| 12 lakh – 16 lakh | 15% |
| 16 lakh – 20 lakh | 20% |
| 20 lakh – 24 lakh | 25% |
| Above 24 lakh | 30% |
Key Benefit: Individuals earning up to ₹12 lakh annually will not be liable to pay any income tax under this regime due to standard deductions and exemptions.
3. Higher Standard Deduction for Salaried Taxpayers
To provide additional relief to salaried individuals, the standard deduction has been increased to ₹75,000. This move reduces taxable income and enhances disposable income for millions of employees across the country.
4. Adjustments in TDS & TCS – A Boost for Small Taxpayers
The budget also brings favorable changes to TDS (Tax Deducted at Source) and TCS (Tax Collected at Source) provisions:
✅ TDS on Rent: The annual exemption limit has been raised from ₹2.40 lakh to ₹6 lakh, benefiting small landlords and property owners.
✅ TDS on Interest for Senior Citizens: The threshold has been doubled from ₹50,000 to ₹1 lakh, offering additional relief to senior citizens who rely on interest income.
These adjustments aim to simplify compliance and provide financial relief to middle-class taxpayers.
5. Extended Time for Filing Updated Income Tax Returns
A major relief for taxpayers! The time limit for filing updated Income Tax Returns (ITR-U) has been extended from 2 years to 4 years. This gives individuals and businesses more time to rectify any omissions or errors in their previously filed returns, reducing unnecessary penalties and legal hassles.
6. Introduction of a New Income Tax Bill
The government has announced plans to introduce a fresh Income Tax Bill, with the objective of simplifying the tax regime and reducing compliance burdens. The new framework aims to modernize tax laws, making them more transparent, business-friendly, and easier to understand.
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