New Income Tax Rules From April 2025: How They Impact Salaried Employees

Starting April 1, several new income tax rules announced in the Union Budget will come into effect, directly impacting salaried individuals, investors, and taxpayers. These changes include revised tax slabs, increased rebates, updated TDS and TCS thresholds, and more.

The Tax Deducted at Source (TDS) threshold has been increased for multiple sections. A key change is for senior citizens—starting April 1, the TDS limit on interest income will rise to Rs 1 lakh, reducing unnecessary tax deductions for pensioners and retirees.

The tax rebate under Section 87A has been significantly increased from Rs 25,000 to Rs 60,000. This means individuals earning up to Rs 12 lakh annually can enjoy tax-free income, providing relief to middle-class taxpayers.

The government has introduced revised income tax slabs, altering tax rates for different income groups:

Up to Rs 4 lakh – No tax

Rs 4 lakh to Rs 8 lakh – 5 per cent

Rs 8 lakh to Rs 12 lakh – 10 per cent

Rs 12 lakh to Rs 16 lakh – 15 per cent

Rs 16 lakh to Rs 20 lakh – 20 per cent

Rs 20 lakh to Rs 24 lakh – 25 per cent

Above Rs 24 lakh – 30 per cent

These new slabs aim to ease the tax burden on lower and middle-income groups while ensuring higher earners contribute more.

TCS rates have been revised, particularly impacting foreign travel, investments, and high-value transactions. Previously, TCS was applicable on amounts exceeding Rs 7 lakh, but from April 1, this limit will be raised to Rs 10 lakh, reducing compliance burdens for taxpayers.

Taxpayers who miss filing their returns now have four years instead of just one year to update their Income Tax Return (ITR). This extended timeline offers flexibility and ensures better compliance.

The new tax rules also impact Unit Linked Insurance Plans (ULIPs). If the redemption proceeds from a ULIP exceed the premium threshold of Rs 2.5 lakh, they will now be taxed under Section 112A as capital gains instead of being tax-free.

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