Employee pay will be directly impacted by a number of new income tax regulations that were outlined in the Union Budget and will take effect on april 1. These modifications include ULIP adjustments, new tax slabs and rates, tax refunds under Section 87A, and more.
What has changed?
1. Increase in TDS Threshold
Starting april 1, the TDS threshold for various sections has been increased. For senior citizens, the TDS limit on interest income will rise to Rs 1 lakh.
2. New Tax Slabs and Rates
0 to Rs 4 lakh - NIL
Rs 4 lakh to Rs 8 lakh - 5%
Rs 8,00,001 to Rs 12,00,000 - 10%
Rs 12,00,001 to Rs 16,00,000 - 15%
Rs 16,00,001 to Rs 20,00,000 - 20%
Rs 20,00,001 to Rs 24,00,000 - 25%
Above Rs 24,00,000 - 30%
3. Tax Rebate Under Section 87A
The tax rebate under Section 87A has been increased from Rs 25,000 to Rs 60,
This rebate allows for a tax-free income up to Rs 12 lakh.
4. Upgradation In tcs Rules
TCS rates have changed as of april 1, 2025, impacting investments, international travel, and other transactions. tcs used to apply to payments over Rs 7 lakh, but it has since been increased to Rs 10 lakh.
5. Extended Tax Return Update Deadline (ITR-U)
The 12-month deadline for submitting an amended ITR has been extended to 48 months (4 years). It can now be amended within four years if the return is missed for whatever reason.
6. Modifications to ULIP
The Budget 2025 states that redemption earnings from ULIPs that are over the ₹2.5 lakh premium barrier will be subject to Section 112A of the Income Tax Act's capital gains tax.
Investors, taxpayers, and salaried individuals will all be impacted by the substantial changes brought about by the new income tax regulations that go into force on april 1. The reforms aim to improve compliance and simplify taxation through updated TDS and tcs thresholds, larger rebates, changed tax slabs, and longer deadlines for filing updated reports.
What has changed?
1. Increase in TDS Threshold
Starting april 1, the TDS threshold for various sections has been increased. For senior citizens, the TDS limit on interest income will rise to Rs 1 lakh.
2. New Tax Slabs and Rates
0 to Rs 4 lakh - NIL
Rs 4 lakh to Rs 8 lakh - 5%
Rs 8,00,001 to Rs 12,00,000 - 10%
Rs 12,00,001 to Rs 16,00,000 - 15%
Rs 16,00,001 to Rs 20,00,000 - 20%
Rs 20,00,001 to Rs 24,00,000 - 25%
Above Rs 24,00,000 - 30%
3. Tax Rebate Under Section 87A
The tax rebate under Section 87A has been increased from Rs 25,000 to Rs 60,
This rebate allows for a tax-free income up to Rs 12 lakh.
4. Upgradation In tcs Rules
TCS rates have changed as of april 1, 2025, impacting investments, international travel, and other transactions. tcs used to apply to payments over Rs 7 lakh, but it has since been increased to Rs 10 lakh.
5. Extended Tax Return Update Deadline (ITR-U)
The 12-month deadline for submitting an amended ITR has been extended to 48 months (4 years). It can now be amended within four years if the return is missed for whatever reason.
6. Modifications to ULIP
The Budget 2025 states that redemption earnings from ULIPs that are over the ₹2.5 lakh premium barrier will be subject to Section 112A of the Income Tax Act's capital gains tax.
Investors, taxpayers, and salaried individuals will all be impacted by the substantial changes brought about by the new income tax regulations that go into force on april 1. The reforms aim to improve compliance and simplify taxation through updated TDS and tcs thresholds, larger rebates, changed tax slabs, and longer deadlines for filing updated reports.
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