New Tax Rules from 1st April 2025: Complete Guide to Income Tax, TDS, and More

 The financial year 2025-26 brings significant tax changes that impact individuals, businesses, and investors. From revised income tax slabs to updated TDS and TCS rules, these modifications will affect tax planning strategies. Here's a complete breakdown of the key updates effective from 1st April 2025.



1. New Income Tax Slabs for FY 2025-26

The new income tax regime is now the default option, but taxpayers can still opt for the old regime by filing Form 10IEA. Below are the revised income tax slab rates:

  • Up to ₹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%

The standard deduction has also been revised:

  • Old Regime: ₹50,000

  • New Regime: ₹75,000

Additionally, Section 87A rebate has been modified:

  • Old Regime: Rebate of ₹12,500 for eligible taxpayers

  • New Regime: Rebate of ₹60,000 for incomes up to ₹12 lakh

2. Capital Gains Tax Revisions

Investors should note the increase in capital gains tax rates:

  • Long-Term Capital Gains (LTCG): 12.5% (previously 10%)

  • Short-Term Capital Gains (STCG): 20% (previously 15%)

This adjustment will significantly impact stock market and real estate investors.

3. TDS Updates: Increased Thresholds & New Section 194T

Several TDS threshold limits have been revised from 1st April 2025:

  • Section 193 (Interest on Securities): ₹10,000 per year

  • Section 194A (Interest Other than Securities): ₹1,00,000 for senior citizens, ₹50,000 for others

  • Section 194 & 194K: ₹10,000 per year

  • Section 194B & 194BB: ₹10,000 per single transaction

  • Section 194D, 194G & 194H: ₹20,000 per financial year

  • Section 194-I (Rent Payment): ₹50,000 per month

  • Section 194J (Professional Fees): ₹50,000 per year

  • Section 194LA (Compensation on Land Acquisition): ₹5,00,000 per year

A new TDS section 194T has been introduced, mandating a 10% TDS deduction on payments exceeding ₹20,000 made by Partnership Firms & LLPs to their partners in a financial year.

Additionally, TDS on insurance commission (Section 194D) has been reduced from 5% to 2%.

4. TCS Amendments: Higher Limits & Exemptions

The Tax Collected at Source (TCS) rules have been modified:

  • LRS (Liberalized Remittance Scheme) remittance limit raised from ₹7 lakh to ₹10 lakh per year.

  • No TCS on student loans for foreign education (earlier limit ₹7 lakh).

  • TCS on the sale of goods (Section 206C(1H)) removed (previous threshold ₹50 lakh).

5. UPI & Banking Changes

The UPI system is also undergoing key changes:

  • Inactive mobile numbers will result in automatic deactivation of linked UPI IDs.

  • Banks will verify mobile numbers weekly to prevent fraud.

  • Numeric UPI IDs linked to mobile numbers will now require explicit user consent.

Additionally, ATM withdrawal charges beyond the free limit have been increased from ₹2 to ₹23 per transaction, making cash transactions more expensive.

6. Extended Time for Filing Updated ITR

The time limit for filing an updated Income Tax Return (ITR) has been extended from 24 months to 48 months. This provides taxpayers additional time to correct or update their past tax returns.

Final Thoughts

The new tax rules from April 2025 introduce substantial changes in income tax slabs, capital gains tax, TDS, TCS, UPI, and banking regulations. These revisions aim to streamline tax administration and improve compliance. Taxpayers and businesses should carefully assess these updates and adjust their financial planning accordingly.

For expert guidance on tax planning and compliance, reach out to Power of Factorial Business Solutions.

FAQs on New Tax Rules 2025

❓ Can I still choose the old tax regime?
✔️ Yes, you can opt for the old regime by filing Form 10IEA.

❓ What is the new standard deduction for salaried employees?
✔️ ₹50,000 under the old regime and ₹75,000 under the new regime.

❓ What is the tax on long-term capital gains?
✔️ LTCG is now taxed at 12.5% (previously 10%).

❓ What is Section 194T?
✔️ A new TDS rule for Partnership Firms & LLPs requiring 10% deduction on payments exceeding ₹20,000 to partners.

❓ Will I be charged for additional ATM withdrawals?
✔️ Yes, beyond the free limit, each transaction will cost ₹23 per withdrawal.

Comments

Post a Comment

Popular posts from this blog

UPI Transaction Limit 2025: All You Need to Know About Daily, Monthly & Bank-Wise Caps

Image
 Unified Payments Interface (UPI) continues to revolutionize digital transactions in India, processing over 18 billion transactions worth ₹24.77 lakh crores in March 2025 alone. As usage surges, users must stay updated with the latest UPI transaction limits across banks, sectors, and payment types. Let’s dive deep into the updated UPI rules for 2025 , including new caps, specialized limits for sectors like education and healthcare, UPI Lite updates, and changes implemented by the NPCI (National Payments Corporation of India). What Is the Standard UPI Limit in 2025? As per NPCI guidelines, the default UPI daily limit is ₹1,00,000 per user per day. However, individual banks may impose lower or higher limits based on internal risk assessments and customer profiles. Standard UPI Daily Limit: ₹1 lakh Per Transaction Limit (for UPI 123Pay): ₹10,000 Max Transactions Allowed Per Day: 20 High-Value Transactions Allowed via UPI To support critical payments, UPI allows ...
Read more

Power of Factorial Business Solution - Auditors and Tax Consultants: Guide to GST Registration in India

Image
  Introduction The Goods and Services Tax (GST) is a comprehensive, multi-stage, destination-based tax that has replaced many indirect taxes in India. GST is levied on every value addition, making it essential for businesses to understand the registration process. Whether you're a new entrepreneur or an established business, understanding how to register for GST is crucial. Why is GST Registration Important? Legal Compliance : Businesses exceeding the threshold limit must register under GST. Non-compliance can lead to penalties. Input Tax Credit : Registered businesses can claim Input Tax Credit on their purchases, reducing the overall tax burden. Enhanced Credibility : GST registration boosts the credibility of a business, making it easier to engage with vendors and customers. Who Needs GST Registration? Turnover Threshold : Businesses with an annual turnover exceeding ₹20 lakh (₹10 lakh for northeastern and hilly states) must register for GST. E-commerce Sellers : Those selling ...
Read more

How to Get a BBMP Trade License in Bangalore? A Complete Guide

 Are you planning to start a business in Bangalore ? If yes, then obtaining a BBMP Trade License is a crucial step. The Bruhat Bengaluru Mahanagara Palike (BBMP) issues trade licenses to ensure that businesses comply with legal and safety regulations. This blog will guide you through the process, required documents, fees, and renewal of a BBMP Trade License in Bangalore . What is a BBMP Trade License? A BBMP Trade License is a legal permit that allows businesses to operate within Bangalore city limits . It ensures that businesses comply with health, safety, and operational guidelines. Operating without a trade license can result in penalties, fines, or even business closure . Who Needs a BBMP Trade License? Any business operating within BBMP’s jurisdiction must obtain a trade license, including: ✔ Shops & Retail Outlets ✔ Restaurants & Cafés ✔ IT Companies & Corporate Offices ✔ Factories & Manufacturing Units ✔ Medical Clinics & Pharmacies ✔ Hotels & Lo...
Read more