Overview of Significant I-T Rule Modifications for Salaried Workers Starting April 1
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Synopsis
As the new financial year approaches on April 1, significant changes to income tax regulations will take effect, providing essential relief to salaried employees and simplifying the tax process.
Key Takeaways
- Tax-free income limit raised to Rs 12 lakh.
- Standard deduction of Rs 75,000 increases the threshold to Rs 12.75 lakh.
- Rebate limit under Section 87A increased to Rs 60,000.
- TDS threshold for bank interest raised to Rs 50,000.
- Four years to file updated ITR-U returns.
New Delhi, March 30 (NationPress) As the new financial year commences on April 1, various modifications in income tax regulations will be implemented.
These changes, unveiled by Finance Minister Nirmala Sitharaman during the Union Budget 2025, seek to streamline the tax framework and offer relief to salaried personnel.
From an elevated tax-free income threshold to adjustments in TDS regulations, these updates will affect all taxpayers in India.
One of the most significant benefits for taxpayers is the enhancement of the tax-free income ceiling under the new tax framework.
Starting April 1, individuals earning up to Rs 12 lakh annually will be exempt from paying any income tax, an increase from the previous limit of Rs 7 lakh.
Additionally, salaried employees will gain from a standard deduction of Rs 75,000, effectively rendering incomes up to Rs 12.75 lakh tax-free.
However, this exemption does not extend to capital gains, which will remain subject to taxation.
The government has revised tax brackets under the new tax regime, while the old tax structure stays unchanged.
Income up to Rs 4 lakh will be tax-exempt, while earnings between Rs 4 lakh and Rs 8 lakh will incur a tax rate of 5 percent.
As income increases, tax rates escalate to 30 percent for those earning above Rs 24 lakh.
The rebate limit under Section 87A has been increased from Rs 25,000 to Rs 60,000, benefiting individuals earning up to Rs 12 lakh under the new tax regime.
With the standard deduction included, this effectively raises the tax-free income threshold to Rs 12.75 lakh. The old tax regime remains unaffected by this adjustment.
The limit for tax deducted at source (TDS) on bank deposit interest has been raised from Rs 40,000 to Rs 50,000. Consequently, interest earnings up to Rs 50,000 will no longer be subject to TDS deductions.
From April 1, benefits and allowances provided by employers will no longer be classified as taxable perquisites.
Moreover, if an employer covers the expenses for medical treatment abroad for an employee or their family, this cost will not be regarded as a taxable benefit.
Taxpayers will now have four years, instead of two, to file updated income tax returns (ITR-U). This extension allows individuals more time to rectify errors or omissions in their tax submissions.
A new tax-saving provision has been introduced for parents. Those contributing to their child's NPS Vatsalya account can claim an additional deduction of Rs 50,000 under the old tax regime.
