April 1:As the new financial year kicks off on April 1, 2025, several changes in income tax regulations have come into effect. The government, in the Union Budget 2025, introduced revised tax slabs, increased deductions, and updated TDS limits to simplify tax compliance and provide relief to taxpayers. These amendments are expected to impact salaried employees, investors, and individuals across different income groups.
Updated Tax Slabs and Rates
Under the new tax regime, individuals earning up to Rs 4 lakh annually are exempt from paying income tax. The revised tax rates for different income brackets are as follows:
- Rs 4,00,001 to Rs 8 lakh – Taxed at 5%
- Rs 8,00,001 to Rs 12 lakh – Taxed at 10%
- Rs 12,00,001 to Rs 16 lakh – Taxed at 15%
- Rs 16,00,001 to Rs 20 lakh – Taxed at 20%
- Rs 20,00,001 to Rs 24 lakh – Taxed at 25%
- Above Rs 24 lakh – Taxed at 30%
A significant change in the new regime is that individuals earning up to Rs 12 lakh will not have to pay any taxes, thanks to Section 87A. However, they are still required to file an Income Tax Return (ITR) to avail of this benefit.
Standard Deduction and Marginal Relief
For salaried employees, a standard deduction of Rs 75,000 has been introduced, making income up to Rs 12.75 lakh tax-free. Additionally, the provision for marginal relief ensures that individuals earning slightly above Rs 12 lakh are taxed only on the surplus amount, preventing a sudden increase in tax liability.
Impact on Taxpayers and Compliance
Ajay Lakhotia, Founder & CEO of StockGro, highlighted the significance of these changes, stating, “With the implementation of the Finance Act 2025, India’s tax system has been restructured to offer relief to a vast number of taxpayers. The tax exemption on income up to Rs 12 lakh strengthens the financial stability of middle-class families, boosting both savings and consumer spending.”
He further noted that the marginal relief mechanism and the revised tax slabs help distribute tax liabilities more equitably. The increase in the standard deduction particularly benefits salaried individuals by simplifying paperwork and reducing compliance burdens.
The latest amendments aim to make tax compliance more straightforward while ensuring balanced tax liabilities across various income groups. With the revised slabs and enhanced deductions, individuals can better manage their financial planning while enjoying increased savings. Taxpayers must stay updated with these new regulations to maximize their benefits and ensure timely compliance.
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