In Budget 2025, Finance Minister Nirmala Sitharaman unveiled a slew of reforms aimed at providing substantial tax relief to the middle class. With a focus on simplifying the tax structure and increasing disposable income, several pivotal changes were introduced. Here’s a detailed breakdown of how Budget 2025 will shape your financial future.
Increased Basic Exemption Limit
The basic exemption limit under the new tax regime has been increased from Rs 3 lakh to Rs 4 lakh. This move provides instant tax relief to lower-income groups and eases the financial burden on many taxpayers.
Revised Income Tax Slabs: New Tax Regime
A major highlight of Budget 2025 is the restructuring of income tax slabs under the new regime, benefiting a broader range of taxpayers:
| Income Range (INR) | New Tax Rate |
| 0 – 4,00,000 | Nil |
| 4,00,001 – 8,00,000 | 5% |
| 8,00,001 – 12,00,000 | 10% |
| 12,00,001 – 16,00,000 | 15% |
| 16,00,001 – 20,00,000 | 20% |
| 20,00,001 – 24,00,000 | 25% |
| Above 24,00,000 | 30% |
Simplified TDS Framework
To enhance transparency and ease of compliance, the TDS (Tax Deducted at Source) structure has been rationalised:
- Senior Citizens: TDS threshold on interest income raised from ₹50,000 to ₹1 lakh.
- General Taxpayers: TDS threshold under Section 194A increased from ₹40,000 to ₹50,000.
- Rent Payments: Annual TDS limit on rent payments increased from ₹2.4 lakh to ₹6 lakh.
Higher TCS Threshold for Foreign Remittances
The threshold for collecting Tax Collected at Source (TCS) under the Liberalised Remittance Scheme (LRS) has been increased from ₹7 lakh to ₹10 lakh. Moreover, remittances made for educational purposes via a loan from a specified financial institution are now exempt from TCS.
Relaxation on House Property Rules
Taxpayers can now treat any two houses as self-occupied without restrictive conditions. This flexibility eliminates tax liabilities on deemed rental income for a second property and simplifies income tax return filings.
Extension of NPS Benefits
Contributions made to NPS Vatsalya accounts now enjoy tax benefits under Section 80CCD(1B), aligning them with standard NPS contributions and encouraging long-term savings.
Extended Timeline for Updated Tax Returns (ITR-U)
Budget 2025 extends the window to file updated income tax returns from two years to four years. This allows greater flexibility for taxpayers to correct past filings and encourages voluntary compliance.
Conclusion
Budget 2025 introduces impactful reforms tailored for the middle-income segment, making the tax system more inclusive and taxpayer-friendly. By revising slabs, enhancing exemptions, and simplifying compliance processes, the budget lays a strong foundation for financial empowerment and growth.
Whether you’re a salaried employee, a senior citizen, or a property owner, these changes offer ample opportunity to optimize your finances. Make sure to consult with a financial advisor to understand how you can best leverage these updates.
