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The Indian government has introduced new tax rules effective from 1st April 2025, bringing significant changes to income tax slabs, deductions, TDS, TCS, UPI transactions, and ATM withdrawal charges. Here’s a detailed breakdown of everything you need to know about these updates.
Income Tax Slabs for FY 2025-26
The New Income Tax Regime is now the default option. However, taxpayers can still choose the Old Tax Regime by filing Form 10IEA. Below are the revised income tax slab rates:
| Income Tax Slab | Tax Rate |
|---|---|
| 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% |
Standard Deduction
Old Tax Regime – ₹50,000
New Tax Regime – Increased to ₹75,000
Section 87A Rebate
Old Regime – ₹12,500 for eligible taxpayers
New Regime – ₹60,000 for income up to ₹12 lakh (Earlier, it was ₹25,000)
Capital Gains Tax Changes
Long-Term Capital Gains (LTCG) Tax: 12.5% (earlier 10%)
Short-Term Capital Gains (STCG) Tax: 20% (earlier 15%)
ITR Filing Timeline Extended
Taxpayersnow have 48 months (4 years) instead of 24 months (2 years) to file an updated ITR from the end of the relevant assessment year.
Changes in TDS (Tax Deducted at Source)
Revised TDS Threshold Limits
| Section | New Threshold (From 1st April 2025) |
|---|---|
| 193 (Interest on securities) | ₹10,000 per financial year |
| 194A (Interest other than securities) | ₹1,00,000 (Senior Citizens), ₹50,000 (Others) |
| 194 & 194K (Dividends & MF earnings) | ₹10,000 per financial year |
| 194B & 194BB (Winnings from lottery/games) | ₹10,000 per transaction |
| 194D, 194G & 194H (Commission, brokerage, etc.) | ₹20,000 per financial year |
| 194-I (Rent on property) | ₹50,000 per month |
| 194J (Professional/technical services) | ₹50,000 per year |
| 194LA (Compensation on land acquisition) | ₹5,00,000 per year |
New TDS Section – 194T
A new TDS provision under Section 194T mandates that Partnership Firms and LLPs must deduct 10% TDS on payments exceeding ₹20,000 made to their partners in a financial year.
TDS Rate Changes
| Section | New Rate (From 1st April 2025) | Old Rate (Until 31st March 2025) |
|---|---|---|
| 194D (Insurance Commission) | 2% | 5% |
Changes in TCS (Tax Collected at Source)
Updated TCS Limits
-
LRS Remittance – TCS limit increased from ₹7 lakh to ₹10 lakh per year.
-
No TCS on student loans for foreign education.
-
TCS on sale of goods (Section 206C(1H)) – Removed (Earlier limit: ₹50 lakh).
UPI & Banking Changes
New UPI Rules
Inactive mobile numbers linked to UPI will be automatically deactivated.
Banks must verify UPI-linked mobile numbers weekly.
Numeric UPI IDs (linked to mobile numbers) now require user consent for transactions.
ATM Withdrawal Charges Increased
Beyond free monthly withdrawals, banks will charge ₹23 per transaction.
FAQs on New Tax Rules 2025
1. What are the new income tax slabs for FY 2025-26?
The new tax slabs are:
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%
2. Will I be forced to use the new tax regime?
No, the New Tax Regime is now the default, but taxpayers can continue with the Old Tax Regime by filing Form 10IEA.
3. How much is the Standard Deduction under both regimes?
Old Regime – ₹50,000
New Regime – ₹75,000
4. What is the rebate under Section 87A?
Old Regime – ₹12,500 for income up to ₹5 lakh.
New Regime – ₹60,000 for income up to ₹12 lakh (Earlier, it was ₹25,000).
5. What are the new TDS rules under Section 194T?
Partnership Firms and LLPs must deduct 10% TDS on payments exceeding ₹20,000 made to partners in a financial year.
6. What are the changes in ATM withdrawal charges?
Banks can now charge ₹23 per transaction after exceeding the free withdrawal limit.
Conclusion
The new tax rules from 1st April 2025 bring significant tax benefits such as a higher standard deduction, increased TDS limits, extended ITR filing deadlines, and better TCS exemptions. However, capital gains tax rates have increased, and ATM withdrawal charges are higher. It’s essential to plan finances accordingly to maximize tax savings and avoid penalties.
For expert tax consultation, visit Power of Factorial Business Solutions today!
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