India’s Income Tax Regime Set for Significant Changes: What You Need to Know

The Indian government has announced a slew of changes to the income tax regime, set to take effect from April 1, 2025. The changes, announced in the Union Budget 2025, aim to provide significant relief to nearly 1 crore taxpayers, with the most notable being the hike in the tax exemption limit under the new tax regime (NTR). In this article, we’ll delve into the details of the changes and what they mean for taxpayers.

The changes, spearheaded by Union Finance Minister Nirmala Sitharaman, are expected to benefit millions of individuals by lowering their tax burden. According to the revised slabs, individuals earning up to Rs 12 lakh annually will no longer have to pay any income tax. The tax rates will be as follows:

• Rs 0-4 lakh – Nil
• Rs 4-8 lakh – 5%
• Rs 8-12 lakh – 10%
• Rs 12-16 lakh – 15%
• Rs 16-20 lakh – 20%
• Rs 20-24 lakh – 25%
• Above Rs 24 lakh – 30%

Taxpayers in the Rs 12-24 lakh bracket will also benefit due to tweaks in the slab rates, resulting in savings of up to Rs 1.1 lakh annually. Another key change is the increase in the TDS (Tax Deducted at Source) threshold on rental income, which has been raised from Rs 2.40 lakh to Rs 6 lakh. This revision aims to ease the compliance burden on smaller landlords and property owners.

For salaried individuals, a standard deduction of Rs 75,000 will continue to be applicable. This means that an individual with an annual salary of Rs 12.75 lakh will effectively fall within the tax-exempt bracket, owing to the deduction that lowers their taxable income to Rs 12 lakh.

While the higher exemption slab is a boon for many, it is essential to note that individuals earning slightly above Rs 12 lakh will not be entirely exempt. For instance, someone with a taxable income of Rs 12.1 lakh will incur a tax liability of Rs 61,500, calculated as follows:

• 5% on income between Rs 4 lakh and Rs 8 lakh
• 10% on income between Rs 8 lakh and Rs 12 lakh
• 15% on the amount exceeding Rs 12 lakh up to Rs 16 lakh

Similarly, for an individual with a taxable income of Rs 15 lakh, the total tax liability will amount to Rs 1,05,000.

For higher income groups earning over Rs 24 lakh annually, the top tax rate of 30 per cent remains unchanged. However, with the restructured slabs, even individuals in these brackets may benefit from marginal reductions in their overall tax outgo.

In conclusion, the changes to India’s income tax regime aim to provide significant relief to taxpayers, simplify compliance for salaried individuals, and ease the compliance burden on smaller landlords and property owners. While the higher exemption slab is a boon for many, it is essential to note that individuals earning slightly above Rs 12 lakh will not be entirely exempt. As the changes take effect from April 1, 2025, it is crucial for taxpayers to stay informed and take advantage of the new tax regime to minimize their tax burden.

Keywords: India’s income tax regime, Union Budget 2025, NTR, tax exemption limit, TDS, rental income, salaried individuals, compliance, tax burden, tax relief

Hashtags: #IndiasIncomeTaxRegime #UnionBudget2025 #NTR #TaxExemptionLimit #TDS #RentalIncome #SalariedIndividuals #Compliance #TaxBurden #TaxRelief



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