Income tax changes in Budget: Here are 10 things individual taxpayers should know

Income Tax Slab Rates

Finance Minister Nirmala Sitharaman, during her Budget 2025 speech on February 1, announced revised income tax slabs and rates for a more progressive taxation system.

Sitharaman further elaborated on the benefits of the new tax structure, "Slabs and rates are being adjusted across the board to benefit all taxpayers. This new structure will significantly reduce taxes for the middle class, putting more money in their hands, boosting household consumption, savings, and investment."

Here are 10 changes individual taxpayers should know:

• Under the new tax regime for FY 2025-26, individuals earning a taxable income of 25 lakh can save as much as 1,10,000 in taxes.
• The tax rebate has been enhanced from 25,000 to 60,000 for those availing the new tax regime (not applicable for NRIs).
• Owners can now claim two houses as self-occupied, whether they live in them or not. Earlier, taxpayers could claim two houses as self-occupied if they lived in them or couldn’t stay in one because their place of work was elsewhere.
• In a boost to overseas travel, the threshold for Tax Collected at Source (TCS) on overseas remittances under the Liberalised Remittance Scheme (LRS) has been increased from 7 lakh to 10 lakh.
• TCS will also not be applicable to remittances made for educational expenses, where such remittance is taken out of a loan from a specified financial institution. Earlier, the TCS on this was applicable at 0.5% on remittance over 7 lakh.
• The time limit to file the updated tax return has been increased from existing 24 months to 48 months, but with stiff additional tax and interest aggregating to 70 percent.
• Tax deduction (under the old tax regime) for own contribution to National Pension System (NPS) of 50,000, has been extended to contributions made in the name of minors under NPS Vatsalya scheme.
• The limit for tax deduction (TDS) on interest income for taxpayers except senior citizens has been increased to 50,000 from 40,000 for interest from deposits from banks, co-operative societies, post office and to 10,000 (from 5,000) in other cases. For senior citizens the limit has been increased from the present limit of 50,000 to 1 lakh.
• Rent paid by non-individuals (like a corporate tenant) has a TDS obligation. The threshold limit of 2.4 lakh per annum for such TDS has been increased to 50,000 per month.
• Threshold limit of TDS on dividend income and income from mutual fund units has been increased from 5,000 to 10,000.