As India enters the new financial year on April 1, 2025, taxpayers are set to experience significant relief following Union Finance Minister Nirmala Sitharaman’s Budget 2025 announcements.
The revised tax structure aims to put more money in the hands of middle-class taxpayers, with a higher tax-free income threshold and reduced tax burdens.
Key Tax Changes Effective April 1, 2025
Higher Tax-Free Income Limit
Under the new tax regime, individuals earning up to ₹12 lakh will be exempt from income tax, marking a substantial increase from previous limits. Salaried employees will enjoy an additional ₹75,000 standard deduction, bringing their tax-free income ceiling to ₹12.75 lakh.
Revised Income Tax Slabs for 2025-26
New Tax Regime:
| Income Tax Slab (₹) | Tax Rate (%) |
| 0 – 4,00,000 | 0% |
| 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% |
| 24,00,001 and above | 30% |
Old Tax Regime:
| Income Tax Slab (₹) | Tax Rate (%) |
| 0 – 2.5 lakh | NIL |
| 2.5 – 5 lakh | 5% above ₹2.5 lakh |
| 5 – 10 lakh | ₹12,500 + 20% above ₹5 lakh |
| Above 10 lakh | ₹1,12,500 + 30% above ₹10 lakh |
With the highest tax rate of 30% now applicable only on income exceeding ₹24 lakh, taxpayers across multiple brackets are set to benefit.
Changes in TDS Rules
FM Sitharaman also introduced higher TDS thresholds, reducing tax deductions at source for common financial transactions:
- Interest on Deposits: No TDS up to ₹50,000 for general citizens and ₹1 lakh for senior citizens (previously ₹40,000 and ₹50,000, respectively).
- Rent Payments: TDS exemption raised from ₹2.4 lakh/year to ₹6 lakh/year.
- Remittances Abroad: No TDS for remittances up to ₹10 lakh, up from the previous ₹7 lakh limit.
Repo Rate Cut and Its Impact on Borrowers
The Reserve Bank of India (RBI) announced a 0.25% repo rate reduction in February 2025, making loans more affordable. With banks already lowering interest rates on home and auto loans, more disposable income is expected for borrowers. SBI Research projects an additional 0.75% repo rate cut in 2025-26 as inflation remains controlled.
Final Thoughts: Will Taxpayers Have More Money in Hand?
With a higher tax-free limit, lower tax rates, and reduced TDS deductions, taxpayers—especially those opting for the new tax regime—will retain a larger portion of their income. The repo rate cut further enhances financial relief by making loans more affordable.
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