Budget 2025 Unveiled: Tax Reliefs, TDS Reforms & Key Changes You Must Know

Budget 2025 Unveiled: Tax Reliefs, TDS Reforms & Key Changes You Must Know

The Union Budget 2025-26 brought with it several exciting changes aimed at reducing the tax burden, boosting disposable income, and encouraging growth in various sectors. If you're wondering how these new measures will affect your pocket, here’s a simple breakdown of what you need to know about the latest Income Tax Slabs, tax exemptions, and more.

Income Tax Slabs 2025-26: A Major Relief for Taxpayers

There is a marked boon to taxpayers, especially salaried persons, as the newly proposed Income Tax Slabs in Budget 2025 are compared to the earlier regime. Under this new regime, no income tax is payable on annual income up to Rs 12,00,000.

Here's how new tax structure would look like for individuals with different income levels:

New Tax Regime: Key Changes

Income Range (Rs) Tax Rate

Income Range (Rs)	Tax Rate
Up to 4,00,000	0%
4,00,001 to 8,00,000	5%
8,00,001 to 12,00,000	10%
12,00,001 to 16,00,000	15%
16,00,001 to 20,00,000	20%
20,00,001 to 24,00,000	25%
20,00,001 to 24,00,000	30%

 

What Does This Mean for You?

-Income up to Rs 12,00,000 will now be tax-free. This is a massive relief for salaried individuals.

-The standard deduction of Rs 75,000 ensures that even those earning up to Rs 12.75 lakh can benefit from a tax-free income.

-The Section 87A rebate has been increased to Rs 60,000, up from Rs 25,000 in previous years.

This will benefit a large number of taxpayers, especially middle-class families, as the exemption limit is increased.

No Tax on Medical Travel Expenditures

The most interesting change proffered by Budget 2025 is tax-free treatment for medical travel abroad. From April 1, 2026, any expenditure incurred for medical treatment abroad shall not be treated as a perquisite by the employer. This is a great big move that will ease the financial burden on persons who have to travel out of the country for one reason or the other related to medical undertakings.

Raising Rebate Limit: A Big Win for Middle-Class Taxpayers

One of the most significant changes introduced in this budget is the increase in the rebate limit under Section 87A. Now, individuals earning up to Rs 12,00,000 will be able to claim a Tax Rebate of Rs 60,000. This change directly impacts the middle class and reduces the overall tax liability.

Probably, the most critical change this budget brings is to the rebate under Section 87A. Henceforth, for a tax payers with up to Rs 12,00,000 annual income, Tax Rebate of Rs 60,000 can be claimed. The middle class gets directly affected due to this, and overall tax liability reduces.

How Does This Work?

For taxpayers with income up to Rs 12 lakh, the rebate will help reduce their tax liability effectively, offering significant financial relief. However, do note that this rebate does not apply to special income like capital gains.

TDS and TCS: What’s Changing?

The Budget 2025 also brought important changes in Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) provisions, with an aim to provide more cash in hand for taxpayers.

-TDS on interest income has been increased to Rs 1 lakh, benefitting senior citizens.

-TDS on rent has been increased from Rs 2.4 lakh to Rs 6 lakh, which will benefit those who receive modest rental income.

How This Helps You

-More disposable income for individuals, especially senior citizens who rely on interest earnings.

-Simplicity in compliance as these changes reduce the burden on taxpayers and make the system more transparent.

Tax Exemption on Two Self-Occupied Homes

Budget 2025 has also brought relief to homeowners. Individuals can now own two self-occupied properties without drawing the attention of additional tax conditions. This is particularly welcome for those who have to keep two different properties in other cities, either for work or personal and familial reasons.

Boost to Real Estate

In addition, the SWAMIH Fund 2 has been established with a corpus of Rs 15,000 crore to complete stalled housing projects. It is a step toward reinstating the real estate sector and helping both the buyers and developers.

TDS on Dividends: A Key Change

Another significant change is the increase in the TDS threshold on dividend income. No TDS would be deducted, the government proposed, if the dividend income is below Rs 10,000.This would be a great relief for those investorswho have been earning dividend income from their stocks or mutual funds.

Tax Benefits for NPS Vatsalya

NPS Vatsalya is now eligible for tax benefits under Section 80CCD(1)(b) for those saving long-term for children. Parents contributing to the NPS Vatsalya scheme can thus avail themselves of tax relief.

Changes to Crypto Taxation

For crypto investors, the new income tax assessment rules will apply to cases involving Virtual Digital Assets (VDAs). If the Income Tax department conducts a search, they can assess income from crypto transactions for up to six years. This is a move to bring more transparency and accountability to the growing crypto space.

What Becomes Cheaper for the Common Man?

Along with tax relief, the Budget 2025-26 also proposed certain items becoming cheaper, which could directly benefit consumers.

-Lifesaving drugs will be exempt from basic custom duties.

-Telecom products like carrier-grade ethernet switches and certain mobile phone components will also be cheaper due to duty reductions.

What Becomes More Expensive?

On the flip side, there are some products that will become more expensive after the Budget 2025-26:

-Electronics, such as interactive flat-panel displays, will attract higher custom duties.

-Textiles will also become costlier with a revision in custom duties.

Key Takeaways from Budget 2025

-The new tax regime provides relief to individuals earning up to Rs 12,00,000, with tax exemptions and increased rebates.

-Senior citizens and homeowners benefit from higher TDS exemptions and a more favorable taxation system.

-The crypto market faces stricter regulations, but clearer taxation rules for crypto income.

-Savings and investment opportunities such as the NPS Vatsalya scheme and changes in TCS/TDS limits provide further relief and opportunities for wealth creation.