Union Budget 2025: Key Tax Changes That Could Impact Your Finances

 Union Budget 2025: Key Tax Changes That Could Impact Your Finances

Union-Budget-2025:-Key-Tax-Changes-That-Could-Impact-Your-Finances
As such, in Union Budget 2025-26, Finance Minister Nirmala Sitharaman has presented various significant amendments which are of utmost importance and influence taxpayers nationwide. Most prominent on the agenda for these taxpayers include the tax slab changes, income tax exemption, and tax deduction. As a salaried individual, gig worker, or an aspirant property buyer, this 2025 budget holds a wealth of financial savings and opportunities for one. Here, let us discover how such key updates might change things for you.

What’s New in Income Tax Slabs for 2025-26?

In the Union Budget 2025, the government introduced significant changes to the income tax regime. This includes a higher tax exemption threshold, which has been eagerly awaited by middle-class taxpayers.

Income Tax Exemption up to Rs. 12 Lakhs

The most exciting news is that the government has now exempted individuals earning up to Rs. 12 lakh annually (under the new tax regime) from paying any income tax. This is a huge relief compared to the previous exemption limit of Rs. 7 lakh.

For taxpayers earning between Rs. 12 lakh and Rs. 24 lakh, the revised tax slabs offer reduced tax burdens. The new, proposed regime aims to simplify tax filing and compliance.

Income Tax Regimes: Which One is Right for You?

India’s tax system offers two primary tax regimes: the Old Tax Regime and the New Tax Regime. Let’s break down the differences and determine which regime benefits you the most.

Old Tax Regime:

The old tax regime offers various exemptions, deductions, and rebates. For example, taxpayers can still claim deductions under sections like 80C (for investments), 80D (for health insurance), and 80CCD (for NPS).

However, this regime requires more paperwork and can be a hassle for those who prefer simplicity. As of Budget 2025, there are still some updates, such as allowing tax treatment of NPS Vatsalya accounts.

New Tax Regime:

The new tax regime is designed to be simpler and more transparent. While it doesn't offer exemptions, it allows for a more straightforward approach to tax filing. Key updates include:

1.   Income of up to Rs. 12 lakh is now completely tax-free.

2.   Revised tax slabs with a 30% tax rate triggering only above Rs. 24 lakh (previously Rs. 15 lakh).

This regime works best for taxpayers who do not need to claim deductions and prefer a hassle-free filing process.

 

Key Changes That Could Affect Your Tax Liability

1.TDS and TCS Updates

As of April 1, 2025, there are important changes to TDS and TCS regulations, especially for non-PAN holders. Previously, non-PAN holders were charged higher TDS rates under Section 206CC. This provision is being removed, making compliance easier for taxpayers without a PAN.

Additionally, there is a change in the Tax Collected at Source (TCS) rate for remittances. The threshold for TCS on international remittances has been raised from Rs. 7 lakh to Rs. 10 lakh.

2. No More Tax on Two Self-Occupied Homes

Good news for homeowners! The new budget allows individuals to declare the annual value of up to two self-occupied properties as nil, exempting them from paying tax on notional rental income. This is a relief for those who own multiple properties and are required to declare rental income for tax purposes.

3. Deduction for NPS Contributions Under the Old Regime

Under the old tax regime, the government has proposed a new tax treatment for NPS Vatsalya accounts. These will now be treated the same as regular NPS accounts under Section 80CCD, offering an additional deduction of up to Rs. 50,000.

What’s in Store for Gig Workers in Budget 2025?

Gig economy workers have long struggled for recognition and benefits. The 2025 budget introduces several changes aimed at improving their social security.

Gig Worker Identity Cards and Healthcare

The government will provide gig workers with identity cards through the e-Shram portal and extend PM Jan Arogya Yojana healthcare benefits. These changes aim to recognize gig workers as part of the official employment ecosystem, providing them with greater job security and healthcare access.

Tax Relief for Property Buyers

For those looking to buy property, Budget 2025 brings relief in the form of new tax exemptions. The government now allows tax benefits on two self-occupied homes rather than just one. This is especially beneficial for people who own homes in different cities for work, personal reasons, or investments.

Additionally, the budget has introduced a higher exemption limit for rental income. Small landlords who receive rental income below Rs. 6 lakh annually will benefit from simplified TDS rules.

How Will Budget 2025 Affect Your Savings and Investments?

The revised tax slabs and the introduction of tax-free income up to Rs. 12 lakh may influence how individuals approach savings and investment.

Does Budget 2025 Discourage Savings?

The new tax regime might discourage savings-focused behavior, especially for individuals who previously claimed deductions. However, the increased disposable income due to the higher exemption limit may encourage spending, which is expected to boost domestic consumption.

Conclusion: Is Budget 2025 Truly Taxpayer-Friendly?

The Union Budget 2025-26 presents several taxpayer-friendly measures, particularly for the middle class. With an increased tax exemption limit, revised tax slabs, and initiatives supporting gig workers and property buyers, the budget promises relief for millions.

While some taxpayers may prefer the old regime due to its deductions and exemptions, others may find the new regime a simpler and more efficient option. Either way, Budget 2025 is a step in the right direction toward reducing tax burdens and simplifying compliance.

Frequently Asked Questions (FAQ)

1. Will my income tax liability be zero if I earn up to Rs. 12 lakh?

Yes, under the proposed new tax regime, individuals with annual incomes up to Rs. 12 lakh will not have to pay any income tax.

2. What happens if I don't have a PAN?

Starting from April 1, 2025, the higher TDS rates for non-PAN holders will be omitted. However, you may still be subject to other compliance requirements.

3. Are gig workers eligible for any tax benefits in Budget 2025?

Yes, gig workers will receive identity cards and access to healthcare benefits under the PM Jan Arogya Yojana, as announced in the budget.

By breaking down complex tax changes into simple language, this article ensures that the information is accessible to all readers, offering clear insights into how the 2025 budget will impact their finances.

Rajveer Singh

Tax Law Page, led by Rajveer Singh, simplifies Tax Laws with 19+ years of expertise, offering insights, compliance strategies, and practical solutions.

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