Budget 2025: Relief for taxpayers to simplified TDS, 10 income tax rules announced by FM Nirmala Sitharaman | Mint

Budget 2025 Finance Minister Nirmala Sitharaman presented an annual budget to Parliament on Saturday that focused on wooing the salaried middle class with tax cuts. In a booster dose for the middle class, she announced an exemption from income tax up to ₹12 lakh. This limit will be ₹12.75 lakh for salaried taxpayers, counting ₹75,000 of the standard deduction. 

Income Tax Budget 2024 Live

Key income tax announcements from the Budget 2025

1)No income tax on annual income up to ₹12.75 lakh

The government has raised the Section 87A rebate limit from ₹7 lakh to ₹12 lakh, providing major tax relief to the middle class. Salaried individuals can also claim a ₹75,000 standard deduction, making incomes up to ₹12.75 lakh tax-free.

2)New Slab Structure under new tax regime:

₹0 – ₹4 lakh → No Tax

₹4 lakh – ₹8 lakh → 5%

₹8 lakh – ₹12 lakh → 10%

₹12 lakh – ₹16 lakh → 15%

₹16 lakh – ₹20 lakh → 20%

₹20 lakh – ₹24 lakh → 25%

₹24 lakh & above → 30%

3) tax benefits for homeowners

Individuals can claim two self-occupied properties as NIL taxable income.

4) Extended time for filing updated returns (ITR-U)

Taxpayers now get 4 years (instead of 2) to update their Income Tax Returns.

5)TDS (Tax Deducted at Source)

TDS on rent limit increased from ₹2.4 lakh to ₹6 lakh, reducing compliance for small landlords.

Threshold for senior citizens’ interest income doubled from ₹50,000 to ₹1 lakh.

Presenting the budget in Lok Sabha, the Finance Minister said, “The annual limit of ₹2.40 lakh for TDS on rent is being increased to ₹6 lakh. This will reduce the number of transactions liable to TDS, thus benefiting small tax payers receiving small payments.”

She said, “I propose to rationalize tax deductions at source (TDS) by reducing the number of rates and thresholds about which TDS is deductible. Further, threshold amounts for tax deduction will be increased for better clarity and uniformity. The limit for tax deduction on interest for senior citizens is being doubled from the present ₹50,000 to ₹1,00,000,” she stated.

“The increase in the tax deduction threshold amounts brings much-needed relief to senior citizens. A major portion of their income comes from interest income. They also tend to hold a larger amount in their SB accounts. The tax deduction limit on interest income is being doubled from ₹50,000 to ₹1 lakh, whicheases their tax burden on these savings. These changes provide much needed financial relief and simplicity, especially for retirees who rely on interest and rental earnings for their post-retirement financial stability,” said Adhil Shetty, CEO, BankBazaar.com

6)TCS (Tax Collected at Source) Changes

TCS on foreign remittances raised from ₹7 lakh to ₹10 lakh, allowing higher limits before tax deductions apply.

Sitharaman said, “In the budget of July 2024, the delay of the payments of the TDS up to the due date of filing statements was decriminalised; I propose the same from the TCS provisions as well.”

Additionally, the threshold for Tax Collected at Source (TCS) on remittances under the RBI’s Liberalized Remittance Scheme (LRS) has been increased from Rs7 lakh to Rs10 lakh, and TCS on remittances for education purposes, where the remittance is out of a loan from a financial institution, has been removed.

“The proposed hike in tax collected at source threshold on remittances under the Reserve Bank of India’s Liberalised Remittance Scheme from ₹7 lakh to ₹10 lakh should benefit the travel and foreign exchange sectors. It will provide tailwinds for the outbound tourism and airline sector. Students and individuals seeking medical treatment will also benefit,” said Poonam Upadhyay, Director, Crisil Ratings.

Senior Citizens’ Tax Benefits & Savings Exemptions

7) Higher tax-free interest income

Senior citizens can now earn up to ₹1 lakh interest tax-free (previously ₹50,000).

8)National Savings Scheme (NSS) Withdrawals Exempted:

NSS account withdrawals made after August 29, 2024, will be tax-exempt.

9)NPS Vatsalya accounts to get the same tax benefits as regular NPS accounts.

10) New Income Tax Bill in the budget session

The government also announced plans to introduce a new Income Tax Bill in the budget session. The proposed bill is expected to be around 50 per cent shorter than the current law regarding chapters and words, making it simpler for taxpayers and administrators. This move aims to enhance tax certainty and reduce litigation.

“We eagerly await the introduction of the New Income Tax Act which can be a real game changer of a reform. We are confident that it will be bring in more clarity and simplification in tax structure. Overall, the Budget strikes a commendable balance between managing the expectations of the common man while ensuring fiscal prudence,” said CA Anand Bathiya, President, BCAS (Bombay Chartered Accountants’ Society).