Important Changes in Income tax effective from 1st April, 2025

 

Changes in TDS Rates and Limits, effective from 1st April 2025 - Comparative Chart:

Category	Previous TDS Rate/Limit	New TDS Rate/Limit	Remarks
Pre-mature withdrawals from EPF (192A)	₹50,000	₹1,00,000	TDS exemption limit raised from ₹50,000 to ₹1,00,000
Interest on Deposits (194A)	₹40,000         (general citizens) ₹50,000           (senior citizens)	₹50,000         (general citizens) ₹1,00,000        (senior citizens)	TDS exemption limit increased for general citizens. Banks will deduct TDS if annual interest exceeds ₹50,000 and for senior citizens if annual interest exceeds ₹1,00,000.
Rent Payments (194I)	₹2,40,000               per year	₹6,00,000                per year	TDS exemption limit raised, reducing tax deductions at source for rent payments.
Insurance Commission (194D)	₹15,000	₹20,000	TDS threshold for insurance commission increased, providing relief to insurance agents.
Professional fees and technical services (194J)	₹30,000	₹50,000	Raised exemption limit, reducing tax deduction on work of professionals, freelances and others.
Dividend Income (194)	₹5,000	₹10,000	TDS exemption limit for dividends raised, benefiting investors in equities and mutual funds.
Lottery Winnings and Horse Race Bets (194B&194BB)	Aggregate annual winnings exceeding ₹10,000	Single transaction exceeding ₹10,000	TDS now deducted only when a single transaction exceeds ₹10,000, simplifying the process.
Higher TDS for non-filers (206AB &206CCA)	Twice the rate applicable or 5% whichever is higher	Omitted	No TDS at higher rate applicable
Remittances Abroad (LRS)	TCS of 20%       (other purposes) TCS of 5%               (education and medical)                    on amounts over ₹7,00,000 per year   Overseas tour package: Up to ₹7 lakh TCS @ 5% Above ₹7 lakh TCS @ 20%	TCS of 20%               (other purpose)                   TCS of 5% (education and medical purposes) on amounts over ₹10,00,000 per year.   Overseas tour package: Up to ₹10 lakh TCS @ 5% Above ₹10 lakh TCS @  20%	Increase in Tax Collected at Source (TCS) rate for foreign remittances under the Liberalized Remittance Scheme (LRS).

 

 

Important changes under Income Tax Act in the case of Partnership firms and LLPs, effective from 1^st April, 2025

Particular	Up to 01.04.2025	From 01.04.2025 onwards
Tax rate	Both were taxed at a flat rate of 30%. If income exceeded Rs. 1 Crore then there was a surcharge of 12%.	Still flat rate is same as previous periods i.e. at 30%. If income exceeded Rs. 1 Crore, surcharge rate has been increased to 15%.
Deductible remuneration to working partner	For first ₹3,00,000 of book profit: Higher of ₹1,50,000 or 90% of book profit   On remainder of book profit:  60% of book profit	For first ₹ 6,00,000 of book profit: Higher of ₹.3,00,000 or 90% of book profit   On remainder of book profit:  60% of book profit
TDS	No TDS was required to be deducted on remuneration of partners.	New Section 194T has implemented TDS to be deducted @10% on partner’s remuneration if payment exceeds Rs. 20,000 in a financial year.
Disclosure Requirements have been increased	Only Standard financial disclosures were sufficient	Firms are  now required to furnish detailed partner-wise income, capital contributions, Related party transactions, Asset Liability Details, Contingent Liabilities, Guarantees and Commitments and Investment Details.

 

Changes in tax slabs, rebates and  provisions for updated returns

Income (A.Y. 2026-27)	Tax rate       (A.Y. 2026-27)	Income (A.Y. 2025-26)	Tax rate           (A.Y. 2025-26)
Up to ₹4,00,000	0%	Up to ₹3,00,000	0%
₹4,00,001-₹8,00,000	5%	₹3,00,001-₹7,00,000	5%
₹8.00.001-₹12.00.000	10%	₹7,00,001-₹10,00,000	10%
₹12,00,001-₹16,00,000	15%	₹10,00,001-₹12,00,000	15%
₹16,00,001-₹20,00,000	20%	₹12,00,001-₹15,00,000	20%
₹20,00,001-₹24,00,000	25%	Above ₹15,00,000	30%
Above ₹24,00,000	30%

• By availing the rebate under section 87A, a person earning income up to ₹12 Lakhs, shall have to pay NIL tax.
• Standard deduction for salaried employee is now of ₹75,000 (previously it was  ₹50,000).
• Relaxation of deemed let out property rule, allowing up to two properties to be declared as self occupies.
• Taxpayers can file updated return u/s 139(8A) within 48 months from the end of relevant assessment year (previously it was within 24 months from the end of relevant assessment year year)