On February 1, 2025, India’s Finance Minister Nirmala Sitharaman announced some big changes in the budget for the year 2025-26 that will help many taxpayers. Here are the key points:
No Tax for Low Earners: People who earn up to ₹12 lakh a year will not have to pay any tax.
New Tax Rates: The government made the tax rates simpler for everyone:
– Those earning ₹0-4 lakh will pay no tax.
– Those earning ₹4-8 lakh will pay 5% tax.
– If you earn ₹8-12 lakh, you pay 10% tax.
– You will pay more as your income increases:
– 15% for ₹12-16 lakh
– 20% for ₹16-20 lakh
– 25% for ₹20-24 lakh
– 30% for over ₹24 lakh
Tax Rebate Increase: The rebate for those using the new tax rules has gone up from ₹25,000 to ₹60,000, but this change does not apply to NRIs (Non-Resident Indians).
Two Houses Allowed: Taxpayers can now call two houses as ‘self-occupied’ for tax purposes, even if they don’t live in both.
Higher TCS Limit: The amount of money received from overseas remittances that requires Tax Collected at Source (TCS) has risen from ₹7 lakh to ₹10 lakh.
Educational Remittances: If you send money for education using a loan from a bank, TCS will not apply. Earlier, TCS was charged on amounts over ₹7 lakh.
Easier Tax Returns: Taxpayers can now update their tax returns within 48 months instead of 24 months, although they will still need to pay extra tax and interest.
NPS Contribution for Minors: Tax deductions for contributions to the National Pension Scheme (NPS) have been extended to include contributions for minors under the NPS Vatsalya scheme.
TDS Changes:
– For senior citizens, the limit for Tax Deducted at Source (TDS) on interest income has increased from ₹50,000 to ₹1 lakh.
– For others, it went from ₹40,000 to ₹50,000.
– The TDS limit on rent paid by companies has changed from ₹2.4 lakh per year to ₹50,000 per month.
– The TDS limit on dividends and mutual funds has increased from ₹5,000 to ₹10,000.
This budget is expected to help boost the economy and benefit many citizens.
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