Income Tax Rule: Major news for everyone. Only a few hours remain until the new financial year begins, bringing with it several changes to income tax regulations. Finance Minister Nirmala Sitharaman made significant announcements during the General Budget 2025, which will take effect on April 1, directly affecting the finances of salaried individuals.

Among the new regulations are increased income tax exemptions and modifications to TDS rules. The enhanced exemptions under the new tax regime, as outlined by the Finance Minister, will now allow individuals with an annual income of up to Rs 12 lakh to qualify for tax exemption, a rise from the previous threshold of Rs 7 lakh.

Additionally, when factoring in the standard deduction of Rs 75,000 available to salaried employees, the total income tax exemption can reach Rs 12.75 lakh. However, it’s important to note that capital gains are not included in this exemption and will be taxed separately.

What changes will take effect on April 1?

The government has introduced new tax brackets under the revised tax regime, while the old tax regime remains unchanged. Under the new system, income up to Rs 4 lakh will be exempt from tax, and earnings between Rs 4 lakh and Rs 8 lakh will be taxed at a rate of 5 percent. As income rises, the tax rates will progressively increase, reaching 30 percent for income exceeding Rs 24 lakh.

The central government has raised the tax exemption limit under section 87A from Rs 25,000 to Rs 60,000 in the latest budget. As a result, individuals earning up to Rs 12 lakh will not have to pay any taxes in the new tax framework.

Additionally, the threshold for TDS deduction on interest earned from bank deposits has been increased from Rs 40,000 to Rs 50,000. This change means that no TDS will be applied to interest amounts up to Rs 50,000 from bank deposits. Starting April 1, benefits and allowances provided by employers will no longer be treated as taxable income.

Moreover, if an employer covers the costs of medical treatment abroad for an employee or their family, this expense will not be regarded as a taxable benefit.

Taxpayers will now have four years, rather than two, to submit updated income tax returns (ITR-U). This extension provides individuals with more time to rectify any mistakes or omissions in their tax submissions.

A new tax-saving opportunity has been introduced for parents. Those who contribute to their child’s NPS Vatsalya account can now claim an additional deduction of Rs 50,000 under the old tax regime.