Starting April 1, 2025, significant changes in income tax slabs under the new regime and TDS deduction thresholds have been introduced. These revisions will impact all taxpayers, offering relief in certain areas while adjusting tax liabilities in others. Here’s a detailed look at the updates:
The government has raised TDS thresholds for both senior and non-senior citizens, reducing the instances where TDS is deducted at source. Here are the updated limits:
Senior Citizens: TDS exemption limit increased from ₹50,000 to ₹1 lakh per year.
Non-Senior Citizens: Threshold raised from ₹40,000 to ₹50,000 per year.
The TDS threshold for rental income has been significantly increased from ₹2.4 lakh to ₹6 lakh per year (equivalent to ₹50,000 per month). This benefits landlords across all taxpayer categories.
The TDS threshold on dividend income from mutual funds (under Section 194K) has been increased from ₹5,000 to ₹10,000 annually.
For incomes exceeding these thresholds, TDS will be deducted at a rate of 10%. However, taxpayers should note that these thresholds only apply to TDS deductions—total tax liability is determined based on overall taxable income.
The new tax regime has been adjusted to provide relief to middle-income taxpayers. Below is a comparison of the old and new tax rates:
| Income Range | Old Tax Rate | Income Range | New Tax Rate |
|---|---|---|---|
| Up to Rs 3 lakh | 0% | Up to Rs 4 lakh | 0% |
| Rs 3 lakh – Rs 7 lakh | 5% | Rs 4 lakh – Rs 8 lakh | 5% |
| Rs 7 lakh – Rs 10 lakh | 10% | Rs 8 lakh – Rs 12 lakh | 10% |
| Rs 10 lakh – Rs 12 lakh | 15% | Rs 12 lakh – Rs 16 lakh | 15% |
| Rs 12 lakh – Rs 15 lakh | 20% | Rs 16 lakh – Rs 20 lakh | 20% |
| Above Rs 15 lakh | 30% | Rs 20 lakh – Rs 24 lakh | 25% |
| Above Rs 24 lakh | 30% |
Additionally, a standard deduction of Rs 75,000 applies to salaried taxpayers, providing further tax relief.
Under the revised tax structure, individuals with total taxable income up to Rs 12 lakh can claim a rebate under Section 87A, effectively reducing their tax liability to zero. However, this rebate does not apply to income taxed at special rates, such as capital gains from stocks and equity mutual funds. If your income includes such gains, you may still be liable to pay taxes on that portion.
The updated income tax slabs and TDS thresholds aim to provide tax relief and simplify compliance for taxpayers. With increased exemption limits and rebates, individuals earning up to Rs 12 lakh can enjoy significant savings, while higher-income earners will benefit from adjusted tax brackets. To ensure optimal tax planning, taxpayers should review these changes and consider consulting a tax professional for tailored advice.
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