New Fiscal Year, New Regulations: Tax Adjustments That Could Break Your Budget

The new fiscal year will begin on April 1, 2025. A more rationalized new income tax regime, as well as increased basic exemption limits and tax rates, are among the new income tax regulations that take effect as the new fiscal year gets underway. Several TDS and TCS regulatory amendments also go into effect. It is essential to comprehend these new income tax regulations since they affect tax deductions from a variety of income sources, such as interest and wages. These adjustments will also affect your tax obligation for income received in FY 2025–2026. The following income tax legislation changes listed below take effect today, April 1, 2025.

TDS Rationalisation:

• The Section 194LBC TDS rate was lowered to a flat 10% from 25% for individuals and HUFs and 30% for others.
• To put more money in the hands of taxpayers, the threshold limitations for several sections (193, 194A, 194K, 194B, etc.) were raised.

Higher TDS/TCS for non-filers is being removed:

• To make compliance easier, Sections 206AB and 206CCA (increased TDS/TCS on non-filers) were eliminated.

Easy Annual Value Estimation for Self-Occupied Real Estate:

• To make filing their ITRs easier, taxpayers are permitted to declare “zero annual value” for up to two self-occupied properties.

Updated ITR Filing Deadline:

• The new ITR filing window was extended from 24 to 48 months after the assessment year finished.

IT Department to Examine Recent and Historical ITRs:

• The IT department will begin comparing recent and previous ITRs on April 1, 2025, to identify any anomalies.

Updates to the GST Rule:

• E-invoices must be uploaded within 30 days for businesses having an annual aggregate turnover (AATO) of ₹10 crore or more.

GST Updates:

• On the GST portal, multi-factor authentication is necessary.  Only documents issued within the last 180 days are eligible for e-way bills. Hotels categorised as “Specified Premises” that charge more than ₹7,500 per night are subject to 18% GST on restaurant services.

Tax-Free Income:

• Tax-Free Income for Salaried Professionals Up to ₹12.75 Lakh. The standard deduction of ₹75,000 raises the tax-free income of salaried individuals under the New Regime to ₹12.75 lakh.

ULIP Taxation Changes:

Since Section 10(10D) does not exempt ULIP proceeds, they will now be considered capital assets and subject to the following taxes:

• STCG (short-term capital gains): 20%. In the absence of indexation, long-term capital gains (LTCG): 12.5%. The Section 10(10D) exemption still applies to ULIPs with yearly premiums under ₹2.5 lakh.