10 Income Tax Rule Changes Effective from April 1 – Important Updates Before Filing Returns
The new Income Tax Bill for the financial year 2025-26 (assessment year 2026-27) has been introduced in the Union Budget. Significant changes have been implemented to attract taxpayers to the new tax regime, simplify the tax structure, and improve compliance. It is essential to plan taxes accordingly. Here’s a clear breakdown of the updates.
New Income Tax Slab for FY 2025-26
Under Section 115BAC, a new tax slab has been proposed under the default tax regime. The rebate limit has been increased from ₹25,000 to ₹60,000, meaning income up to ₹12 lakh will be tax-free. However, in the old tax regime, the rebate limit remains ₹12,500.
Revised Tax Slabs under the New Regime
| Taxable Income (₹) | Tax Rate (%) |
|---|---|
| 0 – 4 lakh | 0% |
| 4 – 8 lakh | 5% |
| 8 – 12 lakh | 10% |
| 12 – 16 lakh | 15% |
| 16 – 20 lakh | 20% |
| 20 – 24 lakh | 25% |
| Above 24 lakh | 30% |
TDS (Tax Deducted at Source) Changes from April 1
| Category | Previous TDS | New TDS |
|---|---|---|
| Interest on Securities (Section 193) | NIL | ₹10,000 |
| Other Interest Income (Section 194A) | ₹50,000 (for senior citizens) | ₹1,00,000 (for senior citizens) |
| Lottery Winnings (Section 194B) | ₹10,000 (annually) | ₹10,000 (per transaction) |
| Rent (Section 194-I) | ₹2,40,000 (annually) | ₹50,000 (monthly) |
| Professional Fees (Section 194J) | ₹30,000 | ₹50,000 |
TCS (Tax Collected at Source) Changes
| Category | Previous Limit | New Limit |
|---|---|---|
| LRS Remittance (206C(1G)) | ₹7 lakh | ₹10 lakh |
| Purchase of Goods (206C(1H)) | ₹50 lakh | No TCS (Exempted) |
Updated Tax Return (ITR-U) – Extended Filing Deadline
The deadline for filing an updated tax return has been extended from 12 months to 48 months (4 years).
Additional Tax for Late ITR-U Filing
| Filing Period | Additional Tax (%) |
|---|---|
| Within 12 months | 25% |
| Within 24 months | 50% |
| Within 36 months | 60% |
| Within 48 months | 70% |
Other Key Tax Updates
- Tax exemption for IFSC (International Financial Services Centre) units has been extended until March 31, 2030, benefiting businesses and investors.
- No tax on life insurance policies purchased by foreign investors from IFSC.
- Startups registered under Section 80-IAC before April 1, 2030, will receive 100% tax exemption for 3 years within their first 10 years.
- Sections 206AB and 206CCA have been removed to simplify TDS and TCS compliance.
- Higher deduction limit for partner’s remuneration:
- Up to ₹6 lakh profit → Maximum deduction: ₹3 lakh or 90% (whichever is higher)
- Above ₹6 lakh profit → Maximum deduction: 60%
- ULIPs (Unit Linked Insurance Plans) with annual premiums over ₹2.5 lakh will now be subject to Capital Gains Tax.
- Self-occupied properties: There is no longer a limit on the number of properties that can be considered tax-free, even if the owner does not reside there.
These changes aim to simplify tax compliance, provide benefits to businesses and individuals, and improve overall tax efficiency.
