Income Tax 2025: How New Slabs and Deductions Impact Your Finances

As the new financial year begins, the central government has introduced new changes in its rules for income tax. The new provisions in the Income Tax Rules 2025 regarding tax bands, deductions and investment choices will concern all taxpayers. This data will be very useful if you are currently planning your finances as well. If there are any changes in the way you manage your taxes and savings, please inform us.

Changes In New Tax Slabs

Starting this year, there are new changes in the income tax slabs. Your pay of up to Rs 3 lakh is free from taxes, but you will pay 5% tax for income between Rs 3 and Rs 6 lakh, 10% for income from Rs 6 to 9 lakh, 15% for income from Rs 9 to 12 lakh, 20% for income from Rs 12 to 15 lakh and 30% for anything income above Rs 15 lakh. This shift has provided comfort to the middle class.

Increase In Standard Deduction

The government has raised the limit for standard deduction from Rs 50,000 to Rs 75,000. The limit for senior citizens is set at Rs 1 lakh. Besides, the tax on medical insurance has been cut from Rs 25,000 to Rs 50,000.

New Provisions In Section 80C

Under Section 80C, the amount you are allowed to invest has gone up from Rs 1.5 lakh to Rs 2 lakh. Tax benefits will be granted for selecting PPF, ELSS, investing in life insurance, making home loan principal payments and joining the Sukanya Samriddhi Yojana. There is still no tax levy when you put in Rs 50,000 more in your NPS, as was the case in the previous budget.

Changes In House Rent Allowance (HRA)

The rules governing HRA have been revised. Now, if you live in a metro city, 50% of your basic salary or 50% of your actual rent will be used for HRA. The ceiling applied to non-metro cities is 40%. Thanks to this change, employees living in rented accommodation in metros will see benefits.

Tax-Savings Plans That Are Newly Available

This year, the government has created some new tax saving investments. Tax relief has been given for investing in digital gold, gold bonds issued by the government and startups. They allow you to save taxes and still make profits.

New Rules For Freelancers

Freelancers and gig workers have also been given special consideration. Now, taxes on freelance earning will not be charged until Rs 5 lakh, if they contribute to PF or Mediclaim programs. This will give youth working online major comfort and support.

Also Read: Government Employees Await Pay Hike: How 2.86 Fitment Factor Could Change Salaries

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