Sun Feb 02 03:50:42 UTC 2025: **India Announces Sweeping Income Tax Changes in Union Budget 2025**

NEW DELHI – Finance Minister Nirmala Sitharaman unveiled significant changes to India’s income tax system during the presentation of the Union Budget 2025 on Saturday. The most dramatic announcement was the elimination of income tax for earnings up to ₹12 lakh (approximately $145,000 USD) under the new tax regime, inclusive of standard deductions. This move was met with enthusiastic applause from BJP MPs.

The new tax regime also features revised slabs: no tax on income up to ₹4 lakh; 5% tax on income between ₹4 lakh and ₹8 lakh; 10% between ₹8 lakh and ₹12 lakh; 15% between ₹12 lakh and ₹16 lakh; 20% between ₹16 lakh and ₹20 lakh; 25% between ₹20 lakh and ₹24 lakh; and 30% on income exceeding ₹24 lakh. The government expects these changes to significantly reduce the tax burden on the middle class, boosting consumption, savings, and investment.

Further changes include rationalization of Tax Deducted at Source (TDS) rates, doubling the tax deduction limit for senior citizens to ₹1 lakh, and extending the deadline for filing updated returns to four years.

The announcements followed confirmation that a new direct tax code will be introduced next week, aiming to simplify tax compliance for individuals. This code is expected to streamline the current system, reducing the complexity of the 1961 Income Tax Act by approximately 60%. Potential changes include eliminating the distinction between financial and accounting years, and introducing a standardized 15% tax on dividend income. Unlike the current system, the new direct tax code will not offer a choice between old and new tax regimes.

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