Sun Feb 02 10:59:24 UTC 2025: ## India Announces Sweeping Income Tax Changes in Budget 2025-26

**New Delhi, February 1:** Finance Minister Nirmala Sitharaman unveiled significant changes to India’s income tax system in the Union Budget presented to Parliament today. The new regime simplifies tax slabs, offering significant relief to the middle class, particularly salaried individuals.

A key highlight is the elimination of income tax for annual incomes up to ₹12.75 lakh. This includes a standard deduction of ₹75,000 and a rebate under Section 87A of up to ₹60,000 on incomes exceeding ₹12 lakh. This effectively means no tax liability for individuals earning up to ₹12.75 lakh annually.

For incomes above this threshold, a new seven-slab system has been introduced. For example, an individual earning ₹12.80 lakh would pay tax only on the amount exceeding ₹12.75 lakh, with varying tax rates applied to different income brackets.

The government has also increased tax deduction at source (TDS) and tax collection at source (TCS) exemption limits. The TDS exemption limit on interest income for senior citizens has been raised to ₹1 lakh (previously ₹50,000), and to ₹50,000 for others (previously ₹40,000). The TDS exemption limit on rental income has been increased to ₹6 lakh annually (previously ₹2.4 lakh). TCS limits have also been revised upwards. The government aims to reduce the number of TDS/TCS transactions, benefiting smaller taxpayers.

While the new tax regime simplifies taxation, the existing regime remains unchanged. The government is expected to introduce a new income tax bill in Parliament next week. The long-term implications of these changes, and the possibility of phasing out the old regime entirely, remain to be seen. Concerns have been raised regarding the potential impact on savings and investment if the old regime with its various deductions is eventually scrapped.

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