The coming new year brings with it the announcement of many fresh rules regarding income tax by the Government of India, which will affect salaried people as well as the business class. Major changes have been made in tax slab, deduction limit and investment option in Income Tax Rules, 2025, for many. If you are into your financial planning, this article will definitely be helpful for you. So, let’s know much more on the new tax rules.
New Changes In The Tax Slab
Under the Income Tax Rules, 2025, there has been a major change in the income tax slab. Tax has increased no one has to pay on income up to Rs 3 lakh, while 5 percent tax is paid on income from Rs 3 to 6 lakh, 10 percent from Rs 6 to 9 lakh, 15 percent from Rs 9 to 12 lakh, 20 percent from Rs 12 to 15 lakh and 30 percent on all income exceeding Rs 15 lakh. This change can be a great relief to the middle class.
Standard Deduction Increase
The standard deduction limit has been raised by the government to Rs 75,000 from its previous Rs 50,000. This limit fixed for senior citizens is Rs 1 lakh. It has also increased the medical insurance exemption limit from 25,000 to 50,000.
New Changes In Section 80C
There has been an increase in investment ceiling under section 80C, which has hiked it from Rs 1.5 lakh to Rs 2 lakh. Tax benefits can now be accrued from other investment options as PPF, ELSS, life insurance, home loan principal and Sukanya Samriddhi Yojana, under this criterion. The government extended even the facility of tax exemption on investing an additional Rs 50,000 under NPS.
Relaxation On House Rent Income
House Rent Allowance (HRA) conditions have also quite changed. This includes now, for those residing in a metropolitan area, HRA would be calculated at either 50% of actual rent (previously 40%) or at most 50% of basic salary, whichever is lower. 40% will be the cap for all others not cities.
Introduced New Tax Saving Investment Options
The government has introduced fresh tax saving instruments like digital gold and bonds. New such investments now include the investment in startups as well. They are additionally given their own tax exemptions.
Changes In Rules For Freelancers
New tax schemes have also been framed for freelancers and gig workers. Freelancers will not be taxed for income earned up to INR 5 lakh if they invest in schemes like PF and Mediclaim. This indeed brings great relief to the youth engaged with digital platforms.
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