Major updates in the new Income Tax Bill 2025, which will be effective from 1st April 2026.
Income Tax Slab
- Up to ₹4 lakh: Nil
- ₹4 lakh to ₹8 lakh: 5%
- ₹8 lakh to ₹12 lakh: 10%
- ₹12 lakh to ₹16 lakh: 15%
- ₹16 lakh to ₹20 lakh: 20%
- ₹20 lakh to ₹24 lakh: 25%
- Above ₹24 lakh: 30%.
Full rebate for those whose income is up to ₹12 lakh under the new regime.
Marginal relief provisions also applies if total income exceeds ₹12 lakh.
TDS Exemption Limits Changed
Interest on bank deposits
For non-senior citizens: threshold increased from ₹40,000 to ₹50,000.
For senior citizens: threshold raised from ₹50,000 to ₹1 lakh.
Rent Limit
No TDS if rent is ₹50,000 per month (6 lakh annually).
Professional Fees Limit
₹50,000 (earlier it was ₹30,000)
Dividend or Mutual Fund Income
₹10,000 (earlier it was ₹5,000)
Updated Return Filing Window
Time to file updated returns has been extended to 48 months (earlier it was only 24 months.)
Additional tax rates for late updated returns:
- 25% within 12 months
- 50% within 24 months
- 60% within 36 months
- 70% within 48 months
Cryptocurrency Reporting Becomes Mandatory
All crypto transactions such as buying and selling activities must be reported to IT Department.
Deduction Extensions Startups
Deduction u/s 80-IAC for eligible startups extended till March 31, 2030.
Startups incorporated before this date will get 100% tax benefit for 5 years.
Registration Changes For Charitable Trusts & Institutions
Registration validity increased from 5 years to 10 years.
Minor defaults will not result in cancellations.
Removal of Section 206AB and 206CCA
Higher TDS/TCS rates for non-filers removed; now only 1% rate apply.
Annual Value of Self-Occupied Property Simplified
Benefit extended to two self-occupied properties.
If you own a house Mumbai and live in Delhi as you can’t live there for valid reasons like your job is in another city, then the annual value of that house is NIL.
TCS on Goods
No TCS on specified goods sold above ₹50 lakh.
Presumptive Taxation for Foreign Electronic Firms
Foreign companies setting up manufacturing plants for electronics will get favorable presumptive taxation.
NPS Vatsalya Account Deduction u/s 80CCD(1B)
Additional Deduction - Up to ₹50,000 deduction will be allowed in old regime for contributions to child/dependent NPS account.
National Saving Scheme Withdrawals Benefit
Full Tax exemption on withdrawal made on or after 29 August 2024 for both principal and interest, even if deduction was claimed earlier.
SUUTI Exemption Extended
Exemption under Specified Undertaking of Unit Trust of India extended till March 31, 2027.
Penalty Amendments
- Search-related penalties u/s 271AB has been removed from 1st September 2024.
- Some penalties by Assessing Officer now need approval from a Joint Commissioner.
No Expiry For Faceless Schemes
Earlier, faceless schemes (like online assessments or appeals) had to be started before 31 March 2025.
Now, that deadline has been removed — the government can launch such schemes anytime in the future.
Time Limit for Immunity Applications
If you apply for immunity from penalty or prosecution, the Assessing Officer (AO) must give a decision within 3 months from the end of the month when you applied.
Tonnage Tax Option
The AO must accept or reject the tonnage tax application within 3 months from the end of the quarter in which the application was received.
Court Stay Periods Excluded from Time Limits
While calculating time limits for passing orders or penalty, periods when proceedings are stayed by a Court will be excluded.
Retention and Seizure Provisions
Departments can now keep seized books/documents only one month post quarter in which assessment order is issued.
Loss Carry Forward & Block Assessments
Under section 72A/ 72AA, losses after merger or amalgamation can be carried forward for 8 years from when first computed.
Loss can be carried forward for 8 years from the year of occurrence, regardless of merger events.
Block assessment order for undisclosed income in virtual assets to be passed within 12 months post last authorization.
Capital Gains for Foreign Investors
Long-term capital gains rate are same for both residents and non-residents.
Transfer Pricing Provisions
Multi-year transfer pricing agreements are allowed for up to three years, instead of just one.
TCS Prosecution Exemption
No prosecution will be launched for delayed in TCS deposit, provided payment is made before quarterly return filing.
Capital Asset Definition Amended
Securities held by investment funds will now be treated as capital assets - eligible for capital gains tax.
Conclusion
These are the main changes which will be effective from FY 2025-26 to provide tax relief for middle-class taxpayers, simplifying compliance through revised TDS/TCS rates, and enhancing transparency with mandatory crypto reporting. It also extends benefits for startups, charitable trusts, and foreign investors while rationalizing penalties and procedural timelines.
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