The Union Budget 2025 has introduced several direct tax changes aimed at reducing the tax burden and easing compliance for individuals and businesses. With higher rebate limits, revised TDS thresholds, and relaxed rules for property ownership, these updates benefit salaried employees, senior citizens, small investors, and professionals. Here are the key highlights.

1. Higher Tax Rebate – More Savings for Individuals

The government has increased the tax rebate limit under Section 87A, bringing relief to middle-class taxpayers:

• No income tax for individuals earning up to ₹12 lakh under the new regime, with a rebate of ₹60,000.
• Salaried employees benefit from the standard deduction of ₹75,000, making their tax-free income ₹12.75 lakh.
• The rebate is not applicable to special rate income, such as capital gains.
• If income exceeds ₹12 lakh (₹12.75 lakh for salaried employees), tax is payable as per the revised slabs.

This move helps ease the tax burden and makes the new tax regime more attractive.

2. New Income Tax Slabs – Progressive Taxation Continues

The revised income tax slabs remain structured to ensure a gradual increase in tax rates with income levels:

These structured tax slabs aim to ensure fairness while benefiting different income groups.

3. Higher TDS Thresholds – Relief for Small Investors & Professionals

The government has raised TDS exemption limits across multiple categories to simplify compliance:

Interest on securities (Section 193): Increased from Nil to ₹10,000.

Interest from banks, post offices (Section 194A):

• Senior citizens: ₹50,000 to ₹1,00,000.
• Others: ₹40,000 to ₹50,000.

Dividend income (Section 194): Increased from ₹5,000 to ₹10,000.

Lottery winnings (Section 194B): TDS now applies per transaction exceeding ₹10,000, instead of aggregate annual winnings.

Rent payments (Section 194-I): Monthly rent above ₹50,000 now attracts TDS.

Professional/technical fees (Section 194J): Exemption limit increased from ₹30,000 to ₹50,000.

These changes reduce unnecessary TDS deductions, making tax compliance easier for small investors, professionals, and businesses.

4. Relief for Senior Citizens & Tenants

• Tax-free interest income limit for senior citizens increased from ₹50,000 to ₹1 lakh.
• TDS exemption limit on rent payments increased from ₹2.4 lakh per year to ₹6 lakh per year, offering relief to tenants and landlords.

5. Extended Time for Filing Updated Returns

The time limit for filing updated income tax returns (ITR-U) has been extended from two years to four years. This allows taxpayers more time to correct or update their income tax filings without facing penalties.

6. Claiming Two Self-Occupied Properties Now Easier

Previously, if you owned more than one house, only one property could be considered as self-occupied, meaning its annual value was treated as nil for tax purposes. The second home was deemed let-out, and you had to pay tax on an assumed rental income.

Now, under the new amendment, two properties can be treated as self-occupied, eliminating the tax burden on the second home.

How This Benefits You

• No more tax on notional rent for a second home.
• More flexibility for homeowners with properties in different cities.
• Encourages homeownership, making it easier for families to invest in real estate.

The direct tax changes in Budget 2025 focus on taxpayer relief, reducing compliance burdens, and promoting a progressive tax structure. Increased rebate limits, revised TDS thresholds, and the ability to claim two self-occupied properties make tax management easier for individuals and businesses.

These updates provide more opportunities for taxpayers to save and plan their finances efficiently.