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Indian Budget 2025 | Top 10 frequent questions
The Interim Budget 2025 demonstrates Indian economic confidence amidst global economic downturns. This document addresses the ten most frequently asked queries and significant changes as perceived by the average taxpayer.
Budget 2025 is an excellent budget which gives the more relief to middle class taxpayers. It is beneficial for the taxpayers who are opting for New Tax Regime (NTR). There are no changes in Old Tax Regime
There is a basic exemption limit increase from Rs 3,00,000 to Rs 4,00,000 for individuals/HUF under New tax Regime. Also, the tax slabs in New Tax regime has undergone a major changes. The new tax slab rates in New Tax Regime are as follows
From FY 2025-26 onwards
NEW * per latest Budget 2025 on 01st February 2025| S.No | Income | Rate of Tax (Applicable from FY 2025-26) |
|---|---|---|
| 1 | Upto Rs 4,00,000 | Nil |
| 2 | From Rs 4,00,001 to Rs 8,00,000 | 5% |
| 3 | From Rs 8,00,001 to Rs 12,00,000 | 10% |
| 4 | From Rs 12,00,001 to Rs 16,00,000 | 15% |
| 5 | From Rs 16,00,001 to Rs 20,00,000 | 20% |
| 6 | From Rs 20,00,001 to Rs 24,00,000 | 25% |
| 7 | More than Rs 24,00,000 | 30% |
However there are no changes to slab rates in Old tax regime
The rebate under Old tax regime does not change and it remains constant. Rebate under Old tax regime is 12,500 if your income is upto 5 Lakhs
Under New Tax Regime, taxpayer having income upto Rs 12 Lakhs is not required to pay any taxes. The salaries employees who are having income upto 12.75 Lakhs are not required to pay any taxes because of standard deduction. The rebate under New Tax regime for taxpayers is Rs 60,000 (If we compare with FY 2024-25 and earlier years, the tax savings is Rs 80,000)
However the tax rebate is applicable only if the taxpayer income consists of normal income like salary, interest, business, rental income etc. If the income consist of special rates of income like Crypto, lottery, capital gains etc, rebate is not applicable on such incomes
Yes, even if your income is 6 lakhs and you owe no taxes, you must file income tax forms. This is because the basic exemption ceiling for filing income tax returns under the new tax regime is Rs 4 lakh.
In the same way, even if your taxable income is less than 12 lakhs (after applying the standard deduction for salaried employees), you must file your tax returns yearly.
Even if there is no tax to pay, but completing an income tax return (ITR) is still necessary. Every person whose income exceeds Rs. 4 lakhs under the new tax regime is required to file an income tax return.
The tax gets calculated even for the income less than Rs. 12 Lakhs (after standard deduction of 75K for salaried), but due to the new rebate u/s 87A, the next tax payable would be zero. Hence there are slab rates below 12 Lakhs.
For Example, Mr Bharath have Salary of Rs 15 Lakhs and after standard deduction of 75000, his net taxable income is Rs 14,25,000. In this case, Bharath is required to pay taxes at the applicable slab rates on the income below 12 Lakhs also.
The rules are not changed under presumptive tax scheme. However if the taxpayer who has business profit upto 12 Lakhs are not required to pay any taxes. Also the slab rates has been changed.
Rebate allows the government to provide relief to lower-income individuals against inflation and/or to put more money in the hands of taxpayers. Also rebate helps the Government with future adjustments in tax collection.
Yes, it is possible for Government to revoke the rebate in future. The tax rebate is a section in Income Tax Act and this can be amended or changed based on economic conditions, political considerations etc
The time limit for filing updated income tax returns has been extended to 4 years (48 months) from the end of relevant Assessment year. Earlier it was 2 years.
The penalties or Additional tax payable for updated returns are as follows
- Filed within 12 months from the end of relevant assessment year: Penalty is 25% of aggregate of tax and interest payable on filing of updated return
- Filed after 12 months and before 24 months from the end of relevant assessment year: Penalty is 50% of aggregate of tax and interest payable on filing on updated return
- Filed after 24 months and before 36 months from the end of relevant assessment year: Penalty is 60% of aggregate of tax and interest payable on filing on updated return
- Filed after 36 months and before 48 months from the end of relevant assessment year: Penalty is 70% of aggregate of tax and interest payable on filing on updated return
The Finance Minister has provided a very much required relief to Senior Citizens. The threshold for deduction of TDS on interest paid or payable to senior citizens is increased to Rs 1,00,000 from Rs 50,000. This helps the senior citizens with small fixed deposits to get the entire interest
The Budget 2025 has provided the measures for rationalization of TDS and TCS for easing difficulties. The Finance Minister proposed that the number of TDS rates will be reduced and threshold for deduction of TDS will be increased for uniformity. Below are the changes
| Section and Nature of Payment | Current TDS Threshold | Proposed TCS Threshold |
|---|---|---|
| 193- Interest on Securities | Rs 0 | Rs 10,000 |
| 194A - Interest other than Interest on securities | Rs 50,000 for senior citizen | Rs 1,00,000 for Senior citizen |
| 194 – Dividend | Rs 5,000 | Rs 10,000 |
| 194K - Income in respect of units of a mutual fund or specified company or undertaking | Rs 5,000 | Rs 10,000 |
| 194B - Winnings from lottery, crossword puzzle etc. | Aggregate of amounts exceeding 10,000/- during the financial year | 10,000/- in respect of a single transaction |
| 194BB - Winnings from horse race | Aggregate of amounts exceeding 10,000/- during the financial year | 10,000/- in respect of a single transaction |
| 194D - Insurance commission | Rs 15,000 | Rs 20,000 |
| 194G - Income by way of commission, prize etc. on lottery tickets | Rs 15,000 | Rs 20,000 |
| 194H - Commission or brokerage | Rs 15,000 | Rs 20,000 |
| 194-I Rent | Rs 2,40,000 | Rs 6,00,000 |
| 194J - Fee for professional or technical services | Rs 30,000 | Rs 50,000 |
| 194LA - Income by way of enhanced compensation | Rs 2,50,000 | Rs 5,00,000 |
| 206C(1G) – Remittance under LRS and overseas tour program package | Rs 7,00,000 | Rs 10,00,000 |
Yes, Budget 2025 has proposed the benefits for the startups. The Tax benefit u/s 80IAC will be extended to startups for another period of five years, i.e. the benefit will be available to eligible start-ups incorporated before 01.04.2030
No Direct tax code was not announced in Budget 2025. However Finance Minister has announced that the direct tax code will be announced next week i.e., post 02 nd February 2025.
Budget 2025 has enhanced the investment and turnover levels for classification of MSME are enhanced to 2.5 times and 2 times respectively. This brings the more business into MSME category
| Investment | Turnover | |||||||
| Particulars | Current | Revised | Current | Revised | ||||
|---|---|---|---|---|---|---|---|---|
| Micro | 1 crore | 2.5 Crore | 5 crore | 10 crore | ||||
| Small | 10 crore | 25 Crore | 50 crore | 100 crore | ||||
| Medium | 50 crore | 125 Crore | 250 crore | 500 crore | ||||
Budget 2025 has announced lot of measures for the ease of doing business and reducing compliance burden
- The period of validity of registration of trust or institution is increased to 10 years from 5 years for smaller trusts or institutions
- The withdrawals made from National Savings Scheme (NSS) by individuals on or after the 29th of August, 2024 is exempted from taxation. Similar treatment is available to NPS Vatsala accounts/normal NPS accounts
- The time limit for the end-use of imported inputs in the relevant rules extended to 1 year from 6 months. Such importers are required to file only quarterly statements instead of a monthly statement
No, employers should not consider the rebate under Section 87A while deducting TDS on salaries. The reasons are as follows
- Under Section 192 of the Income-tax Act, 1961, an employer is required to deduct TDS on estimated taxable income of the employee before applying any rebate
- Rebate under Section 87A is applied after total tax liability is computed when filing the Income Tax Return (ITR). Employers are not responsible for applying the rebate while deducting TDS
Note: If excess TDS is deducted, the employee can claim a refund while filing the ITR.
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