Understanding Key changes in Budget 2025 impacting taxpayers

STC BUSINESS DESK
SRINAGAR, FEBRUARY 04 (STC): Rs 12 lakh as tax-free income proposed in the Budget 2025 is almost every day getting discussed in media and taxpayers have been focussing more on this than other key announcements having an impact on them.
Straight Talk Communications Business Team sums up the details of some other impactful announcements worth attention. Here are some major Budget decisions impacting taxpayers:

New Tax Bill:
The announcement of the New Income Tax Bill has created significant anticipation among taxpayers, who expect it to bring transparency, certainty, and reduced litigation. By simplifying tax laws and making compliance easier, the government aims to build a taxpayer-friendly system based on trust rather than scrutiny.

Basic Exemption Limit Raised to Rs 4 Lakh:
The government has proposed increasing the basic exemption limit under the new tax regime from Rs 3 lakh to Rs 4 lakh. As a result, individuals with an annual taxable income of up to Rs 4 lakh will have zero tax liability. Moreover, taxpayers opting for the new tax regime will not be required to file an income tax return if they do not meet other mandatory filing criteria.

Full Tax Rebate for Income up to Rs 12 Lakh:
The income threshold for availing a full tax rebate has been raised from Rs 7 lakh to Rs 12 lakh under the new tax regime. This means taxpayers earning up to Rs 12 lakh annually will pay no income tax. However, incomes subject to special tax rates, such as capital gains, are excluded from this rebate calculation.
Revised Income Tax Slabs
The new tax regime will feature an additional 25% tax bracket, expanding the total number of slabs to seven. The updated structure is as follows:
₹0 – ₹4,00,000: 0%
₹4,00,001 – ₹8,00,000: 5%
₹8,00,001 – ₹12,00,000: 10%
₹12,00,001 – ₹16,00,000: 15%
₹16,00,001 – ₹20,00,000: 20%
₹20,00,001 – ₹24,00,000: 25%
₹24,00,001 and above: 30%
While no changes have been made to surcharge and cess rates, taxpayers earning Rs 18 lakh annually will see savings of up to Rs 72,800, while those earning Rs 24 lakh will save Rs 1,14,400.

Updated Return Filing Window Extended:
Taxpayers will now have five years, instead of the current three, to file updated tax returns. However, additional tax penalties will apply—60% for returns filed in the fourth year and 70% in the fifth year.
Higher Limit for Foreign Remittance under LRS
The threshold for a 20% Tax Collected at Source (TCS) on foreign remittances under the Liberalised Remittance Scheme (LRS) has been raised from Rs 7 lakh to Rs 10 lakh per annum. Additionally, TCS will no longer be levied on remittances for educational purposes funded through loans from specified institutions. (Inputs from Financial Express)