Tax Changes Simplified! What Salaried Employees Need To Know From April 1

Starting April 1, 2025, salaried employees will see their tax rules shift as the Union Budget 2025, rolled out by Finance Minister Nirmala Sitharaman, takes effect for the Financial Year 2025-26 (Assessment Year 2026-27). The tweaks tweak the default new tax regime, TDS thresholds, and more. Here’s a clear, bite-sized guide to what’s changing and how it hits your wallet.

• Tax-Free Income Jumps: The new tax regime—your default since FY 2023-24—now offers a Rs 12 lakh tax-free ceiling, up from Rs 7 lakh, thanks to a beefed-up Section 87A rebate rising from Rs 25,000 to Rs 60,000. Add the standard deduction (now Rs 75,000 from Rs 50,000), and salaried folks can earn up to Rs 12.75 lakh tax-free, saving up to Rs 17,500 yearly. Slabs stay the same: 0% up to Rs 3 lakh, 5% for Rs 3-6 lakh, and so on, topping at 30% above Rs 15 lakh.

• Old Regime Holds Steady: Prefer the old tax regime? It’s still an option with its familiar slabs and deductions (like HRA and Section 80C up to Rs 1.5 lakh), but it skips the new rebate boost. Your call depends on how much you lean on those exemptions.

• TDS Relief On Bank Interest: Tax Deducted at Source (TDS) on bank deposit interest gets a lift—thresholds rise from Rs 40,000 to Rs 50,000 for regular taxpayers and double to Rs 1 lakh from Rs 50,000 for seniors. Less tax withheld means more cash in hand.

• Perks Get A Pass: Employer-provided perks like medical travel abroad or office amenities (think tea and snacks) are no longer taxable perquisites. That’s one less thing bloating your tax bill.

• NPS Boost For Retirement: The deduction for employer contributions to the National Pension System (NPS) under Section 80CCD(2) in the new regime jumps to 14% of basic salary from 10%. More savings for your golden years.

• ULIP Tax Twist: Unit-Linked Insurance Plans (ULIPs) lose some shine—redemption proceeds above a Rs 2.5 lakh premium cap will now face capital gains tax under Section 112A, ditching their old full exemption under Section 10(10D).

• Property Tax Eases Up: You can now claim nil annual value for up to two self-occupied homes, no matter where they are or your job situation. Simpler filings for multi-property owners.

• Longer Fix-It Window: Made a mistake on your return? The deadline to file an updated return (ITR-U) stretches from two to four years, giving you extra time to correct errors or claim missed deductions.

These changes, effective from April 1, aim to put more money back in your pocket while streamlining tax rules. The new regime tempts with simplicity and relief, but the old one might still win if you’re deduction-heavy. With the ITR deadline for AY 2025-26 set for July 31, 2025, now’s the time to crunch the numbers and pick your play.