The government has rolled out the Income Tax New Rules effective from April 1, 2025, bringing several changes aimed at simplifying the tax structure and offering relief to a broad section of taxpayers. These changes were part of the Union Budget 2025 and are now officially in force for the financial year 2025-26.
From revised tax slabs to a fresh rebate structure and a new pension scheme, the Income Tax New Rules focus on improving taxpayer convenience and increasing disposable income.
Revised Income Tax Slabs for FY 2025-26
One of the biggest highlights of the Income Tax New Rules is the introduction of a new set of tax slabs. The revised system breaks down income into seven slabs, starting from zero tax on incomes up to Rs 4 lakh and reaching 30% for incomes above Rs 24 lakh.
This new structure aims to spread the tax burden more evenly and reduce the rates for those in lower income brackets. It provides more granularity, which could help people plan their taxes better.
Zero Tax Up to Rs 12 Lakh
Another big relief comes in the form of a revised rebate under Section 87A. As per the Income Tax New Rules, individuals with income up to Rs 12 lakh will not have to pay any income tax, thanks to the rebate being increased to Rs 60,000.
This move especially benefits the salaried middle-class segment, reducing their tax outgo significantly. For those earning up to Rs 12.75 lakh, the standard deduction helps them stay within the zero-tax bracket as well.
Standard Deduction for Salaried Employees
The Income Tax New Rules also enhance the standard deduction for salaried individuals to Rs 75,000. This automatic deduction means taxpayers do not need to show investment proofs or paperwork to avail of this benefit.
With the increased rebate and this standard deduction, the tax burden on salaried employees has come down considerably. This helps ease the financial pressure and simplifies filing returns.
Unified Pension Scheme Now Active
The new Unified Pension Scheme, which was introduced last year, has now come into effect from April 1, 2025. It replaces the old pension system and will apply to over 23 lakh central government employees.
Under this scheme, employees who complete at least 25 years of service will receive 50% of their average basic salary (calculated over the past 12 months) as a pension. This marks a significant shift in retirement planning for government staff.
Other Financial Rule Changes
Alongside the Income Tax New Rules, the government has also made adjustments to TDS thresholds and UPI usage regulations. These were included in the 2025 budget and are now being implemented.
The changes in TDS thresholds are expected to impact high-value transactions, while the new UPI rules will bring more transparency and better control over digital payments.
Comparison with the Old Tax Regime
Taxpayers now have the option to choose between the old and new regimes. The old regime still allows for deductions under sections like 80C, 80D, and interest on home loans. However, it requires more paperwork and tax planning.
The Income Tax New Rules in the new regime offer fewer deductions but make filing simpler and more straightforward. It’s best suited for those who do not have many investments or exemptions to claim.
Who Should Choose What?
For incomes up to Rs 12 lakh, the new regime is clearly more beneficial, offering complete tax exemption. For those between Rs 13 lakh and Rs 20 lakh, the choice depends on the deductions they can claim under the old regime.
If your deductions are substantial—say from home loan interest, insurance premiums, and tax-saving investments—the old regime might offer better savings. Otherwise, the new regime’s simplicity is a strong advantage.
Conclusion
The Income Tax New Rules for 2025 are designed with a focus on ease, transparency, and middle-class benefits. They provide a simpler route for those who prefer hassle-free tax filing, while still keeping the old regime open for those who rely on deductions.
As these changes come into force from April 1, taxpayers are advised to assess both options before filing their returns. Choosing the right regime can make a significant difference in how much tax you pay and how efficiently you manage your finances.