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  5. 7 Income Tax rule changes from April 1, 2025 that salaried employees must know

Personal Finance News

7 Income Tax rule changes from April 1, 2025 that salaried employees must know

rajeev kumar
By Rajeev Kumar

3 min read | Updated on March 27, 2025, 12:19 IST

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SUMMARY

Here's a summary of the most important new tax rules that will come into effect from April 1, 2025. Having these rules in mind will help salaried employees in planning their taxes for the new Financial Year 2025-26.

tax changes for salaried employees

Here's a list of key tax rule changes from April 1, 2025. | Image source: Shutterstock

Several new income tax rules introduced through the Finance Bill 2025 will come into effect from for salaried employees in the new Financial Year 2025-26 April 1, 2025.

While you might already be aware of a lot of these new rules, this article will help you recap going into the new financial year.

1. Tax rebate under Section 87 A

The tax rebate under Section 87 A of Income-tax Act, 1961 will increase from ₹25,000 to ₹60,000 in the new tax regime. This enhanced rebate will apply to taxable income up to ₹12 lakh, excluding income from capital gains.

The enhanced rebate will make taxable income up to ₹12 lakh tax-free under the new regime. For salaried employees, this limit will go up to ₹12.75 lakh due to ₹75,000 standard deduction in the new regime.

However, the tax rebate under the old tax regime will remain unchanged

2. Tax slab and rates

Tax slab and rates under the new regime are changing from April 1. The basic exemption limit will increase from ₹3 lakh to ₹4 lakh. Also, the highest 30% tax rate will apply on incomes above ₹24 lakh. However, there is no change in slabs and rates under the new regime. You can check all new slabs and rates under the new regime here.

3. New TDS thresholds

The minimum amount above which TDS/TCS is deducted will increase for various transactions. One of the most important changes that salaried employees would like to know is related to the TDS threshold on bank deposits, which will increase from ₹40,000 to ₹50,000. Check other TDS/TCS changes here.

4. Change in the definition of perquisites

From April 1, the amenities and benefits received by employees from their employers would be exempt from being treated as perquisites. Further, the expenditure incurred by the employer for travel outside India on the medical treatment of such employee or his family member would not be treated as a perquisite.

5. ULIP taxation

If you are investing in ULIPs, you may like to know a new rule about their taxation. As per the Budget 2025, redemption proceeds from ULIPs that exceed the premium threshold of ₹2.5 lakh will be classified as capital gains. They will be taxed under Section 112A of the Income Tax Act.

6. Tax-saving on NPS Vatsalya

In the new financial year, salaried employees as well as other taxpayers can contribute to the NPS Vatsalya account of their children and claim an additional deduction of ₹50,000 under the old tax regime.

7. Annual value of the self-occupied property simplified

From April 1, salaried employees as well as other taxpayers can claim nil value on up to two properties irrespective of whether they are self-occupied or not. More details here.
Apart from the above, there are several other changes that you may want to know. For instance, you can authorise your DigiLocker nominee to access your equity shares and mutual fund statements. A few credit cards are also changing their benefits from the new financial year. Government employees will get a choice to opt for an assured pension scheme under NPS.
Upstox

About The Author

rajeev kumar
Rajeev Kumar is a Deputy Editor at Upstox, and covers personal finance stories. In over 11 years as a journalist, he has written over 2,000 articles on topics like income tax, mutual funds, credit cards, insurance, investing, savings, and pension. He has previously worked with organisations like 1% Club, The Financial Express, Zee Business and Hindustan Times.

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