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  5. 7 income tax trends in 2025: Refund delays, new slabs and key updates

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7 income tax trends in 2025: Refund delays, new slabs and key updates

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By Sangeeta Ojha

3 min read | Updated on December 24, 2025, 11:52 IST

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SUMMARY

From refund delays to the Income Tax Act 2025 and new slabs, discover 8 major income tax trends of 2025 you need to know as 2026 begins, including updates on rates, exemptions, and compliance.

7 big income tax trends of 2025

7 major income tax trends of 2025 you need to know as 2026 begins, including updates on rates, exemptions, and compliance. | Image: Shutterstock

India has seen substantial tax changes and advancements in 2025 (FY 2025–2026). While it's not easy to recap the entire year in a single article, this piece looks at some of the top developments and trends in income tax from 2025 that you should know going into the new year.

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1. Income tax refund delays

There is a significant slowdown in refund processing and longer wait periods for tax returns for FY 2024–25 (AY 2025–26). Delays have been attributed to high-value refund claims and deduction mismatches. Many taxpayers, especially those with large TDS refunds or capital gains, are still waiting for their refunds.

2. New Income Tax Act, 2025

The adoption of the new Income Tax Act, 2025, which will replace the six-decade-old Income Tax Act, 1961, is the most important development in 2025. With effect from April 1, 2026, the new income tax statute replaces the ambiguous terms "Assessment Year" and "Previous Year" with the idea of "Tax Year."

3. ITR Forms

There were technical difficulties and delays in the implementation of the updated and new ITR forms for the Assessment Year (AY) 2025–2026. Significant structural and content modifications were made to the ITR forms, particularly with the introduction of adjustments to the capital gains rules in July 2024.

4. Revised income tax rates & slabs

The Union Budget 2025 introduced significant revisions to income-tax slabs under the new tax regime, increasing the tax-free threshold and adjusting slabs.

Budget 2025 raised the tax rebate limit to ₹12 lakh for those opting for the new tax regime. With the standard deduction, salaried taxpayers pay no tax up to ₹12.75 lakh.

5. Section 87A rebate

The government also increased the rebate under Section 87A to ₹60,000 for income up to ₹12 lakh while raising the basic exemption limit under the new tax regime to ₹4 lakh. But the reason for the misunderstanding is because special earnings, such long-term and short-term capital gains, are treated differently from slab-based income and are subject to set rates of taxation

While the rebate can reduce or eliminate tax on regular income like salary or interest, it does not apply to tax payable on capital gains. As a result, even if a taxpayer’s total income is below ₹12 lakh, tax on capital gains may still be payable, leading to misunderstandings about the overall tax benefit.

6. Capital Gains (STCG & LTCG) tax changes

Capital gains taxation saw several important changes this year that impact both short-term (STCG) and long-term (LTCG) gains:

  • STCG on equity instruments moved to a higher rate (20%) from 15% under the new regime.

  • LTCG exemptions and limits were adjusted. Up to ₹1.25 lakh were exempt

  • Above ₹1.25 lakh – Taxed at 12.5%

After Budget 2025, there was confusion over capital gains. Since they are taxed separately, some experts were of the view that the rebate should still apply to salary income even if capital gains push total income above ₹12 lakh. Others argued that exceeding ₹12 lakh in total income cancels the rebate.

7. GST 2.0

Though not an income tax, the GST 2.0 rollout in 2025 brought major changes to indirect taxation by simplifying rates and easing compliance, including rationalised tax slabs and exemptions on essential goods and services.
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About The Author

sangeeta-ojha.webp
Sangeeta Ojha is a business and finance journalist with vast experience across leading media platforms, including Mint and India Today. Passionate about personal finance, she has built a reputation for covering a wide range of PF topics—from income tax and mutual funds to insurance, savings, and investing.

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