Every year budget season brings surprises. For 2025, government made some new rules in income tax which are going to impact salaried people, business owners, freelancers, everyone. People always ask one question – “How much tax I will save this year?”. The answer depends on how new slabs, deductions, and filing process are applied.
So let’s break it down in simple words.
Why new rules in 2025?
Government said they want to make system simpler. For years, India had two systems – old regime with deductions like 80C, HRA, LTA etc., and new regime with lower tax rates but no deductions. Many people were confused which one to pick. So 2025 changes are trying to push more people into new system.
Also, tax collection rising, digital filing improving, so government wants less complexity, more compliance.
Key changes in slabs (New Regime 2025)
Earlier slab rates were different, now government adjusted them. Approx new slabs for FY 2025-26 (under new regime) are:
- 0 – ₹3 lakh: No tax
- ₹3 – 7 lakh: 5%
- ₹7 – 10 lakh: 10%
- ₹10 – 12 lakh: 15%
- ₹12 – 15 lakh: 20%
- Above ₹15 lakh: 30%
One relief – rebate under section 87A extended to income up to ₹7 lakh, means zero tax if your annual income is within that limit.
So middle class earners get some benefit.
Old regime vs new regime
Old regime still there, but government giving less focus now. Deductions like 80C (₹1.5 lakh), 80D (health insurance), HRA, LTA still allowed in old system. But in 2025, standard deduction of ₹75,000 available in new regime also, earlier it was ₹50,000. This makes new regime slightly more attractive.
Changes in deductions
- Standard deduction increased to ₹75,000.
- Some allowances like transport and medical reimbursement merged into standard deduction.
- NPS contribution deduction limit enhanced for government employees.
- Home loan interest deduction still available only in old regime.
- Education loan interest deduction (Section 80E) continues, but not in new regime.
So basically, if you are salaried with not much investments, new regime is simpler and now cheaper. If you have home loan, heavy investments in ELSS, PF, insurance, old regime may still save more.
Filing process updates 2025
Filing becoming easier. Government integrated AIS (Annual Information Statement) with pre-filled ITR forms. So now when you log in, most salary, TDS, bank interest, capital gains – already filled. You just verify and submit.
Deadline remains 31st July 2025 for individuals. Late filing penalty still ₹1000 to ₹5000 depending on income.
Also, faceless assessment continues, meaning less physical visits to IT office, more online scrutiny.
TDS and advance tax changes
- TDS on online gaming winnings increased, no threshold. Means even small winnings taxable.
- TDS on property purchase now stricter, buyer must deduct correctly else penalty.
- Senior citizens above 75 years with only pension + interest income exempted from filing if bank deducts TDS.
Impact on salaried class
For salaried middle class, new rules bring mixed results. If you earn around ₹7-10 lakh, new regime gives relief. If you earn above ₹15 lakh, tax burden same, but filing easier.
Example: Rajesh earns ₹9 lakh annually, no home loan. Under new regime after standard deduction, taxable income ~₹8.25 lakh. Tax ~₹40,000 only. Old regime with limited deductions may be higher. So Rajesh benefits.
But take Anita, earning ₹12 lakh, paying home loan interest ₹2 lakh, investing ₹1.5 lakh in 80C. Old regime may still save her more.
So choice still depends person to person.
Effect on businesses & freelancers
Businesses have to comply with TDS and GST more strictly. Freelancers who get income from multiple clients will see AIS capturing all payments, so harder to hide. But on positive side, more expenses allowed as deductions if bills uploaded digitally.
NRIs and foreign income rules
NRIs have to declare foreign bank accounts more clearly. Non-disclosure penalties increased. Double Tax Avoidance Agreement (DTAA) claims also need supporting documents uploaded.
Why people should care
Many ignore tax planning till July. But with new rules, waiting last minute can cost. Because one wrong choice between old and new regime may mean extra ₹30-40k gone.
Also, banks, lenders check tax returns for loan approvals. Clean ITR record improves credit profile.
Pros of 2025 rules
- Simpler slab structure
- Higher standard deduction
- More pre-filled data, less manual work
- Middle income group gets relief
Cons of 2025 rules
- Deductions in new regime still limited
- Home loan buyers lose if forced into new system
- Still some confusion which regime to pick
Expert view
Tax experts say, gradually old regime will be phased out. Government wants everyone in new system. But for now, both exist, so individuals must calculate both before filing.
Final thought
The Income Tax New Rules 2025 are step towards simpler system. Slabs easier, deductions streamlined, filing digital. For common salaried people, relief is there up to certain level. But planning still important.
So don’t wait till last moment. Check your income, compare both regimes, decide smart. Because small mistake in choice may cost thousands.
At the end, tax is never sweet, but if you play by rules smartly, you can at least reduce the bite.
