Key Financial Rule Changes from April 1, 2025
With the beginning of the new financial year 2025-26 starting from April 1, several rules related to financial and non-financial services will be changing. Among these, the rules regarding income tax and savings interest are significant and will directly affect your finances. Additionally, changes in UPI-related rules could impact your transactions.
No Tax on Income up to ₹12.75 Lakh
From April 1, salaried individuals will not have to pay any tax on an income of up to ₹12.75 lakh. The government has announced that for the financial year 2025-26, all taxpayers who opt for the new tax system will not be taxed on income up to ₹12 lakh. Additionally, salaried individuals will benefit from an extra standard deduction of ₹75,000.
A new tax system will also be implemented from April 2025, with an increase in the number of slabs and income limits. However, this new tax system will be voluntary. Taxpayers can choose between the new or old tax system when filing their returns. The new tax system does not provide exemptions for any type of investment, while the old system remains unchanged, with exemptions available for eligible investments.
Income Slab and Tax Rates:
- 0-4 lakh INR: 0%
- 4-8 lakh INR: 5%
- 8-12 lakh INR: 10%
- 12-16 lakh INR: 15%
- 16-20 lakh INR: 20%
- 20-24 lakh INR: 25%
- Above 24 lakh INR: 30%
Higher Interest on Savings Schemes
From April 1, the non-taxable interest limits on Fixed Deposits (FDs), Recurring Deposits (RDs), and other savings schemes will increase. Senior citizens will not be taxed on interest income up to ₹1 lakh, which was earlier ₹50,000. For others, the non-taxable interest limit will increase from ₹40,000 to ₹50,000.
No Payment from Inactive UPI IDs
Starting April 1, payments cannot be made from UPI IDs linked to inactive mobile numbers. According to the recent guidelines by the National Payments Corporation of India (NPCI), inactive mobile numbers will be removed from UPI IDs.
Increased Exemption on Rental Income
From April 2025, the exemption limit for rental income will be increased to ₹6 lakh. This will increase cash availability for property owners and promote the rental market in urban areas.
Positive Pay System for Cheques Over ₹50,000
From April 1, cheques of ₹50,000 or more will require the Positive Pay System. Under this system, the cheque details must be provided to the bank in advance to reduce fraud.
Lower Tax on Money Sent to Children Studying Abroad
From April, under the Liberalized Remittance Scheme (LRS) of the RBI, sending money up to ₹10 lakh for children's education or other expenses abroad will not attract tax. The limit was previously ₹7 lakh, beyond which a 5% tax was applicable.
Dividend Income Tax Exemption Raised to ₹10,000
Starting from the next financial year, the tax exemption limit for dividend income will increase to ₹10,000. This means that any dividend income up to ₹10,000 will not be taxed. Previously, the exemption limit was ₹5,000.
New Pension Scheme for Central Employees
A new Unified Pension Scheme (UPS) will be implemented for central employees starting from April 1. This will benefit about 23 lakh employees. Under this scheme, employees with a minimum of 25 years of service will receive a pension equal to 50% of the average monthly salary of the last 12 months.
GST-Related Changes
From April 1, businesses with an annual turnover exceeding ₹10 crore will be required to provide details of e-invoices issued within 30 days on the invoice registration portal. Previously, there was no specific deadline for this. Additionally, businesses registered for GST in multiple states under a single PAN number will need to register as an Input Service Distributor (ISD) for the distribution of input tax credit.