Income Tax Slabs of Budget 2025: Rent TDS, Tax Deduction For Senior Citizens and Other Benefits

Union Finance Minister Nirmala Sitharaman presented the Union Budget 2025-26 at 11 AM today. The Budget 2025, focused on providing tax relief to the middle class. One of the most significant announcements was an increase in the rebate limit under the new tax regime, ensuring that individuals earning up to ₹12 lakh annually will not have to pay any income tax.

Revised Income Tax Slabs Under the New Regime

Post-budget, the proposed tax slabs for individual taxpayers under the new regime are as follows:

• Income up to ₹4,00,000 – No Tax
• ₹4,00,001 to ₹8,00,000 – 5%
• ₹8,00,001 to ₹12,00,000 – 10%
• ₹12,00,001 to ₹16,00,000 – 15%
• ₹16,00,001 to ₹20,00,000 – 20%
• ₹20,00,001 to ₹24,00,000 – 25%
• Above ₹24,00,000 – 30%

This restructuring aims to ease the tax burden on salaried individuals, particularly the middle-income group. Additionally, the standard deduction for salaried taxpayers has been raised to ₹75,000, effectively increasing the tax-free income limit to ₹12.75 lakh.

Rent TDS: A Relief for Tenants

The budget also introduced a significant change in the Tax Deducted at Source (TDS) on rent. The annual threshold for TDS on rental payments has been raised from ₹2.40 lakh to ₹6 lakh. This means that individuals paying rent up to ₹6 lakh annually will no longer be subject to TDS deductions. 

Tax Exemption on Foreign Education Remittances

A notable amendment in the budget is the exemption of Tax Collected at Source (TCS) on remittances for educational purposes. If an individual takes an education loan from a specified financial institution, they will now be exempt from TCS when sending money abroad for education. 

Increased Tax Deduction Limits for Senior Citizens

To support senior citizens, the budget has proposed an increase in the tax deduction limit on interest income. The limit has been doubled to ₹1 lakh, allowing senior citizens to enjoy higher tax savings on their fixed deposit and savings account interest earnings.

Extension of Vivad Se Vishwas 2.0 Scheme

The government has also provided updates on the Vivad Se Vishwas 2.0 scheme, a tax dispute resolution mechanism. As per the finance minister, 33,000 taxpayers have availed themselves of this scheme to settle direct tax disputes. 

Startups and Tax Benefits

In a push to encourage entrepreneurship, the budget has extended the period of incorporation for startups to avail tax benefits by 5 years. This move is expected to provide young businesses with more financial flexibility and a longer runway for tax exemptions.

Extended Time Limit for Filing Updated Tax Returns

Taxpayers now have more time to rectify their tax filings. The budget proposes extending the deadline for filing updated returns from the current 2 years to 4 years. This will allow individuals and businesses to correct past returns and comply with tax regulations without incurring hefty penalties.

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