The new tax regime introduces lower tax rates and simplified structures to benefit taxpayers. It aims to reduce the burden on middle-class taxpayers by offering rebates while removing various deductions that existed in the old tax system.
The revised tax rates ensure a progressive taxation structure with reduced rates for lower income groups. This structure is designed to encourage compliance and improve tax efficiency while making it easier for individuals to understand their tax obligations.
| Total Income (₹) | Tax Rate (%) |
|---|---|
| Up to 3,00,000 | Nil |
| 3,00,001 – 7,00,000 | 5% |
| 7,00,001 – 10,00,000 | 10% |
| 10,00,001 – 12,00,000 | 15% |
| 12,00,001 – 15,00,000 | 20% |
| Above 15,00,000 | 30% |
Section 87A provides tax rebates for individuals earning up to a specified limit, ensuring that lower-income earners benefit from reduced tax liability. The changes extend the rebate limits, making tax savings more accessible to a larger section of taxpayers.
| Assessment Year | Income Limit for Full Rebate (₹) | Maximum Rebate (₹) |
|---|---|---|
| 2025-26 | 7,00,000 | 100% of tax liability |
| 2026-27 onwards | 12,00,000 | 60,000 |
The Finance Bill, 2025, introduces various investment incentives to encourage business growth, with special focus on the IFSC sector. These benefits aim to make India a competitive hub for international trade and financial operations.
International Financial Services Centre (IFSC) benefits include extended tax exemptions for key financial sectors like ship leasing, treasury operations, and capital gains. These incentives help promote IFSC as a global financial hub.
| Benefit | Extended Till |
|---|---|
| Tax exemptions for ship leasing & aircraft leasing | March 2030 |
| Tax incentives for treasury operations | March 2030 |
| Capital gains exemptions for IFSC-based financial entities | March 2030 |
The tax deductions and compliance relief measures aim to simplify tax payments and reduce compliance burdens. Higher TDS thresholds help ensure tax deductions are more aligned with inflation and business needs.
The increase in TDS thresholds reduces the tax deduction burden on small businesses and individual taxpayers. This change promotes ease of doing business and reduces the administrative burden on tax deductors.
| Section | Current Threshold (₹) | Revised Threshold (₹) |
|---|---|---|
| Interest (194A) | 40,000 (50,000 for seniors) | 50,000 (1,00,000 for seniors) |
| Dividend (194) | 5,000 | 10,000 |
| Insurance Commission (194D) | 5% | 2% |
The TDS deduction threshold under Section 194-I has been increased from ₹2,40,000 per year to ₹50,000 per month, reducing tax deduction hassles for tenants and landlords.
This benefits individuals and businesses renting properties by lowering compliance burdens..
Higher TDS Threshold on Rent Payments
The TDS deduction threshold under Section 194-I has been increased from ₹2,40,000 per year to ₹50,000 per month, reducing tax deduction hassles for tenants and landlords.
This benefits individuals and businesses renting properties by lowering compliance burdens.
Landlords earning rental income below the specified threshold are not required to deduct TDS, making rental transactions smoother.
Simplifies documentation and tax filing for landlords with moderate rental income.
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The Finance Bill, 2025, focuses on tax simplification, economic growth, and investment promotion. The reforms are designed to create a more business-friendly tax environment while ensuring fairness and compliance.