Like every year, this time too, the time to file income tax return (ITR) has come close. But before filing returns in 2025, some significant changes and new rules are going to be implemented, which will affect every taxpayer. If you are a job, you are a freelancer or earn income through any means, then the information of these changes is very important for you.
This year, the government has made several new announcements in the budget to provide relief to taxpayers, especially middle class and lower income group. By adopting these changes, you can not only save tax, but it will also be easier to file returns. Let’s know the 5 major changes that are necessary to know before filing returns in 2025.
1. Basic Exgption Limit now Rs 4 lakh
In the budget of 2025, under the new tax system, it has been proposed to increase the basic exhalation limit from Rs 3 lakh to Rs 4 lakh. That is, if your annual taxable income is up to Rs 4 lakh, then you will not have to pay any tax.
In addition, if your income is less than 4 lakhs and you have not met some special conditions such as more than 1 crore bank deposits, more than 2 lakh foreign travel expenses, or more than 1 lakh electricity expenditure, then you will not even need to file ITR.
2. Tax exemption to those with income up to 12 lakhs
According to the new proposal, now tax exemptions will be given to those with income up to Rs 12 lakh, but this facility will be only for those who choose the new tax regime. Earlier this exemption was for those with income up to Rs 7 lakh.
However, it will be mandatory to file ITR to take advantage of this facility, even if tax is not payable.
3. 7 slabs will now be in the new tax regime
The government has increased the number of tax slabs to 7 to make New Tax Regime and Fair. Its purpose is to fix a suitable tax rate for every income level. These slabs are as follows:
₹ 0 – ₹ 4 Lakh: No Tax
₹ 4,01,000 – ₹ 8 lakh: 5%
₹ 8,01,000 – ₹ 12 Lakh: 10%
₹ 12,01,000 – ₹ 16 lakh: 15%
₹ 16,01,000 – ₹ 20 lakh: 20%
₹ 20,01,000 – ₹ 24 Lakh: 25%
Over ₹ 24 lakh: 30%
4. Updated ITR deadline now 5 years
Earlier, where the limit to file updated ITR was 3 years, now it has been proposed to increase it to 5 years. That is, if you did not file a return on time or want to rectify any mistake, then now you will have 2 years longer.
Keep in mind, the more late you file the return, the greater the penalty and interest amount will be.
5. Tax exemption facility on two houses
Till now there was a tax exemption at the same house, but after the budget 2025, taxpayers can claim tax exemption on two houses. If you live in one house yourself and are not getting any special fare from the other, then the nominal rental income of that house will not have to be taxed.
Old or New Tax Regies – Whom to choose?
Tax slabs in the new tax system may be simple, but it does not get discounts like 80C, HRA, LTA. However, now standard deduction has been increased to ₹ 75,000.
At the same time, in the old tax system, you get a discount on savings like PPF, LIC, ELSS, FD, and Sukanya Yojana under 80C. The benefits of cuttings like home loans, HRA, 80D (health insurance) are also available here.
If you invest more, the old system can be more beneficial for you.
Some important things that keep in mind
Save tax by investing under 80C
Section 24 (b) exemption up to 2 lakhs on home loan interest
Rebate like HRA, Gratuity, Internet and Food Allowance
Deduction up to Rs 1 lakh on health insurance in 80D
Penalty on late filing: ₹ 1000 on income less than 5 lakhs, ₹ 5000 on above
conclusion
It is very important to understand these new rules and changes before filing income tax returns in 2025. With this, not only will you be able to save tax, but can also avoid any kind of fine. If you are having trouble understanding which tax system is better for you, then definitely analyze your income, investment and expenses.