Union Budget 2025: New tax slabs, extended limit to file updated ITR, and other key changes announced in this budget

In her Budget 2025 speech on February 1 (Saturday), a slew of important tax-related changes were announced by the Finance Minister, with the major tax relief introduced for the middle-class taxpayer with the nil tax slab limit being increased from the earlier Rs 7 lakh to Rs 12 lakh under the new tax regime.

Here is the brief summary of all the key taxation changes introduced in Union Budget 2025:

Nil tax for individuals with annual income up to Rs 12 lakh: Offering much-needed relief to taxpayers, the FM in her Budget 2025 speech proposed to levy no income tax on annual income up to Rs 12 lakh. This is a massive increase from the current exemption of up to Rs 7 lakh.

So, accordingly the proposed tax slabs under the new tax regime for the FY 2025-26 or AY 2026-27 

2. Time limit to file an updated income tax return increased from 2 years to 4 years: Now instead of 2 years, taxpayers will have 4 years to file the updated tax return. Updated ITR filed using the form ITR-U enables taxpayers to update their ITRs i.e. correct their ITRs for any errors or omissions. Also, they can file their ITRs if they didn't do so within the prescribed time limit or failed to file the belated ITR- within two years from the end of the relevant assessment year.

3. Threshold for TDS deduction on rent increased from Rs 2.4 lakhs to Rs 6 lakhs: The Finance Minister has proposed to raise the TDS threshold for rental income from Rs 2.4 lakh per year to Rs 6 lakh per year. This has been aimed at reducing the number of transactions that are subject to TDS or tax deduction at source.

4. Threshold for TCS on remittances increased from Rs 7 lakhs to Rs 10 lakhs: The government has also raised the TCS exemption limit on Liberalised Remittance Scheme (LRS) transactions from Rs 7 lakh to Rs 10 lakh.

 Furthermore, the FM has proposed to remove TCS on remittances for education purposes, where such remittance is out of a loan taken from a specified financial institution. 

5. TCS and TDS compliance for sale of goods: Both TDS and TCS are being applied on any transaction relating to the sale of goods. To prevent such compliance difficulties, TCS is proposed to be omitted. I also propose that the provisions of the higher TDS deduction will now apply only in non-PAN cases, said the FM while delivering her Budget 2025 speech.