6 Major Financial Changes Effective from April 1, 2025: New Tax Slabs, TDS Rules & More

The new financial year (FY 2025-26) brings several important changes in India's financial landscape. From revised income tax slabs to updated TDS rules and UPI transaction limits, these changes will impact taxpayers, investors, and businesses.

Here are 6 key financial changes effective from April 1, 2025:

1. New Income Tax Slabs & Regime

2. Increased TDS Thresholds

The government has introduced revised tax slabs under the New Tax Regime, making it more attractive for taxpayers:

• Income up to ₹4,00,000: No Tax

• ₹4,00,001 - ₹8,00,000: 5%

• ₹8,00,001 - ₹12,00,000: 10%

• ₹12,00,001 - ₹16,00,000: 15%

• ₹16,00,001 - ₹20,00,000: 20%

• ₹20,00,001 - ₹24,00,000: 25%

• Above ₹24,00,000: 30%

Key Changes:

• Standard deduction (₹50,000) now extended to the New Tax Regime.

• Surcharge reduced for incomes above ₹5 crore (from 37% to 25%).

• More deductions allowed under the New Regime to encourage adoption.

Should you switch to the New Tax Regime?
Evaluate based on your investments and deductions.

To reduce the compliance burden and enhance cash flow for taxpayers, the TDS exemption limits have been raised:

• Interest Income for Senior Citizens: The TDS threshold on interest income has been increased from ₹50,000 to ₹1 lakh.

• Dividend and Mutual Fund Earnings: TDS will now be deducted only if the total dividend or mutual fund earnings exceed ₹10,000 per financial year, up from the previous threshold of ₹5,000.

3. Introduction of the Unified Pension Scheme (UPS)

• Guaranteed Minimum Pension: Employees are assured a minimum pension of ₹10,000 per month, subject to a contribution of 10% of their basic pay and Dearness Allowance.

• Eligibility: Applicable to existing central government employees under the National Pension System (NPS) and new recruits joining on or after April 1, 2025.

The Pension Fund Regulatory and Development Authority (PFRDA) has launched the Unified Pension Scheme for central government employees:

4. Deactivation of Inactive UPI IDs

To enhance security in digital transactions, inactive Unified Payments Interface (UPI) IDs that have not been used for an extended period will be deactivated. Users are advised to perform at least one transaction to keep their UPI IDs active.

5. Adjustments in Small Savings Schemes

The government has decided to maintain the existing interest rates for small savings schemes, such as the Public Provident Fund (PPF) and National Savings Certificate (NSC), providing stability for investors relying on these instruments.

6. Changes in Credit Card Benefits

Certain banks have revised their credit card reward structures and benefits. Cardholders are encouraged to review the updated terms and conditions to understand how these changes may affect their rewards and benefits.

Conclusion

These financial changes, effective from April 1, 2025, are designed to simplify tax structures, enhance taxpayer benefits, and promote financial security. Taxpayers and investors should familiarize themselves with these updates to make informed financial decisions and optimize their financial planning strategies.