# Income Tax, TDS & TCS Changes from 1st April 2025: What You Need to Know Published: 28 Mar 2025 | Last updated: 22 Jul 2025 Author: Treelife Practice area: Taxation Tags: income tax changes, income tax changes 2025 Source: https://treelife.in/taxation/income-tax-tds-tcs-changes-from-1st-april-2025/ ## Summary - Under the new tax regime (Section 115BAC), revised slabs apply from FY 2025-26, with nil tax up to ₹4,00,000 and a top rate of 30% on income above ₹24,00,000. - The Section 87A rebate under the new regime rises to ₹60,000 from ₹25,000, making income up to ₹12,00,000 tax free, while the old regime rebate stays at ₹12,500 for income up to ₹5,00,000. - TDS thresholds increase across several sections, including ₹1,00,000 for senior citizen interest under Section 194A, ₹50,000 per month for rent under Section 194-I, and ₹50,000 for professional or technical fees under Section 194J. - Section 194T introduces a new TDS threshold of ₹20,000 on remuneration paid to partners, where previously no threshold existed. - Under Section 206C(1G), TCS on LRS remittances and overseas tour packages now applies only above ₹10,00,000 (up from ₹7,00,000), and education remittances funded through loans from specified financial institutions are exempt from TCS. - TCS on purchase of goods under Section 206C(1H), previously applicable above ₹50,00,000, has been withdrawn entirely. - ULIP redemption proceeds will be taxed as capital gains where the premium exceeds 10% of the sum assured or the annual premium exceeds ₹2,50,000, bringing ULIP taxation in line with mutual funds. - The window for filing an Updated Return (ITR-U) extends to 48 months from the end of the relevant assessment year, effective FY 2025-26, with additional tax payable ranging from 25% to 70% depending on the filing timeline. - Start-ups incorporated on or before 01/04/2030 remain eligible for a 100% tax exemption for 3 consecutive years out of 10 years under Section 80-IAC, subject to DPIIT eligibility criteria. --- Blog Content Overview - [1 1. Revised Income Tax Slabs (New Tax Regime)](#1_Revised_Income_Tax_Slabs_New_Tax_Regime) - [2 2. Higher Rebate Under Section 87A](#2_Higher_Rebate_Under_Section_87A) - [3 3. Increased TDS Thresholds](#3_Increased_TDS_Thresholds) - [4 4. TCS Changes (Effective April 2025)](#4_TCS_Changes_Effective_April_2025) - [5 5. Capital Gains Tax on ULIPs](#5_Capital_Gains_Tax_on_ULIPs) - [6 6. Higher LRS Limit & TCS Relief on Education Loans](#6_Higher_LRS_Limit_TCS_Relief_on_Education_Loans) - [7 7. Updated Return (ITR-U) – 4-Year Filing Window](#7_Updated_Return_ITR-U_4-Year_Filing_Window) - [8 8. Start-up Tax Exemption Extended](#8_Start-up_Tax_Exemption_Extended) - [9 9. Extended Tax Benefits for IFSC Units](#9_Extended_Tax_Benefits_for_IFSC_Units) - [10 Final Thoughts](#Final_Thoughts) The Union Budget 2025 introduced a series of major changes in the Indian tax landscape, applicable from** 1st April 2025**. These updates significantly impact individuals, startups, and businesses — with revised income tax slabs, increased thresholds for TDS and TCS, and extended exemptions for start-ups and IFSC units. Here’s a comprehensive breakdown of the key changes and what they mean for you: ## **1. Revised Income Tax Slabs (New Tax Regime)** Under the default **New Tax Regime (Section 115BAC)**, income tax slabs have been revised for FY 2025-26 onwards: - **0%**: Income up to ₹4,00,000 - **5%**: ₹4,00,001 – ₹8,00,000 - **10%**: ₹8,00,001 – ₹12,00,000 - **15%**: ₹12,00,001 – ₹16,00,000 - **20%**: ₹16,00,001 – ₹20,00,000 - **25%**: ₹20,00,001 – ₹24,00,000 - **30%**: Above ₹24,00,000 🔍 *Note: The Old Tax Regime remains optional and unchanged.* ## **2. Higher Rebate Under Section 87A** The rebate limit under the **New Tax Regime** has been increased to **₹60,000** (from ₹25,000). This means individuals earning **up to ₹12,00,000** annually will have **zero tax liability** under the new regime. The rebate for the **Old Regime** remains unchanged at ₹12,500 (up to ₹5 lakh income). ## **3. Increased TDS Thresholds** Multiple TDS sections now have **higher deduction limits**, reducing unnecessary withholding and easing compliance: **Section****Nature of Payment****Old Threshold****New Threshold**193Interest on SecuritiesNIL₹10,000194AInterest (Senior Citizens)₹50,000₹1,00,000194AInterest (Others – Banks)₹40,000₹50,000194AInterest (Others – Non-Banks)₹5,000₹10,000194Dividend (Individual Shareholder)₹5,000₹10,000194KMutual Fund Units₹5,000₹10,000194B/194BBLottery, Crossword, Horse Race WinningsAggregate > ₹10,000/year₹10,000 (per transaction)194DInsurance Commission₹15,000₹20,000194GLottery Commission/Prize₹15,000₹20,000194HCommission or Brokerage₹15,000₹20,000194-IRent₹2,40,000/year₹50,000/month194JProfessional/Technical Fees₹30,000₹50,000194LAEnhanced Compensation₹2,50,000₹5,00,000194TRemuneration to PartnersNIL₹20,000 - *Other TDS sections remain unchanged* ## **4. TCS Changes (Effective April 2025)** **Section****Nature of Transaction****Old Threshold****New Threshold**206C(1G)Remittance under LRS & Overseas Tour Package₹7,00,000₹10,00,000206C(1G)LRS for Education (via Educational Loan)₹7,00,000Exempt (No TCS)206C(1H)Purchase of Goods₹50,00,000Exempt (No TCS) - ***Other TCS provisions remain unchanged.*** ## **5. Capital Gains Tax on ULIPs** Redemption proceeds from ULIPs (Unit Linked Insurance Plans) will now be taxed as **capital gains** if: - The premium exceeds **10% of the sum assured**, or - The annual premium is **more than ₹2.5 lakhs**** ** This ends the long-standing ambiguity and brings parity with mutual fund taxation. ## **6. Higher LRS Limit & TCS Relief on Education Loans** - The threshold for **TCS on foreign remittances** under **Section 206C(1G)** has been **raised from ₹7 Lakhs to ₹10 Lakhs** per financial year. - **No TCS will be applicable** on remittances for **education**, if funded through **educational loans** from specified financial institutions. - These changes aim to ease compliance and reduce the tax burden on students and families funding overseas education. ## **7. Updated Return (ITR-U) – 4-Year Filing Window** The time limit for filing** Updated Tax Returns (ITR-U)** has been extended to **48 months (4 years) **from the end of the relevant assessment year. This move encourages voluntary disclosure of previously missed or under-reported income. **Time of Filing ITR-U****Additional Tax Payable**Within 12 months25% of additional tax (tax + interest)Within 24 months50% of additional tax (tax + interest)Within 36 months60% of additional tax (tax + interest)Within 48 months70% of additional tax (tax + interest) 📌 *Applicable from FY 2025-26 onwards* ## **8. Start-up Tax Exemption Extended** Start-ups can now avail **100% tax exemption** for **3 consecutive years out of 10 years** from the year of incorporation under **Section 80-IAC** if they are: - Incorporated **on or before 1st April 2030** - Eligible under DPIIT criteria and other prescribed conditions ## **9. Extended Tax Benefits for IFSC Units** - The **sunset date** for starting operations to claim tax concessions in **IFSC units** has been extended to **31st March 2030**. - Under **Section 10(10D)**, the **entire maturity amount** of a **life insurance policy** purchased by a **non-resident** from an IFSC office is **fully exempt**, with **no premium limit**. ## **Final Thoughts** These updates signal a shift toward simplification, transparency, and digital compliance in India’s tax ecosystem. But with so many rule changes across income tax, TDS, TCS, and capital gains — **staying compliant** is more critical than ever. ### Related posts: - [ESOP Taxation in India – Complete Guide for Founders & Startups](https://treelife.in/taxation/esop-taxation-in-india/) - [Tax Calculator for Tax Regime – Old vs New](https://treelife.in/taxation/tax-calculator-for-tax-regime-old-vs-new/) - [An Event of Indirect Transfer Tax](https://treelife.in/taxation/an-event-of-indirect-transfer-tax/) - [GST Amendments Effective from 1st April 2025 ](https://treelife.in/taxation/gst-amendments-effective-from-1st-april-2025/) --- This is informational content from Treelife. For advice specific to your situation, contact support@treelife.in