New Income Tax Rules Effective Today, April 1: Higher Exemptions, New Deductions & Key Updates

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NP English
Tue, 01 Apr 2025 10:55:04 IST
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With the beginning of the new financial year, several tax and financial rule changes have come into effect from April 1, 2025. These updates impact income tax, banking transactions, GST, and digital payments. Here’s a quick rundown of what’s new:


Income Tax Revisions

  • Higher Tax-Free Income: Under the new tax regime, individuals earning up to ₹12 lakh annually will be exempt from income tax.
  • Standard Deduction Boost: Salaried employees can now claim a standard deduction of ₹75,000, making incomes up to ₹12.75 lakh tax-free.
  • No Dividend Without PAN-Aadhaar Link: If your PAN and Aadhaar are not linked, you won’t receive dividend income, and higher TDS will apply.

Banking and Payments Updates

  • Cheque Clearance Rule: For cheque payments above ₹50,000, accountholders must electronically verify details before processing.
  • Credit Card Reward Changes: SBI SimplyCLICK and Air India SBI Platinum credit card users will see updates in their reward structures.
  • Minimum Balance Requirement: Major banks like SBI, PNB, and Canara Bank have revised minimum balance rules, with penalties for non-compliance.

GST and Business Transactions

  • Mandatory Multi-Factor Authentication: GST portal users must enable multi-factor authentication for enhanced security.
  • Hotel GST Update: Hotels charging over ₹7,500 per day will now be classified as ‘specified premises.’ Restaurant services in such hotels will attract an 18% GST but can avail input tax credit.

Investment and KYC Regulations

  • Mandatory KYC for Investments: Investors in mutual funds and demat accounts must complete KYC verification and update nominee details.

Loan and Priority-Sector Lending

  • Higher Home Loan Limits: Borrowers can now avail of home loans up to ₹50 lakh in metro cities, ₹45 lakh in Tier-2 cities, and ₹35 lakh in smaller cities under priority-sector lending.

Tax Collection & Deduction Changes

  • TCS Limit Increased: The threshold for Tax Collected at Source (TCS) on foreign travel, investments, and large transactions has been raised from ₹7 lakh to ₹10 lakh.
  • Higher TDS Limit for Senior Citizens: Senior citizens will enjoy a higher TDS exemption on interest income, with the threshold now set at ₹1 lakh.

Unified Pension Scheme (UPS)

  • The government’s new Unified Pension Scheme (UPS) comes into effect today. This allows central government employees with 25+ years of service to receive 50% of their last 12 months’ average basic salary as a pension.

UPI and Digital Payments

  • Inactive UPI Accounts Disabled: UPI accounts linked to mobile numbers that haven’t been used for a long time will be deactivated.

These changes are expected to impact taxpayers, investors, and digital payment users alike. Staying updated with these new rules will help you manage your finances more effectively in FY 2025-26.