No tax on income up to ₹12 lakh
In a major relief for taxpayers, the Union Budget has proposed raising the tax-free income threshold to ₹12 lakh, up from ₹7 lakh. For salaried individuals, factoring in the ₹75,000 standard deduction, income up to ₹12.75 lakh will now be tax-free. However, capital gains remain separately taxed under short-term and long-term tax slabs.
TDS and TCS reforms
The Budget provides relief for senior citizens relying on interest income, doubling the TDS (tax deducted at source) exemption limit from ₹50,000 to ₹1 lakh per year on bank deposits.
For rental income, no TDS will be deducted on earnings up to ₹6 lakh, up from ₹2.4 lakh. Similarly, shareholders will see no TDS on dividend income up to ₹10,000, raised from ₹5,000.
In international transactions, the TCS exemption limit under the Liberalised Remittance Scheme (LRS) has been raised to ₹10 lakh from ₹7 lakh. Additionally, no TCS (tax collected at source) will apply on education-related remittances if funded by an approved education loan.
Other key updates
National Savings Scheme (NSS) withdrawals made on or after 29 August 2024, will be tax-exempt for amounts previously eligible for deductions.
NPS Vatsalya contributions—a pension scheme for children—are now officially eligible for tax deductions under Section 80CCD of the Income-tax Act, 1961.
Self-occupied property tax relief has been expanded—taxpayers can now claim nil annual value for up to two properties without additional conditions.
Budget 2025-26 has extended the time limit to file updated tax returns from 24 months to 48 months from the end of the relevant assessment year.
