Income Tax FY25: Everything you should know about the new tax regulations that go into effect today

April 1 marks the beginning of a new financial year, after which Union Budget proposals on income tax take effect. These changes were announced by Finance Minister Nirmala Sitharaman in her Budget speech this year in February.

Here’s a look at some of the changes in tax rules that will be effective from April 1:

The new tax regime, which intends to facilitate tax filing and encourage increased participation in the new regime, will be adopted by default. In the event that it is more advantageous for them, taxpayers will still be able to continue under the previous tax system.

The tax divisions will be as follows: Income from ₹3 lakh to ₹6 lakh will be taxed at 5%, ₹6 lakh to ₹9 lakh will be taxed at 10%, ₹9 lakh to ₹12 lakh will be taxed at 15%, ₹12 lakh to ₹15 lakh will be taxed at 20%, and ₹15 lakh and above will be taxed at 30%.

The new tax system now includes the ₹50,000 standard deduction that was previously applied to the prior tax regime. This will lower taxable income even more under the new system.

The maximum surcharge rate of 37% on revenue exceeding ₹5 crore has been lowered to 25%.

If the entire premium for a life insurance policy issued on or after April 1, 2023 exceeds ₹5 lakh, the maturity proceeds will be taxed.

For non-government employees, the ₹3 lakh leave encashment tax exemption limit has been raised to ₹25 lakh.