Income Tax Changes Impacting from April 1: Key Tax Changes in New Financial Year 2025-26

Income Tax Changes Impacting from April 1: The Income Tax changes effective from April 1 are a significant topic for taxpayers, businesses, and financial planners. Each year, the government introduces new tax regulations, exemptions, and revisions to streamline the tax system and boost economic growth. The Income Tax changes for the new financial year bring both opportunities and challenges for taxpayers. This article provides a detailed guide on the Income Tax changes impacting from April 1, including key highlights, how they affect individuals and businesses. We’ll also include a table summarizing key changes for easy reference.

The Income Tax Changes Impacting from April 1 bring significant benefits for individuals, businesses, and investors. From revised tax slabs and higher deductions to reduced surcharges and increased exemptions, these changes aim to simplify the tax system and promote economic growth. As a taxpayer, it’s essential to stay informed about these changes and adapt your financial planning accordingly. By leveraging the new provisions, you can maximize your savings and minimize your tax liability. For more information, visit the official Income Tax Department website or consult a tax professional. Stay updated, stay compliant, and make the most of the  Income Tax Changes Impacting from April 1.

Overview of Income Tax Changes

Below is a table summarizing the key Income Tax Changes Impacting from April 1 :

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Key Income Tax Changes Effective from April 1

Here’s a detailed look at the  Income Tax Changes Impacting from April 1 :

1. Revised Tax Slabs under New Regime

• The new tax regime introduced in 2020 has been further simplified with revised tax slabs.
• Key Changes:
  • 0% tax for income up to ₹3 lakh.
  • 5% tax for income between ₹3-6 lakh.
  • 10% tax for income between ₹6-9 lakh.
  • 15% tax for income between ₹9-12 lakh.
  • 20% tax for income between ₹12-15 lakh.
  • 30% tax for income above ₹15 lakh.

Impact: Lower tax liability for individuals opting for the new tax regime.

2. Increased Standard Deduction for Senior Citizens

• The standard deduction for senior citizens has been increased from ₹50,000 to ₹75,000.
• Impact: Higher savings for senior citizens, reducing their taxable income.

3. TDS on Online Gaming

• A new provision mandates 30% TDS on net winnings from online gaming platforms.
• Impact: Increased compliance for online gaming platforms and transparency in earnings.

4. Higher NPS Contribution Limit

• The tax deduction limit under Section 80CCD(1) for NPS contributions has been increased from ₹1.5 lakh to ₹2 lakh.
• Impact: Higher tax savings for NPS subscribers, encouraging retirement planning.

5. Enhanced Tax Rebate under Section 87A

• The tax rebate under Section 87A has been increased from ₹12,500 to ₹25,000 for individuals with income up to ₹7 lakh.
• Impact: Higher tax relief for low-income individuals, reducing their tax burden.

6. Reduced Surcharge on High Income

• The surcharge on income above ₹5 crore has been reduced from 37% to 25%.
• Impact: Lower tax burden for high-net-worth individuals, encouraging investments.

7. Increased Leave Encashment Exemption

• The tax-free limit for leave encashment for non-government employees has been increased from ₹3 lakh to ₹25 lakh.
• Impact: Higher tax-free earnings for employees, especially during retirement.

8. Higher Tax Audit Threshold for Businesses

• The turnover threshold for tax audits has been increased from ₹1 crore to ₹10 crore for businesses with digital transactions.
• Impact: Reduced compliance burden for small businesses, promoting digital payments.

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How These Changes Affect Taxpayers?

The Income Tax changes from April 1 have wide-ranging implications for different categories of taxpayers:

1. Individuals: Lower tax liability under the new regime, higher standard deduction for senior citizens, and increased tax rebates for low-income individuals.
2. Businesses: Reduced compliance burden with higher tax audit thresholds and incentives for digital transactions.
3. Investors: Stability in mutual fund taxation and higher NPS contribution limits for better retirement planning.
4. High-Net-Worth Individuals: Reduced surcharge on high income, encouraging investments and savings.

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