The Union Budget 2025, presented by Finance Minister Nirmala Sitharaman, contains some significant alterations that aim to enhance economic growth, raise investment, and grant relief to taxpayers. The budget introduces reforms regarding income tax rates, taxing the income of insurance, and financial incentives for various sectors. The article discusses the key highlights of the income tax budget 2025 and how these alterations influence individual taxpayers, businesses, and the economy.
Revised Income Tax Slabs and Rate Changes in Budget 2025
One of the most highly expected segments of the Union Budget every year is the change in the income tax slabs. The government has, this year, rearranged the slabs according to the new regime, bringing relief to the middle class and simplifying the tax system.
The new income tax rate structure for FY 2025-26 (Assessment Year 2026-27) is as follows:
| Annual Income (₹) | Tax Rate (%) |
| Up to 4,00,000 | Nil |
| 4,00,001 – 8,00,000 | 5% |
| 8,00,001 – 12,00,000 | 10% |
| 12,00,001 – 16,00,000 | 15% |
| 16,00,001 – 20,00,000 | 20% |
| 20,00,001 – 24,00,000 | 25% |
| Above 24,00,000 | 30% |
This review will make persons in low and middle-class families have more disposable income, while the top slabs are kept competitive to ensure government revenue. The proposed modifications in the income tax slabs will most likely drive savings and spending, which will result in economic growth in the long term.
Increase in Tax Rebate Under Section 87A
Apart from easing the burden on middle-class taxpayers, the government has also raised the rebate under Section 87A. Individuals earning up to ₹12 lakh per annum are now eligible for a rebate of ₹60,000, which makes their tax liability zero. This is a great relief for salaried professionals and small entrepreneurs.
Standard Deduction and HRA Benefits
Salary individuals will still get a universal deduction of ₹75,000, helping them keep taxable income lower. The exemptions for HRA have also been continued, and there is greater deduction for rent paid. This benefits the individuals residing in metro cities where rent is on the higher side.
New TDS and TCS Rules
The budget income tax 2025 also introduces the changes in Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) norms. The most significant changes are:
- Increased TDS limit for various transactions to reduce compliance burden.
- Removal of higher TDS/TCS rates on non-filers of income-tax returns.
- Insertion of new rates of TCS on foreign remittances and investments abroad.
These reforms aim to reduce tax compliance and spur timely payment of tax.
Taxation of Insurance Income
The taxation of insurance income has been modified to achieve parity between different insurance products. The modifications are as follows:
- Proceeds of maturity of life insurance (except ULIPs) would be taxed if the premium is over ₹5 lakh for a year.
- Health insurance premiums remain deductible under Section 80D with an enhanced threshold of ₹1 lakh per year for senior citizens.
- Insurance contracts of annuities and pensions are favoured to encourage long-term savings.
Equitable taxation is provided for while not deterring the insurance industry from being an investment channel.
Also Read: Additional Tax Benefits for Affordable Housing
Simplification of Income Tax Compliance
With an eye to making tax return less troublesome, the government has also introduced pre-filled tax returns, auto-updated deductions, and an enhanced grievance redressal mechanism. Introduction of a simplified Income Tax Bill is aimed at streamlining the income tax rate structure, reducing legal uncertainties as well as conflicts.
Boost to Affordable Housing and Home Loan Benefits
The Budget 2025 also positively continues with the realty sector, and the affordable housing sector in particular. The most significant tax relief available to homebuyers is:
- Extension of Section 24B home loan interest deduction for first-time buyers till ₹2.5 lakh every year.
- Increasing deduction under Section 80EEA for loan borrowers of affordable housing.
- Reduction in capital gains tax upon reinvestment in residential property.
These measures support homeownership as well as real estate investment.
Corporate Tax and MSME Benefits
The government also altered the structure of corporate taxation to encourage investment and enable business processes:
- The corporate tax for new manufacturing companies is 15%.
- Long-term tax exemption and credit guarantee extended to MSMEs for driving growth.
- Tax incentives to start-ups given an extension of another five years to support innovation.
These reforms position India as a comfortable destination for doing business while nurturing job creation.
Digital Economy and Taxation of Crypto Assets
The income tax framework of the budget introduced further clarifications regarding the taxation of digital assets such as cryptocurrencies and NFTs:
- 30% flat tax on digital asset capital gains remains unchanged.
- 1% TDS on crypto transactions remains unchanged.
- Tax relief on blockchain business introduced for promoting innovation.
These measures ensure digital transactions remain transparent and compliant with tax obligations.
GST Reforms and Indirect Tax Adjustments
Besides budget 2025 income tax revisions, GST and customs duty reforms have also been introduced:
- Streamlining of the process for the filing of GST for small businesses.
- Reduction in GST on essential goods such as healthcare and education-related services.
- Waiver of customs duty on imported machinery for critical industries.
These changes reduce compliance expenses and lower business and consumer costs.
How Grihum Housing Finance Can Help You
At Grihum Housing Finance, we understand that homeownership is a key financial decision, particularly in the wake of evolving tax regulations and budget amendments. Whether you seek a home loan, construction loan, balance transfer, or loan against property, our tailor-made solutions allow you to derive the maximum from the available tax advantages.
With the boost in home loan interest deductions and affordable housing schemes in Union Budget 2025, this is the best time to invest in real estate. Our expert advisors at Grihum Housing Finance will walk you through:
- Home loan financing with simple EMIs and extended tenures
- Tax benefits under Sections 80C and 24(b) explained
- Maximizing savings through housing finance solutions
We assist you in navigating the intricacies of home loans and tax deductions to ensure you achieve maximum savings and secure your future.
Also Read: Step-by-Step Guide to Home Loan Application Pprocess
Conclusion
Union Budget 2025 brings about significant reforms in India's tax regime with income tax slab changes benefiting salaried individuals and entrepreneurs as well. From enhanced rebates and new tax rates to insurance income taxation amendments and home loan benefits, this budget is all about economic growth and stability.
Being a taxpayer, it is necessary to stay updated and make the most of the new tax provisions. Grihum Housing Finance is committed to helping individuals and enterprises understand these changes and make effective financial decisions. Being a homebuyer, investor, or salaried person, these income tax budget 2025 modifications have created new opportunities for tax savings and wealth creation.
For professional financial advice, rely on Grihum Housing Finance to assist you in realizing your objectives under the new Union Budget 2025.
