With the commencement of the new financial year, there will come great changes in the income tax regulations and investment policies starting from April 1, 2025. Get updated to avoid missing out on any savings or even in finding the right information to make financial decisions.
Finance Minister Nirmala Sitharaman has brought enormous changes in the Union Budget 2025, and some major changes were done concerning the new tax regime, while the old tax regime remains as it is. Further, Reserve Bank of India (RBI) will also be bringing more changes in the interest rates for loans concerning homes and vehicles.
Here is a summary of the most important updates that you need to know:
1. Higher Tax Exemption Limit – No Tax on Income Up to ₹12 Lakh
Among the most favorable changes within the new tax regime is the increase in exemption limit.
- No tax on an annual income up to ₹12 lakh.
- In fact, for salaried individuals, the threshold goes up to ₹12.75 lakh with the standard deductions.
This revision is aimed at motivating more taxpayers to switch to the new tax regime, providing middle-class families with even more disposable income.
Key Takeaway:
Switching to the new tax regime would save you a lot if your earnings fall within this bracket.
2. Revised Tax Slabs Under the New Regime
The government has reorganized the tax slabs under the new regime, which has made it more attractive as compared to the old regime.
| Income Range (Annual) | Tax Rate |
|---|---|
| Up to ₹4 lakh | 0% |
| ₹4 lakh – ₹8 lakh | 5% |
| ₹8 lakh – ₹12 lakh | 10% |
| ₹12 lakh – ₹16 lakh | 15% |
| ₹16 lakh – ₹20 lakh | 20% |
| ₹20 lakh – ₹24 lakh | 25% |
| Above ₹24 lakh | 30% |
3. Potential Reduction in Home Loan Interest Rates
The monetary policy committee of the RBI is scheduled to meet on 7 April for announcing related policies on 9 April.
- Experts have predicted that there could be further cuts in the interest rate following the 0.25% decrease in the month of February.
- Lowering of the repo rate will naturally translate into cheaper home and car loans, thus proving beneficial.
What Should Happen?
If you’re planning to take a home loan, waiting for the RBI’s decision could help you secure a better interest rate.
4. New Investment Option – Specialized Investment Funds (SIF)
Securities Exchange Board of India (SEBI) has completed the framework for a new type of investment under the name Specialized Investment Fund (SIF).
- Minimum investment: ₹10 lakh
- Allocation: At least 25% in derivatives, unlike traditional mutual funds that use derivatives only for hedging.
Who would SIF be Best for?
People seeking diverse portfolios from traditional mutual funds may find it an attractive option.
In summary
New tax benefits and investments during the new financial year 2025-26 allow you to save even further and create wealth through greater efficiency.
How to increase savings?