Top 10 Major Changes in the New Income Tax Act, 2025 – A Clear Guide for Taxpayers

Team CNC
4 days ago
2 min read

The Government has introduced the Income Tax Act, 2025, aimed at simplifying tax rules, reducing litigation, and providing relief to the middle class. The new legislation restructures tax slabs, rationalises deductions, and focuses on ease of compliance through clearer language and digital processes.

At CNC, we have summarised the top 10 most important changes along with simple examples to help taxpayers understand how the new rules impact them.

1. New Simplified Tax Slabs (0–₹4 lakh fully exempt)

The new regime introduces wider slab ranges and lower tax rates. Key features:

0% tax up to ₹4,00,000
Slabs thereafter at 5%, 10%, 15%, 20%, 25%, 30%
Designed to provide broad-based relief

2. Zero Tax Up to ₹12 Lakh (Effective Relief for Middle Class)

Through enhanced standard deduction and rebate, salaried individuals effectively pay zero tax up to ₹12–12.75 lakh depending on conditions.

3. Option to Choose Between Old vs New Regime Continues

Taxpayers can still choose between:

Old Regime → full deductions
New Regime → no deductions but lower tax rates

This flexibility helps individuals with high deductions (home loan, 80C, HRA) choose what is beneficial.

4. No Notional Rent on Second Self-Occupied House

Up to two houses can now be declared as self-occupied, eliminating the burden of paying tax on “notional rent”.

Example: Owning two homes no longer leads to artificial rental income being taxed.

5. TDS/TCS Rationalised – Higher Thresholds, Lower Compliance Burden

Examples include:

Rent TDS threshold raised to ₹6 lakh per year
Streamlined TDS categories for easier compliance

This benefits small taxpayers and landlords.

6. Updated Return Window Extended to 48 Months

Taxpayers now get four years to file an updated return if they miss reporting income. This promotes voluntary compliance without fear of penalty.

7. Digitally Aligned & Simplified Law Structure

The new Act reduces the number of sections, removes obsolete clauses, and simplifies terminology. The aim is to make the law:

Easier to read
Easier to implement
Less prone to litigation

Digital, faceless assessments continue with stronger infrastructure.

8. Senior Citizens Get Higher Relief on Interest Income

Savings and FD interest exemptions have been enhanced for senior citizens.

9. Clear Rules on Capital Gains & Digital Assets

Capital gains on property, shares, mutual funds, and digital assets continue to be taxed under specific provisions — but the Act now provides clearer definitions and simplified computation methods.

10. Overall Compliance Relief & Tax Certainty

With rationalised deductions, simplified provisions, and wider exemptions, taxpayers benefit from:

Lower tax burden
Lesser paperwork
Fewer disputes
Transparent rules

Conclusion

The Income Tax Act, 2025 introduces major structural improvements while offering meaningful tax relief to the middle class and senior citizens. Whether you are a salaried individual, business owner, or investor, these changes bring clarity and ease to tax planning.

At CHAUDHARI & CHAUDHARY Chartered Accountants, we help individuals and businesses analyse the new rules and select the most beneficial tax regime based on their profile.