Our take on Union budget 2025 for its relevance to one’s personal finances. We have just highlighted the important points to make this simple.
- The tax lab has been changed drastically for the New Tax Regime with income up to Rs. 4 lakhs being exempt (Residents and for NRIs for Indian income) and the highest slabs of 30% is now for income above Rs. 24 lakhs. All tax payers going forward would have a substantial savings post this change. This would hence make the new tax regime the default choice for all tax payers.
- Standard deduction of Rs. 75,000 for Salary/Pension earners continues in the new tax regime.
- Annual Income up to Rs. 12 lakhs and up to Rs 12.75 lakhs for salaried earners would be tax exempt. Do note that income here means salary, interest, rentals and pensions. Other income like capital gains etc. would be taxed on the mentioned rates. This is applicable under the new tax regime and for Resident Indians.
- No change in Old Tax Regime. This regime would have a natural death.
- NPS as a corporate subscription would be the only tax saving product available under the new tax regime. Up to 14% of one’s basic pay could be invested in NPS for salaried where the employer has opted for the same. Employees should push their employers to opt for this scheme.
- We are moving to a system where there are no additional incentives for savings, loans and investing. If one is responsible enough, one needs to save and invest as per one’s risk profile, cash flows and financial goals.
- TDS limits for fixed deposits have been increased for senior citizen to Rs. 1 Lakh and for non-senior citizen to Rs. 50,000.
- Remittance outside India without TCS have been increased to Rs 10 lakhs.
- Anyone having two residential units can declare them as self-occupied and need not have any notional rents on the same.
- Limits on TDS on rental increased to Rs 50k per month.
- Taxes on ULIPs have been rationalized and would be taxed as long-term gains like mutual funds.
With the New Tax Regime, one should reduce housing loans as much as possible and invest in financial portfolio based on one’s financial plan. Feel free to connect to me @9845557582/ naveen@naveenrego.com for any clarifications.
Happy Budgeting!!
Naveen Julian Rego- CFP
Managing Director & Principal Officer
5th Feb 2025
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- It would be important to consult a tax practitioner before acting on any of the above tax