Budget 2025 Kicks In From April 1: Six Major Changes That Impact You

The Union Budget 2025 officially takes effect from April 1, bringing to life several key announcements made by the government on February 1. While some benefits like tax exemptions and subsidies kick in immediately with the new financial year, infrastructure projects and social welfare schemes will take longer to implement due to their complex processes. 

Here are six major changes coming into effect tomorrow that will directly impact your finances:

1. New Tax Slab for ₹20-24 Lakh Income Bracket 

Under the new tax regime, income up to ₹12 lakh will now be completely tax-free. For salaried employees, with the standard deduction of ₹75,000, this tax-free limit effectively rises to ₹12.75 lakh. Additionally, a new 25% tax slab has been introduced for income between ₹20-24 lakh. 

Previously, the maximum 30% tax rate applied to income above ₹15 lakh, but this threshold has now been raised to ₹24 lakh. This change will significantly benefit middle and upper-middle-income taxpayers.

2. Higher TDS Exemption Limits

Several Tax Deduction at Source (TDS) thresholds have been doubled:

• Rental income TDS threshold has jumped from ₹2.4 lakh to ₹6 lakh
• For senior citizens, bank FD interest income TDS threshold has increased from ₹50,000 to ₹1 lakh
• Professional services TDS threshold has been raised from ₹30,000 to ₹50,000 

These changes will reduce the TDS burden on low-income individuals and improve cash flow for many taxpayers.

3. Increased TCS Threshold for Foreign Education 

The Tax Collection at Source (TCS) threshold for foreign education remittances has been increased from ₹7 lakh to ₹10 lakh. Furthermore, no TCS will apply if the money is sourced from financial institutions like banks. 

Earlier, TCS between 0.5%-5% would be deducted on amounts exceeding ₹7 lakh, making the transfer process cumbersome. Now, students and their families can transfer up to ₹10 lakh without any TCS deduction.

4. Extended Window for Updated Returns

Taxpayers can now file updated returns up to 48 months from the end of the assessment year, instead of the previous 24 months. However, this comes with conditions:

• Returns filed between 24-36 months will attract 60% additional tax
• Returns filed between 36-48 months will attract 70% additional tax

This extended timeline gives taxpayers more opportunity to correct errors and encourages voluntary compliance. 

5. Capital Gains Tax on High-Premium ULIPs

Unit Linked Insurance Plans (ULIPs) with annual premiums exceeding ₹2.5 lakh will now be treated as capital assets, with any gains subject to capital gains tax:

• Holding period over 12 months: 12.5% Long Term Capital Gains (LTCG) tax
• Holding period under 12 months: 20% Short Term Capital Gains (STCG) tax 

This change aims to prevent high-income taxpayers from using ULIPs as tax-free investment vehicles, as a significant portion of ULIP premiums is invested in the stock market.

6. Custom Duty Changes Affecting 150-200 Products

The government has revised custom duties on approximately 150-200 products, which will generally take effect from April 1, 2025, though some changes may be implemented based on CBIC notifications. 

Products likely to become cheaper:

• Imported cars priced over $40,000 or with engine capacity exceeding 3,000 CC  
• Imported motorcycles with engine capacity up to 1,600 CC
• 36 life-saving medications with eliminated custom duties
• Electric vehicles, as duty has been removed on 35 capital goods for battery manufacturing
• Mobile phone batteries, with exemptions on 28 capital goods for production 

Products likely to become more expensive:

• Smart meters, solar cells, imported footwear, imported candles
• Imported boats and other vessels
• PVC flex films, sheets, and banners
• Knitted fabrics
• LCD/LED TVs