Income Tax Filing 2025: Like every year, this time too the time to file Income Tax Return (ITR) is near. But this time some big changes and new provisions are going to be implemented, which is important for every taxpayer to understand. If you are also employed, or pay tax on income in any way, then with the information of these new rules, not only will you be able to save tax but it will also be easy to file returns.

In the 2025 budget, the government has made many big announcements to provide relief to taxpayers, especially the middle-class and lower-income groups. The Finance Minister has also talked about introducing a new tax bill, which aims to make the tax system easier. Let us know the 5 important changes that every taxpayer should know before filing returns in 2025.

1. Basic exemption limit now up to Rs 4 lakh

Under the new tax regime, it is proposed to increase the basic exemption limit to Rs 4 lakh. That is, if your annual taxable income is up to Rs 4 lakh, then you will not have to pay any tax.

Apart from this, if your income is less than Rs 4 lakh and you do not fulfill any other set conditions like depositing more than Rs 1 crore in the current account, foreign travel expenses of more than Rs 2 lakh, or electricity expenses of more than Rs 1 lakh, then you will not even need to file ITR.

2. Now benefit of tax exemption on income up to Rs 12 lakh

There is a proposal to increase the limit of full tax rebate to Rs 12 lakh, but this is only for those in the new tax regime. Earlier this limit was Rs 7 lakh. That is, if you choose the new tax regime and your income is up to Rs 12 lakh (excluding capital gains), then you will not have to pay any tax.

However, to avail of this facility, you will have to file an income tax return.

3. Now there will be 7 tax slabs in the new tax regime

Now under the new tax regime, the tax slabs are being increased to 7, so that the tax rate is more fair for every income level. The new slabs (New Income Tax Slabs) will be something like this:

0 to 4 lakh rupees – no tax

4 lakh 1 to 8 lakh – 5% tax

8 lakh 1 to 12 lakh – 10% tax

12 lakh 1 to 16 lakh – 15% tax

16 lakh 1 to 20 lakh – 20% tax

20 lakh 1 to 24 lakh – 25% tax

Above 24 lakh 1 – 30% tax

4. The time limit for filing an updated ITR is now 5 years

Now if you could not file ITR on time or missed the opportunity to file a revised return, then there is no need to worry. The government has proposed to increase the time limit for filing updated ITRs from 3 years to 5 years. That is, now you will get more time to correct the old return.

However, keep in mind that the later you file the return, the more extra tax and penalty can be levied.

5. Now you will get the benefit of tax exemption on two houses

Till now, tax exemption was available only on one house, but after Budget 2025, taxpayers will be able to claim tax exemption on two houses as well. That is, if you have two properties and you live in one of them yourself and are not getting any significant rent from the other, then you will not have to pay tax on that nominal rental income.

This exemption is especially beneficial for those who own two houses or whose one house is not rented out.

Old or new tax regime – which one to choose?

The new tax system offers simpler tax slabs, but there are fewer options for exemptions and deductions. For example, the standard deduction has been increased to Rs 75,000 but the rest of the investment based exemptions are limited.

On the other hand, more deductions are available in the old tax system like section 80C (exemption up to Rs 1.5 lakh), 80D (health insurance), HRA, LTA, home loan interest etc. If you invest more, then the old tax regime can be beneficial for you.

Keep these important things in mind.

Tax savings through investment: In the old system, tax could be saved through options like PPF, ELSS, LIC, FD, and Sukanya Yojana under 80C.

Exemption on interest on home loan: Under section 24 (b), exemption of up to Rs 2 lakh is available for own house and exemption on the entire interest amount for rented house.

Exemption on HRA and other allowances: Exemption can be obtained by showing rent receipt if living in a rented house. Exemption is also available on other allowances like travel, gratuity, leave encashment, food and internet allowance.

Deduction on health insurance: Up to Rs 1 lakh can be deducted under section 80D.

Penalty on late filing: A fine of Rs 1000 can be imposed on income less than Rs 5 lakh and Rs 5000 on income more than Rs 5 lakh.

If you understand these changes and file your return before filing ITR in 2025, you can save tax as well as avoid penalties. If you are still confused about which tax system is right for you, then analyze your income, investment and expenses once.

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