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Today, the Finance Minister unveiled the Budget 2025, introducing several significant changes that may influence personal finance. Below are the details of these key highlights.
Budget 2025 – 7 Key highlights impacting personal finance
1) Simplification of KYC Process
The Know Your Customer (KYC) process has long been regarded as a major obstacle due to its complexity. In this budget, the Finance Minister announced the introduction of a revamped Central KYC Registry, set to launch in 2025. This initiative aims to alleviate the challenges many individuals currently face with the KYC process.
2) Doubling of TDS Limit for Senior Citizens
The tax deduction limit on interest income for senior citizens has been increased from the current Rs.50,000 to Rs.1 lakh. It is important to note that while the TDS limit has been raised, this does not imply that no tax is applicable up to Rs.1 lakh.
3) Increased TDS Limit on Rent
Previously, TDS was applicable when the total rent paid or expected to be paid exceeded Rs.2,40,000 in a financial year, as per the Union Budget 2019-20. This threshold has now been raised to Rs.6,00,000.
4) Enhanced TCS Limit on LRS (Liberalised Remittance Scheme)
The Liberalised Remittance Scheme (LRS), established by the Reserve Bank of India (RBI), permits Indian residents to remit funds abroad for personal use, with a maximum limit of $250,000 per financial year. This limit is applicable per individual, allowing family members to remit separately. Previously, a Tax Collected at Source (TCS) of 5% was imposed on remittances exceeding Rs.7 lakh annually (excluding education and medical expenses). This threshold has now been increased to Rs.10 lakh. Additionally, a significant update is the removal of TCS on remittances for educational purposes when funded by a loan from a designated financial institution.
5) Tax-Free Withdrawals from the National Savings Scheme (NSS)
The National Savings Scheme (NSS) was a government-initiated savings program that enabled individuals to invest and accrue interest. However, this scheme has become obsolete, and the government has ceased to provide interest on these accounts. A significant number of senior and very senior citizens still maintain old NSS accounts containing funds. Given that these accounts no longer generate interest, account holders may wish to withdraw their funds.
Typically, withdrawals from certain savings schemes are subject to taxation. However, due to the age of NSS accounts and their lack of interest earnings, the government is offering a special exemption. Withdrawals from NSS accounts will be entirely tax-free if executed on or after August 29, 2024. Consequently, individuals withdrawing money from their NSS accounts after this date will not incur any tax liabilities.
6) NPS Vatsalya withdrawal and taxation
The withdrawal and taxation process for NPS Vatsalya will align with that of a standard NPS account. Therefore, there are no additional benefits regarding withdrawal and taxation regulations for NPS Vatsalya (NPS Vatsalya Scheme – Don’t Invest BLINDLY!! and Budget 2024 – NPS Vatsalya Scheme – Should you invest?).
7) Changes in Income Tax Slab Rates for the New Tax Regime
This adjustment is, in my opinion, a significant advantage for the middle class. It is important to note, however, that there are no modifications to the old tax regime. The new changes will apply solely to the new tax slabs. The chart below will clarify this. According to this, any salaried individual with an income of up to Rs. 12 lakh will incur no tax liability. I wrote a detailed post on this and you can refer the same at “Budget 2025 – New Income Tax Slab Rates FY 2025-26” or refer the below table for reference.
Conclusion – Overall the biggest relief is for the tax payers (especially middle class). Also, indirectly you noticed that the stress is on new tax regime. If you still hoping and relying on old tax regime for availing certain tax benefits, then think twice. Old tax regime is DIED long back. Adopt the simple new tax regime.
If i have CG on debt-0.5 L, equity-ST-1.0L and equity LT-2L(after availing exemption of 1.25L).There is no other income. ie total CG is 3.5L. It is less than 4L.
Shall I have to pay tax at special rates on CG as applicable or tax will be zero as it is less than 4L
Dear Dipak,
Please refer my earlier post on this aspect “Do we need to pay capital gains tax if income is below basic exemption limit?“
Hello Sir,
Can you pls explain when you mention old tax regime is dead.?
Isn’t it more beneficial in terms of saving tax there by showing deduction for 80c & house loan interest deduction etc.
Dear Vishwanath,
Sec.80C limit not enhanced since many years and they will not increase in the future too. Regarding house loan interest, look at the slab changes they done to new regime, it looks simple and attractive than old regime. Hence, one day or another day they soon close the old regime and it is in the best interest of tax payers.