Surprising Budget Changes That Will Impact Your Wallet

The Union Budget 2025 was presented by the Finance Minister of India on February 1, 2025. It mainly focused on accelerating growth and promoting inclusive development. The theme of the budget was ‘Sabka Vikas’, focusing on balanced growth across all regions. Let us look at some of the major highlights and budget changes and how they will impact your personal finances. 

 

• Introduction of a new tax bill

While presenting the Union Budget 2025, the finance minister proposed the introduction of a new Income Tax Bill, which aims to replace the existing Income Tax Act of 1961. This new bill is specially designed to simplify tax compliance and reduce the complexity of tax laws. 

Under the new tax regime, the tax structure is revised as follows:

 

Income Tax Slab	Tax Rate
Up to Rs. 4,00,000	NIL
Rs. 4,00,001 to Rs. 8,00,000	5%
Rs. 8,00,001 to Rs. 12,00,000	10%
Rs. 12,00,001 to Rs. 16,00,000	15%
Rs. 16,00,001 to Rs. 20,00,000	20%
Rs. 20,00,001 to Rs. 24,00,000	25%
Above Rs. 24,00,000	30%

 

Thus, the new tax regime announced in Budget 2025 is set to bring a huge relief to you as an individual income taxpayer. Therefore, if you have an annual income of up to Rs. 12 lakh, you can claim an exemption from tax, as the rebate has increased significantly from Rs. 25,000 to Rs. 60,000. 

With the tax rebate and the revision in income tax limit, you can expect to enjoy valuable savings on tax payments if you fall under the no-tax bracket. 

 

• Removal of Sections 206AB and 206CCA

The Budget 2025 proposed removing Section 206AB and 206CCA from the Income Tax Act, which imposed higher TDS (Tax Deducted at Source) and TCS (Tax Collected at Source) at twice the rate prescribed. Although these sections were intended to motivate the taxpayers, these provisions led to significant compliance challenges, particularly for small taxpayers and the verification of the filing of the returns became cumbersome. 

Removing these sections from the new tax budget aims to reduce the compliance burden and simplify the tax process, as well as help you save on paying excessive taxes. The amendment to remove the sections is set to take effect from April 1, 2025. 

 

• Tax exemption on withdrawal from NSS

The NSS (National Savings Scheme) is one of the most popular savings schemes in India, backed by the government and operated through authorised financial institutions. One of the primary objectives of this program is to encourage individuals to save and help them build a corpus for a brighter future. 

Therefore, if you have invested in NSS or plan to add it to your portfolio, you will be pleased to know that withdrawals from your NSS account are not tax-exempt. This can provide significant relief to your wallet, as you can now use the entire amount for personal use without worrying about paying taxes. 

Additionally, the 2025 budget extends the tax benefits applicable to the NPS (National Pension System) under Section 80CCD(1B) to the contributions made to the NPS Vatsalya Account. This means you can enjoy an additional tax deduction of Rs. 50,000 under the old regime, easing the tax burden from your wallet. 

 

• Updates on tax deductions and exemptions

In the budget 2025, the basic tax exemption limit has been raised from Rs. 3 Lakh to Rs. 4 Lakh. So, if you are a salaried employee, it can have a significant positive impact on your savings and wallet as you can now earn up to Rs. 12.75 Lakh and pay no income tax, i.e., after you claim the rebate and standard deductions of Rs. 75,000. 

Additionally, the annual threshold for TDS deduction on rent has been raised from ₹ 2.4 Lakh to ₹ 6 Lakh. Therefore, if you are living in a rented house, you do not need to worry about a TDS deduction if your annual rent payment is under Rs. 6 Lakh in a financial year. 

The tax exemptions and deductions proposed in Budget 2025 will also benefit senior citizens as the deduction limit under Section 194A for senior citizens is doubled from Rs. 50,000 to Rs. 1 Lakh. So, if your parents are paying these taxes, they can enjoy some relief and increase their family savings. 

 

• Including ULIPs in capital asset

ULIP, or Unit-Linked Insurance Plan, is a unique insurance product that also serves as an investment vehicle. A portion of the premium you pay is invested in the money market, and the rest is used for offering protection against various risks. 

Previously, only the ULIPs with an annual premium of more than Rs. 2.5 Lakh were considered capital assets. However, the Budget 2025 proposed considering ULIPs as capital assets where the premium exceeds 10% of the policy’s sum assured. 

If you have invested in a ULIP or are planning to do so now, be sure to take advantage of the new tax benefits and claim them to enjoy more savings on your annual tax liability. 

 

Conclusion

So, there you have it; the proposed changes in the budget 2025 are sure to have a positive impact on your wallet, and you can be assured of increasing your savings. 

For more savings on your home loan, you can consider applying for a loan with reputed lenders like India Shelter, which has a reputation for offering loans at attractive interest rates with flexible repayment terms, extended tenure and quick processing that give you a hassle-free borrowing experience.