Income Tax Rules: 5 key changes you must know for filing ITR next year

As 2024 comes to a close, several new income tax rules introduced this year will impact taxpayers while filing their Income Tax Returns (ITR) in 2025. The Union Budget, presented in July 2024 following the general elections, brought significant changes to the income tax framework. Here are five crucial updates that taxpayers should keep in mind:

Revised Income Tax slabs

Under the new tax regime, the income tax slabs have been updated, offering potential savings of up to Rs 17,500 annually. These revised slabs will play a crucial role while calculating your tax liability.

Enhanced standard deduction

For salaried individuals, the standard deduction has been increased from Rs 50,000 to Rs 75,000. Family pensioners also benefit from a rise, with the deduction limit now at Rs 25,000, up from Rs 15,000.

Higher deduction under corporate NPS

Employees covered under Corporate NPS will see an increased deduction limit under Section 80CCD(2). Previously capped at 10% of the company’s contribution, this limit has now been raised to 14%.

Updated rules for LTCG and STCG

Short-Term Capital Gains (STCG): Tax on short-term gains from equity and mutual funds has risen from 15% to 20%. For assets like gold and property, these gains will now be taxed according to the applicable income tax slab.
Long-Term Capital Gains (LTCG): Tax on long-term gains from assets has been increased to 12.5% from 10%. Additionally, the tax exemption limit for LTCG has been raised from Rs 1 lakh to Rs 1.25 lakh.

Revised holding period for capital gains

The government has redefined the holding periods for capital gains:

• Listed Securities: Gains will be considered long-term if the holding period exceeds 12 months; otherwise, they will be categorised as short-term.
• Unlisted Securities: Gains will qualify as long-term only if the holding period exceeds 24 months.
• These changes are essential for planning and accurate ITR filing in 2025. Taxpayers should familiarise themselves with these updates to ensure compliance and maximize benefits under the new provisions.f