With the commencement of the new financial year 2025-26 from April 1, several key economic and financial changes have come into effect. These reforms, stemming from the Union Budget announcements and regulatory updates, are set to impact taxpayers, senior citizens, and digital payment users alike. From revisions in income tax slabs to ATM withdrawal charges and UPI transaction norms, here’s everything you need to know about the changes implemented from today.
Taxation Overhaul: No Tax on Income Up to ₹12.75 Lakh
One of the most significant updates is in the income tax structure. Under the new tax regime, individuals earning up to ₹12 lakh annually will not have to pay any income tax. For salaried employees, the standard deduction of ₹75,000 increases this tax-free income limit to ₹12.75 lakh per annum. Any income beyond this threshold will be taxed based on the new slabs.
Additionally, the tax rebate under Section 87A has been increased from ₹25,000 to ₹60,000, ensuring that individuals earning up to ₹12 lakh per annum have no tax liability.
Higher TDS Exemptions on Interest Earnings
To provide relief to deposit holders, the government has increased the tax deduction at source (TDS) exemption limit on interest earned from Fixed Deposits (FDs) and Recurring Deposits (RDs):
- For senior citizens: The exemption limit has doubled from ₹50,000 to ₹1 lakh per annum.
- For general depositors: The exemption has been raised from ₹40,000 to ₹50,000.
This move benefits individuals who rely on interest income for their financial sustenance.
TDS on Rental Income Increased to ₹6 Lakh
Individuals earning rental income will also see relief, as the TDS deduction limit has been increased from ₹2.40 lakh to ₹6 lakh annually. This means that landlords earning up to ₹50,000 per month in rental income will not be subject to TDS deductions.
Dividend Income TDS Limit Increased
Stock market investors and mutual fund holders will benefit from the increased TDS exemption on dividend income. The limit has been raised from ₹5,000 to ₹10,000 per annum, reducing the tax burden on smaller investors.
ATM Withdrawals to Become Costlier
Starting May 1, 2025, ATM withdrawals beyond the free monthly limit will be more expensive. The Reserve Bank of India (RBI) has approved an increase in ATM interchange fees, meaning customers will now be charged ₹23 per transaction instead of ₹21 after exhausting their free withdrawal quota. Currently, banks allow:
- Metro cities: Five free transactions at home bank ATMs and three at other banks.
- Non-metro cities: Five free transactions at both home and other bank ATMs.
Interest Rate Changes for Savings and Fixed Deposits
Several banks, including SBI, PNB, and Canara Bank, have announced revisions in their savings and FD interest rates. New rates will depend on deposit amounts, meaning customers maintaining higher balances could receive better interest rates.
Minimum Balance Rules Tightened
Banks have also imposed stricter rules for maintaining minimum balances. SBI, PNB, and Canara Bank will require different minimum balances for urban, semi-urban, and rural branches. Non-compliance will attract penalties:
- Urban areas: Minimum balance requirement of ₹5,000
- Rural areas: Minimum balance of ₹2,000
Reduction in Credit Card Rewards
SBI Cards has announced a revision in reward points for select credit cards:
- SimplyCLICK SBI Card: Swiggy transactions will now earn 5x reward points instead of 10x.
- Air India SBI Platinum Credit Card: Rewards per ₹100 spent reduced from 15 to 5 points.
- Air India SBI Signature Credit Card: Rewards reduced from 30 to 10 points.
- IDFC First Bank: Club Vistara Credit Card milestone benefits will be discontinued from March 31, 2025.
GST: E-Invoicing Changes for Businesses
The GST Network (GSTN) has revised the e-invoicing process for businesses. Companies with an annual turnover between ₹10 crore and ₹100 crore must now upload e-invoices to the Invoice Registration Portal (IRP) within 30 days of issue. Previously, this rule applied only to businesses with a turnover exceeding ₹100 crore. Failure to upload invoices within the timeframe will result in automatic rejection.
Updated ITR Filing Window Extended to 48 Months
Taxpayers will now have more time to file updated income tax returns (ITRs). The window for submitting an updated ITR has been extended from 12 months to 48 months (four years). However, penalties apply:
- Within 12 months: 25% additional tax
- Within 24 months: 50% additional tax
- Within 36 months: 60% additional tax
- Within 48 months: 70% additional tax
UPI Services Affected by Mobile Number Deactivation
The National Payments Corporation of India (NPCI) has introduced stricter security measures for UPI transactions. If a mobile number remains inactive for 90 days, telecom providers may reassign it to another user, rendering the original UPI ID inactive. Users are advised to update their UPI-linked mobile numbers promptly to avoid transaction failures.
These financial changes from April 1, 2025, bring both benefits and challenges for taxpayers, banking customers, and businesses. While the revised income tax slabs and higher TDS exemption limits provide relief, increased ATM withdrawal charges and credit card reward reductions may impact spending habits. Staying informed and adjusting financial plans accordingly will be crucial for maximizing benefits under the new rules.
