Key Highlights of Income Tax Act, 2025

India's direct tax framework has been overhauled with the implementation of the new Income-tax Act, 2025 and the updated Income-tax Rules, 2026. Tax filing has been digitized to simplify compliance, featuring a dedicated AI chatbot ('Kar Sathi') and streamlined forms that reduce the old rules from 511 to 333.

Key Tax Rules and Limit Changes
  • New Tax Regime Slabs: The default tax regime continues without major changes to the slabs, offering a tax-free income up to ₹12 lakh when factoring in standard deductions and rebates.
  • Exemption Updates: The tax-exempt limit for employer-provided meals has been increased to ₹200 per meal.
  • HRA Adjustments: The list of cities eligible for the higher House Rent Allowance (HRA) exemption has been expanded to cover four additional cities.
  • Property Limits: Taxpayers can now file using ITR forms that accommodate up to two house properties (up from one previously).
  • Capital Gains Changes: ULIPs with an annual premium exceeding ₹2.5 lakh are now taxed under capital gains, similar to equity investments. 
Compliance and Filing
  • Simplified Forms: Total ITR forms have been reduced and redesigned for clarity, allowing an easier filing process for both salaried individuals and businesses.
  • Real-time Transparency: The modernized tax infrastructure ties reporting more closely to digital footprints, meaning accurate and comprehensive disclosure of financial data is vital

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