Maximize Your Money This New Financial Year for a Brighter Future!

As the New Financial Year 2025-26 begins on April 1, 2025, taxpayers across the country can look forward to higher disposable income due to key policy changes. From tax benefits to lower loan interest rates and higher TDS thresholds, here are three major reasons why you’ll have more money in hand starting this April.

1. Higher Tax-Free Income Under the New Tax Regime

One of the most significant changes is the revision in income tax slabs under the new tax regime, which will take effect from April 1, 2025:

  • No income tax up to ₹12 lakh: Individuals opting for the new tax regime will not have to pay any tax if their income is up to ₹12 lakh.
  • Minimal tax for slightly higher incomes: Due to marginal tax relief, incomes slightly above ₹12 lakh will attract either zero or minimal tax.
  • ₹12.75 lakh tax-free limit for salaried employees: Thanks to the ₹75,000 standard deduction, salaried individuals will enjoy a higher tax-free limit.

How does this benefit you?

For employees earning up to ₹12.75 lakh, employers won’t deduct advance tax, resulting in a higher monthly take-home salary. Even those in higher income brackets could save up to ₹1 lakh under the new tax regime.

Also Read: Simplify Your ITR Process: Discover the New AIS Feature for ITR Filing FY24

2. Repo Rate Cut: Lower Loan EMIs

In February 2025, the Reserve Bank of India (RBI) announced a 0.25% cut in the repo rate, which directly impacts interest rates on loans. This means:

  • Lower home loan and auto loan interest rates
  • Reduced EMIs for borrowers
  • More disposable income

Future Outlook

Experts predict further repo rate cuts in FY 2025-26. SBI Research forecasts a potential 0.75% reduction in the repo rate due to controlled inflation, which means borrowing costs could drop even further in the coming months.

3. Higher TDS Thresholds: More Savings on Interest, Rent & Remittances

From April 1, 2025, higher TDS (Tax Deducted at Source) thresholds will apply to interest income, rent payments, and foreign remittances.

  • Higher TDS limit on interest income:
    • General citizens: ₹50,000 (previously ₹40,000)
    • Senior citizens: ₹1 lakh (previously ₹50,000)
  • TDS-free rent up to ₹6 lakh per year: The previous limit was ₹2.4 lakh per year.
  • No TDS on foreign remittances up to ₹10 lakh: The previous limit was ₹7 lakh under the RBI’s Liberalised Remittance Scheme (LRS).

How does this benefit you?

With higher TDS thresholds, you retain more money in your account instead of having it deducted upfront, improving your overall cash flow.

Final Thoughts

The New Financial Year 2025-26 is shaping up to be taxpayer-friendly, with policies aimed at increasing disposable income. Whether it’s through reduced taxes, lower loan EMIs, or relaxed TDS rules, these changes will put more money in your hands starting April 1, 2025.

Plan wisely and make the most of these financial benefits!

(Disclaimer:  The above article is intended for informational purposes solely and should not be construed as investment advice. FINOSTRY advises its readers/audience to consult with their financial advisors before making any decisions related to money matters.)