New TDS Rules on Salary/Pension from 1st April 2025

 New TDS Rules on Salary/Pension from 1st April 2025

By- Tax GuruJi Digital

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"Hey, everyone! Welcome back to the channel! If you’re a salaried employee or a pensioner, listen up—because starting April 1st, 2025, the way your taxes are deducted is getting a major shake-up! I’m talking about the new TDS rules under the Income Tax Act, and trust me, this affects YOUR paycheck. In this video, we’re breaking down everything you need to know: new slab rates, deductions you can still claim, and some big changes that might surprise you. Don’t miss out—hit that like button, subscribe if you haven’t, and let’s dive into the tax madness!"

With effect from 1st April 2025, significant changes have been introduced under Section 115BAC, which governs the new tax regime. These changes impact how TDS is deducted on salaries, with a revised set of slab rates.

TDS Deduction Based on New Tax Regime Slabs

Employers will deduct TDS on salary income based on the latest slab rates. Employees, however, will still have the option to choose between the old and new tax regimes. The old tax regime remains unchanged.

Additionally, employees can provide details of any other TDS or TCS deducted outside their salary, and employers will consider these amounts before computing the TDS deduction on salary.

New Tax Regime: Latest Slab Rates (FY 2025-26)

Total Income (₹)            Tax Rate (%)

0 – 4,00,000 0%

4,00,001 – 8,00,000   5%

8,00,001 – 12,00,000   10%

12,00,001 – 16,00,000     15%

16,00,001 – 20,00,000   20%

20,00,001 – 24,00,000   25%

Above 24,00,000           30%

Rebate & Relief:

Maximum rebate available: ₹60,000 (Applicable for income up to ₹12 lakh)

Marginal relief is also available

Deductions Allowed Under the New Tax Regime

Employer’s Contribution to NPS (Section 80CCD(2)) – The deduction has been increased from 10% to 14% of the salary as per Budget 2024.

Standard Deduction (available for both Salary and Pension) – ₹75,000 (applicable from FY 2023-24).

Family Pension Scheme Deduction (Section 57(iia)) – Maximum of ₹25,000.

Agniveer Corpus Fund Deduction (Section 80CCH(2)) – Amount deposited in the fund.

Transport Allowance – Provided to specially-abled persons.

Conveyance Allowance – Compensation for employment-related expenses.

Tour, Transfer, or Travel Allowance – Allowance received for such expenses.

Daily Allowance – Covers ordinary expenses for being away from duty location.

Perquisites for Official Purposes – Exempt from tax.

Exemptions for Retirement Benefits – Includes:

Voluntary Retirement (Section 10(10C))

Leave Encashment (Section 10(10AA))

Gratuity (Section 10(10))

Gifts Received – Up to ₹50,000.

Interest on Home Loan (Section 24) – For let-out properties onlyonly.

Deductions Excluded from Business Income Under the New Regime

Additional Depreciation (Section 32)

Investment Allowance (Section 32AD)

Sector-Specific Deductions (Sections 33AB, 33ABA)

Scientific Research Expenses (Section 35)

Capital Expenditure Deductions (Section 35AD)

SEZ Unit Exemption (Section 10AA)

Deductions and Exemptions Not Allowed Under the New Regime

Professional Tax

Entertainment Allowance

Leave Travel Allowance (LTA)

House Rent Allowance (HRA)

Helper Allowance

Minor Child Income Allowance

Allowance to MPs/MLAs

Special Allowances (Section 10(14))

Children’s Education Allowance

Additional Depreciation (Section 32(1)(iia))

Deductions under Sections 32AD, 33AB, 33ABA

Scientific Research Donations (Sections 35(2AA), 35(1)(ii), 35(1)(iia), 35(1)(iii))

Deductions under Sections 35AD, 35CCC

Interest on Housing Loan for Self-Occupied Property

Chapter VI-A Deductions (except Section 80CCD(2) and 80JJAA)

Exemptions for Food Allowance (₹50 per meal for 2 meals/day)

Donations to Trusts/Political Parties

Employee’s Own Contribution to NPS

Section 115BAC for Business Taxpayers

Business taxpayers can choose between the old and new tax regimes.

Once opted for, the new tax regime will remain applicable for all future years.

Unlike salaried individuals, business taxpayers cannot switch regimes annually.

They can revert to the old regime only once in a lifetime.

After switching back to the old regime, they cannot opt for the new regime again unless permitted under specific conditions.

House Property Loss Under the New Tax Regime

No deduction for home loan interest on self-occupied property.

No ₹2 lakh deduction that was available in the old regime.

For let-out properties, deduction allowed only up to taxable rent received.

Loss from house property cannot be set off against salary income.

Loss cannot be carried forward to future years.