This article gives a high-level overview of the most important points which affect your portfolio and taxation in Union Budget 2025 for both residents and NRIs.

This article is a part of our detailed article series on Union Budget 2025. Ensure you have read the other parts here: Show/Hide

📚 Topics covered:

• What are the highlights of Union Budget 2025 for your portfolio?
• What has Union Budget 2025 changed in personal income tax?
  • Lower taxes further via the new tax regime
  • Lower TCS on international remittances under RBI’s LRS scheme
  • Higher TDS thresholds for various types of income
  • The period of filing revised ITRs has now increased from 2 to 4 years
  • ULIP taxation will be the same as equity mutual funds
• What has Union Budget 2025 changed for capital gains tax?
• What has Union Budget 2025 changed for real estate?

What are the highlights of Union Budget 2025 for your portfolio?

Union Budget 2025 on 1st February 2025 covered changes in income tax while capital gains tax and other relevant changes will be covered a week later. For now, we will cover these changes only.

What has Union Budget 2025 changed in personal income tax?

Lower taxes further via the new tax regime

Personal income tax rates have been changed to allow up to ₹12.75 lakhs as tax-free income in the new tax regime.

Old tax Regime slabs for post-deduction income are:

• 0-2.5L - no tax
• 2.5-5L @ 5%
• 5-10L @ 20%
• 10L+ @ 30%

New tax Regime slabs for post-deduction income are:

• 0-4L - no tax
• 4-8L @ 5%
• 8-12L @ 10%
• 12-16L @ 15%
• 16-20L @ 20%
• 20-24L @ 25%
• 24L+ @ 30%

Note: The new tax regime slabs are as of Union Budget 2025 announced on 1-Feb-2025. Standard deduction is at ₹75,000 (same as Budget 2024) for income from salary and pension. Please keep in mind that offset of capital gains say under Section 111A, 112 etc (stocks and mutual funds) will not be available in the amounts above and will now be taxable even if there is no income tax for incomes below the threshold.

This means that income up to ₹12.75L (including the standard deduction) will be tax-free but if you have say ₹3 lakhs of equity long-term capital gains, it will still be taxable at 12.5% above 1.25L.

There is also a concept of marginal relief, under Section 87A, up to ₹71,250 so that some one with ₹12,75,001 income is not hit with ₹71,250 tax just because of being over the threshold by ₹1. In Budget 2025, 87A relief has been raised to ₹60,000 for income up to ₹12 lakhs. 87A rebate is not available for NRIs.

Previous to Union Budget 2025, the new regime slab rates were:

• 0-3L no tax, 3-7L @ 5%, 7-10L @ 10%, 10-12L @ 15%, 12-15L @ 20%, 15L+ @ 30% with ₹75,000 standard deduction as per Budget 2024 (applicable to FY 2024-25)
• 0-3L @ 0%, 3-6L @ 5%, 6-9L @ 10%, 9-12L @ 15%, and 15L+ @ 30% with ₹50,000 standard deduction as per Budget 2023 (applicable to FY 2023-24)

We have an updated calculator on the best tax regime you should choose from 1st April 2025 onwards here: Union Budget 2025: which is the best tax regime to choose from 1st April 2025?

Lower TCS on international remittances under RBI’s LRS scheme

Under the RBI’s Liberalised Remittance Scheme (LRS), resident Indians can spend up to $250,000 (over ₹2 crores) per financial year on foreign investments, children’s education, foreign tours, and medical expenses abroad.

Union Budget 2025 has introduced additional changes for resident Indians looking to remit internationally:

• for educational purposes, there is no longer any TCS if the funds being remitted come from an educational loan. Earlier, it was 0.5% above ₹7 lakhs for educational loan
• for other purposes, the 20% TCS above ₹7 lakhs threshold rule is there but the threshold has been bumped to ₹10 lakhs

Remember: As per Budget 2024, TCS can now be offset against TDS from salary: Budget 2024: How New Changes Make International Investing under LRS Easier for Indians?

Higher TDS thresholds for various types of income

Annual TDS thresholds have been increased for these types of income

• Bank/Post office Interest income for senior citizens: ₹50,000 to ₹100,000
• Bank/Post office Interest income for non-senior citizens: ₹40,000 to ₹50,000
• Coupon payments from bonds and debentures: ₹5,000 to ₹10,000
• Dividends from stocks and IDCW plans of mutual funds: ₹5,000 to ₹10,000
• Rent from real estate: ₹240,000 to ₹600,000

The period of filing revised ITRs has now increased from 2 to 4 years

Under Section 139(8A), you earlier could amend your past income tax returns for up to two years. For example, you can update any of the returns filed in FY2021 onwards by 31st March 2025. Now this window of amending returns has been increased by two more years.

Related:
What should you do if you have received the income tax SMS telling you about the opportunity to file your updated ITR under section 139(8A)?

ULIP taxation will be the same as equity mutual funds

A clarification in the budget speech tagged ULIPs (with annual premiums above ₹2.5/year) having the same taxation (12.5% on gains) as equity mutual funds.

ULIPs purchased after 2021 with annual premium (across all ULIPs) below ₹2.5 lakhs will continue to be tax-free on maturity.

Note: Due to the opaque commission structure and high fees, investors looking at ULIPs should invest in mutual funds and purchase adequate term insurance.

What has Union Budget 2025 changed for capital gains tax?

We expect to hear more on this within a week from 1st February 2025.

What has Union Budget 2025 changed for real estate?

There were two surprise changes affecting real estate in the Budget speech:

• TDS limit on rent has been increased from ₹2.4 lakhs to ₹6 lakhs per year
• Investors can now claim no notional rental income from their second unoccupied house

Earlier, for the second unoccupied house, there was tax to be paid assuming a notional rent as per circle rate of the property. Now real estate owners, apart from the primary residence, can avoid paying tax if they have one or two houses without any rental income.

We expect capital gains tax-related details revealed later. For now, capital gains tax remains as:

• for resident Indians, the lower of 12.5% on flat profit or 20% on indexed profit whichever is lower for houses held for 2 years or more
• for NRIs, it is 12.5% on flat profit

More details are available here: Budget 2024 taxation rule reversal: grandfathering rule brings back indexation benefit to properties acquired before July 2024