Union Budget 2025: Key Tax Changes Every Business Must Know

New Income Tax Slabs Under the Default Regime

Finance Minister Nirmala Sitharaman revised the new tax regime slabs significantly in Budget 2025. The nil-tax threshold has been raised to ₹4 lakh, with revised rates across slabs up to ₹24 lakh. Taxpayers earning up to ₹12 lakh now effectively pay zero tax after the standard deduction and the revised rebate under Section 87A.

• ₹0–₹4 lakh: Nil
• ₹4–₹8 lakh: 5%
• ₹8–₹12 lakh: 10%
• ₹12–₹16 lakh: 15%
• ₹16–₹20 lakh: 20%
• ₹20–₹24 lakh: 25%
• Above ₹24 lakh: 30%

Capital Gains Tax Reform

Budget 2025 rationalised the short-term and long-term capital gains tax structure. Long-term capital gains (LTCG) on listed equity and equity mutual funds above ₹1.25 lakh are taxed at 12.5% (up from 10%). Short-term capital gains (STCG) on listed equity now attract a flat 20% (up from 15%). The holding period for unlisted assets to qualify as long-term remains 24 months.

TDS Rationalisation

Multiple TDS sections have been rationalised. The threshold for TDS on interest income from banks and post offices for senior citizens has been doubled. Section 194-IA (TDS on property purchase) now applies only above ₹75 lakh. Several redundant TDS sections have been merged to reduce compliance burden for smaller businesses.

• Section 194-IA threshold raised to ₹75 lakh from ₹50 lakh
• TDS on e-commerce operators reduced from 1% to 0.1%
• New Section 194T introduced for payments by firms to partners

What Business Owners Must Do Now

Immediately revisit your advance tax computations for FY 2024-25 Q4 and FY 2025-26. Ensure your payroll system reflects the revised slabs. Review whether switching from old regime to new regime now makes mathematical sense for your employees. For unlisted equity holdings, re-evaluate exit timing based on the revised LTCG rates.