The Finance Act 2025 introduced comprehensive changes to the Personal Income Tax structure under the New Tax Regime (NTR), leaving more money in taxpayers’ hands.
“These changes are effective from FY 2025-26 (AY 2026-27),” Finance Ministry said in a post on X.
The Income Tax Bill, 2025, marks a significant step towards replacing India’s six-decade-old direct tax framework with the government seeking to balance investor confidence, taxpayer relief, and administrative efficiency with the new law.
The tax policy reforms include those in corporate tax, where a tax rate of 22 per cent was provided to those companies that do not claim specified deductions and exemptions and a 15 per cent for new manufacturing companies for a specified period, and in individual taxation, where the new tax regime provide for liberal slabs and lower rates with increased rebates. The individuals earning up to Rs 12 lakh (Rs 12.75 lakh effectively for salaried tax payers, due to standard deduction of Rs. 75,000) are not required to pay tax by these slabs, rates and rebates.
Finance Act 2025 also extended Section 10 (23FE) benefits. Eligible SWFs and Pension Funds can now make qualifying infrastructure investments till 31 March 2030, with continued tax exemption on dividends, interest and LTCG, the ministry highlighted.
Additional activities and date extensions for the International Financial Services Centre (IFSC) is fully implemented through the Finance Act, 2025. The amendments took effect from the April 1, 2025.
“The government has fulfilled the Budget promise to provide ‘certainty of taxation’ for Alternative Investment Funds (AIF) by clarifying the classification of their income from securities,” the ministry said.
Moreover, additional activities and date extensions for the International Financial Services Centre (IFSC) is fully implemented through the Finance Act, 2025. The amendments took effect from the April 1, 2025.
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