From Taxes To UPI: Five Major Financial Changes Coming Into Effect From April 1, 2025

With the start of the new financial year, several key changes will impact your finances. Here's a simplified breakdown of what you need to know:

Income Tax Rules

One of the biggest updates is the new income tax slabs introduced in the Union Budget 2025. Now, individuals earning up to Rs 12 lakh per year are exempt from paying income tax. Additionally, a standard deduction of Rs 75,000 makes incomes up to Rs 12.75 lakh tax-free. However, taxpayers still need to file their returns to claim a rebate of up to Rs 60,000.

Unified Pension Scheme (UPS)

The Unified Pension Scheme (UPS), introduced in August 2024, will officially take effect from April 1, 2025. It is expected to benefit around 23 lakh central government employees. Under this scheme, those with at least 25 years of service will receive a pension equal to 50 per cent of their last 12 months' average basic salary, ensuring financial security after retirement. Notably, this scheme is an alternative to the National Pension System (NPS) and offers long-term stability for government employees.

UPI Inactivation

Starting April 1, 2025, the National Payments Corporation of India (NPCI) will begin deactivating UPI IDs linked to inactive mobile numbers. If you use GPay, PhonePe, or any UPI-based payment app, ensure that your registered number is active.

This move aims to enhance security as inactive UPI-linked numbers pose a risk. If a number is reassigned, old accounts could be misused, leading to potential fraud.

GST Reforms

Several changes have been introduced in the Goods and Services Tax (GST) system, such as:

Multi-Factor Authentication (MFA): The GST portal now requires MFA for added security.

E-Way Bills: E-way bills can only be generated for documents issued within the last 180 days, ensuring stricter compliance.

Hospitality Sector Taxation: Hotels with room rates above Rs 7,500 per day are now classified as 'Specified Premises', meaning restaurant services in these hotels will be taxed at 18 per cent GST. However, businesses within these establishments can claim input tax credit.

TDS Compliance: If you file GSTR-7 for tax deductions at source (TDS), you can no longer skip months or file returns out of order.

Biometric Authentication: Promoters and directors must now visit a GST Suvidha Kendra for biometric verification.

TDS And TCS Revisions

In the Budget 2025, Finance Minister Nirmala Sitharaman introduced key changes to TDS (Tax Deducted at Source) and TCS (Tax Collected at Source):

The TDS threshold on bank interest for senior citizens has been doubled from Rs 50,000 to Rs 1 lakh. Meanwhile, it has been increased to Rs 50,000 for others.

The TDS threshold for dividend income has been raised to Rs 10,000.

The TCS threshold for overseas remittances under the Liberalised Remittance Scheme (LRS) has increased from Rs 7 lakh to Rs 10 lakh.

These updates bring significant financial changes that will affect individuals and businesses. It is crucial to stay informed and adjust your financial planning accordingly. If you are impacted by any of these changes, consider consulting a financial advisor to optimize your tax savings and ensure compliance.