As we step into the new financial year on April 1, 2025, it not only marks the beginning of a fresh accounting period but also brings several key changes across banking, taxation, and financial regulations. Being aware of these updates is essential to making informed financial decisions, avoiding penalties, and optimising your financial planning for the year ahead. Staying updated will help you navigate the financial landscape effectively and ensure compliance with the latest guidelines.
In this article, we will explore the key financial changes taking effect from April 2025.
Income Tax Slab
Starting April 1, 2025, the revised income tax structure will introduce updated tax brackets. Under the new regime, individuals with an annual income of up to Rs 12 lakh will be exempt from paying taxes.
Additionally, salaried employees will benefit from a standard deduction of Rs 75,000, effectively making salary income up to Rs 12.75 lakh tax-free. However, this exemption will only be available to those who opt for the new tax regime.
Tax Deducted at Source (TDS)
For Investors: From April 1, 2025, investors will enjoy a higher tax exemption on dividends and mutual fund earnings. TDS will now be deducted only if total income from dividends or mutual funds exceeds Rs 10,000 in a financial year. Previously, this limit was Rs 5,000.
For Senior Citizens: The TDS exemption limit on interest income from fixed and recurring deposits will be doubled from Rs 50,000 to Rs 1 lakh per financial year. This means TDS will only be deducted if total interest earnings exceed Rs 1 lakh.
For Rental Income: On February 1, Finance Minister Nirmala Sitharaman announced that the TDS threshold for rental income would be increased from Rs 2.4 lakh per year to Rs 6 lakh per year.
Tax Collected at Source (TCS)
From April 1, 2025, the TCS threshold under the Liberalised Remittance Scheme (LRS) will increase from Rs 7 lakh to Rs 10 lakh. TCS will only apply if remittances exceed Rs 10 lakh in a financial year, impacting foreign travel, investments, and other transactions.
ATM Transaction Charges
Starting May 1, 2025, the Reserve Bank of India (RBI) will increase ATM transaction fees from Rs 21 to Rs 23 per transaction. However, customers will still get five free transactions per month at their own bank’s ATMs and a limited number at other banks’ ATMs. The revised charges will also attract GST, making withdrawals slightly more expensive.
Positive Pay System (PPS)
To prevent cheque fraud, the Positive Pay System (PPS) will be implemented from April 1, 2025. Under this RBI-introduced system, customers issuing cheques above Rs 50,000 must pre-register key details such as cheque number, date, payee name, account number, and amount with their bank.
The bank will verify these details before processing the payment. If there is a mismatch, corrective measures will be taken.
Minimum Balance Requirement
Banks will update their minimum balance policies, requiring account holders to maintain a specific average balance to avoid penalties. The requirement will vary based on the bank and branch location, such as rural, semi-rural, urban, or metro areas.
Interest on Savings Accounts and FDs
Banks are revising interest rates on both savings accounts and fixed deposits (FDs). Savings account interest rates will now vary based on the balance maintained, with higher balances earning better interest.
UPI Transactions
The National Payments Corporation of India (NPCI) is introducing new security guidelines for UPI transactions starting April 1, 2025. If your mobile number has been inactive for a long time, your UPI ID will be deactivated. This means you won’t be able to use UPI services unless you update your number with your bank.
DigiLocker for Investment Nomination
From April 1, 2025, stock market and mutual fund investors will be able to access and store their holdings’ statements from their demat accounts and Consolidated Account Statement (CAS) on DigiLocker. SEBI introduced this rule to simplify access to investment details and minimise unclaimed assets.
Unified Pension Scheme (UPS)
The Central Government has introduced the Unified Pension Scheme (UPS) under the National Pension System (NPS) for its employees, ensuring an assured monthly payout post-retirement. This fund-based system, supported by contributions from both employees and employers, will be operational from April 1, 2025.
NSE & BSE to Act as Backups for Each Other
From April 1, 2025, NSE and BSE will serve as alternative trading platforms for each other, as per SEBI’s new guidelines. This ensures uninterrupted trading in case one exchange experiences an outage. Both exchanges will formulate a contingency plan outlining their roles and actions during such events.
Wrapping Up
With these financial and banking changes taking effect in April 2025, staying updated will help you manage your finances better. Understanding these changes will enable you to avoid extra charges, comply with new regulations, and make smarter financial decisions for the future.
*This article is for informational purposes only. This is not investment advice.
*Disclaimer: Teji Mandi Disclaimer
