Budget 2025: 5 Subtle Changes That Could Impact Your Finances
Some vital changes would be witnessed through Budget 2025 on the personal finance side, thereby influencing taxpayers and investors. So here are some updates you need to know:
1. ULIP (Unit Linked Insurance Plan) Taxation
If you pay more than Rs. 2.5 lakh per year for ULIPs (Unit Linked Insurance Plans), the money you get at redemption will now be taxed as capital gains. If you hold the ULIP for over a year, a 12.5% tax will apply, just like equity mutual funds. Earlier, ULIP proceeds were completely tax-free under Section 10(10D), as long as the total premium for all policies stayed within Rs. 2.5 lakh per year.
2. Updated ITR Deadline Extended
The time available for filing an updated income-tax return has increased from 2 years to 4 years, which would now give more comfort in rectification or updation of earlier returns.
If you file an updated tax return within one year from the end of the assessment year in this case, you have to pay an additional 25% of the tax and interest. If you file it within two years, this increases to 50%. For fillings made between 24 to 36 months, the extra charge is 60%, and for fillings made between 36 to 48 months, it goes up to 70%.
3. Latest Tax Benefits for NPS Vatsalya
The NPS Vatsalya Scheme, which is essentially available for dependents or children with disabilities, will now enjoy the same tax benefit as the regular NPS. Since parents can claim an additional tax deduction of Rs 50,000 in the old tax regime, they would be saving more and thereby securing their child’s future.
4. Central KYC Database
In 2025, the government will launch an improved Central KYC (Know Your Customer) system. This new system will make KYC verification more simple and more efficient, with easier periodic updates for users.
The tax changes are designed to make compliance easier, give more flexibility, and offer better tax benefits for both investors and taxpayers.
5. NSS Withdrawals Tax-Exempt
From August 29, 2024, all withdrawals from the National Saving Scheme will be tax-free. This means that both the amount deposited and the interest earned would be tax-free if you had previously claimed tax benefits on those deposits.
