Updated Income Tax Slabs and Rates in India (Budget 2025)
The Union Budget 2025, presented by Finance Minister Nirmala Sitharaman, introduced significant revisions to India's income tax structure under the new tax regime. These changes aim to reduce the tax burden on individuals, increase disposable income, and boost economic activity.
Revised Income Tax Slabs for FY 2025-26
| Annual Income (₹) | Old Tax Slabs (Old Regime) | New Tax Slabs (New Regime) |
|---|---|---|
| Up to ₹2,50,000 | Nil | - |
| ₹2,50,001 - ₹3,00,000 | 5% | - |
| ₹3,00,001 - ₹4,00,000 | 5% | Nil |
| ₹4,00,001 - ₹8,00,000 | 5% | 5% |
| ₹8,00,001 - ₹12,00,000 | 20% | 10% |
| ₹12,00,001 - ₹16,00,000 | 30% | 15% |
| ₹16,00,001 - ₹20,00,000 | 30% | 20% |
| ₹20,00,001 - ₹24,00,000 | 30% | 25% |
| Above ₹24,00,000 | 30% | 30% |
Key Highlights of Budget 2025 Tax Reforms
- Increased Basic Exemption Limit: Raised from ₹3 lakh to ₹4 lakh.
- Higher Tax-Free Income: Individuals earning up to ₹12 lakh will pay zero tax due to enhanced rebates.
- Lower Tax Rates: Middle-income earners benefit from reduced tax rates.
- Revised Standard Deduction: Increased from ₹50,000 to ₹75,000.
- Enhanced Tax Rebate under Section 87A: Increased from ₹25,000 to ₹60,000.
Comparison: Old vs. New Tax Regime
| Aspect | Old Tax Regime | New Tax Regime (2025-26) |
|---|---|---|
| Basic Exemption Limit | ₹2,50,000 | ₹4,00,000 |
| Highest Tax Rate | 30% for income above ₹10L | 30% for income above ₹24L |
| Standard Deduction | ₹50,000 | ₹75,000 |
| Tax Rebate (87A) | ₹25,000 (income up to ₹5L) | ₹60,000 (income up to ₹12L) |
| Deductions Allowed? | Yes (80C, 80D, HRA, etc.) | No |
| Simplicity | Complex due to exemptions | Simple with fixed slabs |
Impact on Taxpayers
The revised tax slabs offer significant benefits to middle-income earners:
- A salaried person earning ₹12 lakh will pay zero tax under the new regime, compared to ₹1.35 lakh under the old regime.
- Individuals earning between ₹16 lakh and ₹24 lakh will see substantial savings due to reduced tax rates.
The new tax reforms aim to simplify taxation, increase take-home income, and encourage savings and investments in India's growing economy.
