The Union Budget 2025 has introduced significant changes in India’s income tax structure, bringing relief to taxpayers across various income groups. One of the biggest highlights is the proposal to increase the tax exemption limit, ensuring that individuals earning up to ₹12 lakh annually may not have to pay any income tax under the new regime. Let’s take a detailed look at the latest income tax slab rates and what they mean for taxpayers.
New Income Tax Slabs for FY 2025-26
As per the new tax regime, the revised income tax slabs are as follows:
| Annual Income (₹) | Tax Rate |
|---|---|
| Up to ₹12 lakh | 0% (No Tax) |
| ₹12 lakh – ₹15 lakh | 10% |
| ₹15 lakh – ₹20 lakh | 15% |
| ₹20 lakh – ₹25 lakh | 20% |
| Above ₹25 lakh | 30% |
Key Highlights of the New Tax Regime
- Tax exemption limit raised to ₹12 lakh: Individuals earning up to ₹12 lakh annually will not have to pay any income tax, bringing significant relief to middle-class taxpayers.
- Reduced tax burden on higher income groups: The new tax slabs provide lower tax rates for those earning between ₹12 lakh and ₹25 lakh, making the new regime more attractive.
- Encouraging taxpayers to shift to the new regime: With simpler slab rates and higher exemptions, the government aims to make the new tax regime the preferred choice over the old one.
How Does This Benefit Taxpayers?
- Higher Savings for Salaried Individuals
The increase in the tax-free income threshold to ₹12 lakh means that salaried employees can retain a larger portion of their earnings without worrying about tax deductions. - Simplified Tax Filing
The new structure is designed to be more straightforward, making it easier for taxpayers to file returns without the need for complex deductions and exemptions. - Boost to Disposable Income
With lower tax rates across various income brackets, individuals will have more money in hand, which could lead to higher consumer spending and economic growth.
Old vs. New Tax Regime: Should You Switch?
With the revised tax slabs, many taxpayers may consider shifting to the new tax regime. However, the decision should be based on individual financial planning. The old regime allows deductions such as:
- Section 80C: Up to ₹1.5 lakh for investments like PPF, EPF, and ELSS
- Section 80D: Medical insurance premiums
- HRA (House Rent Allowance) & LTA (Leave Travel Allowance)
Taxpayers who heavily rely on deductions may still find the old regime beneficial. However, those looking for simplicity and a higher tax-free limit may prefer the new regime.
Conclusion
The new income tax slabs for 2025-26 bring significant relief to taxpayers, especially those earning up to ₹12 lakh annually. With reduced tax rates for higher-income brackets, the government aims to make tax compliance easier while boosting disposable income. Taxpayers must analyze their financial situation carefully before choosing between the old and new tax regimes.
Are you planning to switch to the new tax regime? Share your thoughts in the comments below!
Disclaimer: This article is for informational purposes only and should not be considered tax advice. Please consult a financial expert for personalized tax planning.
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