The Union Budget 2025 introduced significant changes to India's income tax structure, raising the tax exemption limit so individuals earning up to ₹12 lakh annually may pay no income tax under the new regime.
New Income Tax Slabs for FY 2025-26
| 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
- Tax exemption limit raised to ₹12 lakh, relieving middle-class taxpayers
- Reduced tax burden for ₹12–25 lakh income bracket
- Government aims to make the new regime the preferred choice over the old one
How Does This Benefit Taxpayers?
- Higher savings for salaried individuals — larger share of earnings retained tax-free up to ₹12 lakh
- Simplified tax filing — fewer complex deductions and exemptions needed
- Boost to disposable income — potential for higher consumer spending and growth
Old vs. New Tax Regime: Should You Switch?
The old regime still allows deductions such as Section 80C (up to ₹1.5 lakh for PPF/EPF/ELSS), Section 80D (medical insurance), and HRA/LTA. Taxpayers relying heavily on deductions may still find the old regime beneficial; those seeking simplicity and a higher tax-free limit may prefer the new regime.
Conclusion
The new slabs bring significant relief, especially for those earning up to ₹12 lakh, while boosting disposable income and simplifying compliance. Taxpayers should analyze their financial situation before choosing between regimes.
Disclaimer: This article is for informational purposes only and should not be considered tax advice. Please consult a financial expert for personalized tax planning.