Image Source : PTI Nirmala Sitharaman
Budget 2025: Union Finance Minister Nirmala Sitharaman on Saturday announced during the Budget 2025 that no income tax will be paid on earnings up to Rs 12 lakh, or up to Rs 12.75 lakh including standard deductions, under the new tax regime.
After the new changes are introduced now, the individual taxpayers in the new regime with an income of Rs 12 lakh will get a benefit of Rs 80,000 in tax (100% of tax payable as per existing rates will be exempt). In the new tax regime, the effective income tax rate will be 0%. This move of the Centre means even if people earning between Rs 8 to 10 lakh end up paying a 10% tax in the new tax regime, they can claim a refund of the entire value, making their payable income tax Rs 0.
Moreover, those earning up to Rs 13 lakh will now be able to save income tax over and above the Rs 12 lakh income limit as there is a standard deduction of Rs 75,000 and a marginal relief of around 30,000.
Previously, there was a 30% tax on those earning above Rs 15 lakh under both regimes. Now, there is a 25% slab for those earning between Rs 20 lakh and Rs 24 lakh with the new tax regime.
The new decision from the Centre to change the tax slabs in the Union Budget 2025 is aimed at reducing taxes for the middle class and leaving more money in their hands, boosting household consumption, savings, and investment.
5 things employees must know under new tax regime
An employee earning Rs 16 lakh will receive a tax benefit of Rs 50,000, resulting in an effective tax rate of just 7.5%.
An employees earning Rs 18 lakh will have a tax benefit of Rs 70,000, bringing the effective tax rate to 8.8%.
An employee earning Rs 20 lakh will receive tax benefit of Rs 90,000, leading to an effective tax rate of 10%.
An employee with an income of Rs 25 lakh will get a tax benefit of Rs 1,10,000, resulting in an effective tax rate of 13.2%.
An employee earning Rs 50 lakh will also receive a tax benefit of Rs 1,10,000, with an effective tax rate of 21.6%.
