Image Source : PIXABAY Budget 2025, Income Tax Slabs: The new structure will substantially reduce the taxes of the middle class.
Budget 2025, New Income Tax Slabs: In a major relief to the middle class, Finance Minister Nirmala Sitharaman today announced that no income tax will be payable on income up to Rs 12 lakh. The move will significantly benefit salaried taxpayers as this limit will be Rs 12.75 lakh rupees for them (with Rs 75,000 being standard deduction).
Sitharaman said “To tax payers up to Rs 12 lakh of normal income (other than special rate income such as capital gains) tax rebate is being provided in addition to the benefit due to slab rate reduction in such a manner that there is no tax payable by them.”
As per the rejig, for people earning more than Rs 12 lakh per annum, there will be nil tax for income up to Rs 4 lakh, 5 per cent for income between Rs 4 and 8 lakh, 10 per cent for Rs 8-12 lakh, 15 per cent for Rs 12-16 lakh.
Budget 2025: Revised Tax Slabs For FY 2025-26
Revised Tax Slabs (FY 2025-26)
0-4 lakh rupees
Nil
4-8 lakh rupees
5 per cent
8-12 lakh rupees
10 per cent
12-16 lakh rupees
15 per cent
16-20 lakh rupees
20 per cent
20- 24 lakh rupees
25 per cent
Above 24 lakh rupees
30 per cent
Here’s how the total tax benefit of slab rate changes and rebates will work
A taxpayer in the new regime with an income of ₹12 lakh will get a benefit of Rs 80,000 in tax (100 per cent of tax payable as per existing rates will be exempt). The effective income tax rate will be 0 per cent.
A person having an income of ₹16 lakh will get a benefit of Rs 50,000 in tax. (The effective income tax rate payable will be just 7.5 per cent).
A person having an income of Rs 18 lakh will get a benefit of Rs 70,000 in tax. (The effective income tax rate payable will be just 8.8 per cent).
A person having an income of Rs 20 lakh will get a benefit of Rs 90,000 in tax. (The effective income tax rate payable will be just 10 per cent).
A person with an income of Rs 25 lakh gets a benefit of Rs 1,10,000. (The effective tax rate will be just 13.2 per cent).
A person with an income of Rs 50 lakh also gets a benefit of Rs 1,10,000. (The effective tax rate will be just 21.6 per cent).
Income
Tax on Slabs and rates
Benefit of
Rebate benefit
(for those earning below Rs.12 lakh)
Total Benefit
Tax after benefit
Present
Proposed
Rate/Slab
Full rebate upto Rs. 12 lakhs
Up to 8 lakh
30,000
20,000
10,000
20,000
30,000
0
9 lakh
40,000
30,000
10,000
30,000
40,000
0
10 lakh
50,000
40,000
10,000
40,000
50,000
0
11 lakh
65,000
50,000
15,000
50,000
65,000
0
12 lakh
80,000
60,000
20,000
60,000
80,000
0
16 lakh
1,70,000
1,20,000
50,000
0
50,000
1,20,000
20 lakh
2,90,000
2,00,000
90,000
0
90,000
2,00,000
24 lakh
4,10,000
3,00,000
1,10,000
0
1,10,000
3,00,000
50 lakh
11,90,000
10,80,000
1,10,000
0
1,10,000
10,80,000
Budget 2025: New and Old Tax Regime Before Today’s Announcement
The new tax regime exempts income up to Rs 3 lakh. Those earning annually between Rs 3-7 lakh pay 5 per cent tax, Rs 7-10 lakh (10 per cent), Rs 10-12 lakh (15 per cent), Rs 12-15 lakh (20 per cent) and above Rs 15 lakh (30 per cent).
Image Source : FILETax benefits for different categories
The old tax regime, however, exempts income up to Rs 2.5 lakh from taxes. Income from Rs 2.5-5 lakh attracts 5 per cent tax, and 20 per cent for income between Rs 5 lakh and Rs 10 lakh. A 30 per cent tax is levied on income above Rs 10 lakh.
