The 2025 Indian Union Budget brought about significant changes to the income tax regime, benefiting taxpayers, especially those with lower to middle incomes. The new regime has been designed to provide tax relief and simplify the process, making it easier for individuals to save and plan their finances. Let’s take a closer look at the key points of the newly introduced tax structure.
1. No Income Tax Up to ₹12 Lakh
One of the most notable changes under the new income tax regime is that individuals earning up to ₹12 lakh annually will no longer be liable to pay any income tax. This move aims to provide financial relief to taxpayers, allowing them to retain a larger portion of their earnings.
For salaried individuals, the threshold is even higher. With the standard deduction, those earning up to ₹12.75 lakh will be exempt from income tax.
2. New Tax Slabs
In an effort to ease the tax burden on middle-income earners, the government has introduced new tax slabs. These slabs are as follows:
- Income between ₹5 lakh and ₹7 lakh: Taxed at 5%.
- Income between ₹7 lakh and ₹10 lakh: Taxed at 10%.
- Income between ₹10 lakh and ₹12 lakh: Taxed at 15%.
- Income between ₹12 lakh and ₹15 lakh: Taxed at 20%.
- Income above ₹15 lakh: Taxed at 30%.
This step is designed to make the tax system more progressive and reduce the burden on taxpayers in the lower to middle-income brackets.
3. Section 87A Rebate
Section 87A offers a significant relief to taxpayers under the new income tax regime. The rebate has been increased from ₹25,000 to ₹60,000 for individuals earning up to ₹12 lakh annually. This rebate directly reduces the taxable income, thereby lowering the overall tax liability.
4. How is Tax ₹0 Up to ₹12 Lakh?
For taxpayers with income up to ₹12 lakh, there is a unique combination of benefits under the new regime:
- No Tax on the First ₹12 Lakh: The new tax slabs ensure that individuals earning up to ₹12 lakh are not subject to income tax.
- Section 87A Rebate: In addition, taxpayers are eligible for a rebate of ₹60,000, further reducing their taxable income to zero.
Conclusion
The introduction of the new income tax regime in the 2025 Union Budget is a welcome move for many taxpayers, particularly salaried individuals and those with annual incomes up to ₹12 lakh. With a combination of no tax up to ₹12 lakh and an increased Section 87A rebate, taxpayers can look forward to greater financial relief. The new tax slabs further ensure that middle-income earners are not overburdened with taxes.
As always, it’s important to stay informed about these changes and consult with a tax professional for personalized guidance to make the most of the new tax regime.