Union budget 2025, Union Budget 2025 tax Slab

Union Budget 2025 tax Slab

How a middle class tax payer will get benefit after new tax slab in Fy 25 - 26

The honorable Finance Minister of India, Nirmala Sitharaman has announced a significant change in the income tax slabs which is suppose to give a substantial relief to the middle class, salaried taxpayers. The high burden of tax on salaried class has been a burning topic for last few years and after this announcement, at least some relief is going to come to them.

What changes has been announce in this year budget?

In the budget 2025, the exemption limit for zero income tax has been increased to 12 lakh plus a standard deduction of 75 thousands. That means an individual earning up to 12.75 lakhs need not to pay any income tax which was earlier 7 lakhs.A change has been introduced to tax slabs as following:

0 to 4 lakh – 0%

4 to 8 lakh – 5%

8 to 12 lakh – 10%

12 to 16 lakh – 15%

16 to 20 lakh – 20%

20 to 24 lakh – 25%

24 lakh and above – 30% [earlier 30% tax was applicable above 15 lakh]

This is important to note that all these changes have been made to ‘New Tax Regime’.

This will be applicable for FY 25 – 26 [AY 26 – 27]

What about Old Tax regime?

As expected by many, there has been no change announcement for ‘Old Tax Regime’ which is done very consciously by government to encourage tax payers to move to New tax regime from Old tax regime.

The tax slabs for Old tax regime still stays the same:

0 to 5 lakh – 0%

5 to 10 lakh – 20%

Above 10 lakh – 30%

What to choose [between Old or New tax regime]?

The broad understanding is if one individual’s gross salary is above 24 lakh and he or she is eligible for total deduction of more than 8 lakh, then only old tax regime is helpful.

For all other cases, the new tax regime is a clear winner post 2025 budget announcement.