The union government gave a significant relief to the taxpayers by key changes in the Income Tax rules in the Union Budget 2025. The updates will be implemented from April 1, 2025. From April 1, the annual income of up to Rs 12 lakh (Rs 12.75 lakh for salaried individuals with standard deductions) will become tax-free. Moreover, if someone earns above that, he/she will have to pay less tax due to revised tax slabs.
As a result, the take home income is set to rise for the individuals from April 1.
New Tax Slabs Under New Regime
| Income Range | Tax Rate |
|---|---|
| ₹0 to ₹4 lakh | Nil |
| ₹4 lakh to ₹8 lakh | 5% |
| ₹8 lakh to ₹12 lakh | 10% |
| ₹12 lakh to ₹16 lakh | 15% |
| ₹16 lakh to ₹20 lakh | 20% |
| ₹20 lakh to ₹24 lakh | 25% |
| Above ₹24 lakh | 30% |
Old Tax Slabs Under New Regime
| Income Range | Tax Rate |
|---|---|
| Up to ₹3,00,000 | Nil |
| ₹3,00,001 to ₹7,00,000 | 5% (Tax rebate under Section 87A up to ₹7 lakh) |
| ₹7,00,001 to ₹10,00,000 | 10% |
| ₹10,00,001 to ₹12,00,000 | 15% |
| ₹12,00,001 to ₹15,00,000 | 20% |
| Above ₹15,00,000 | 30% |
Income Tax Update: Higher Income
Individuals earning up to Rs 12 lakh annually will have to pay no income tax, as compared with Rs 7 lakh currently. Moreover, salary individuals will pay no income tax on income up to Rs 12.75 lakh in FY2025-26, with standard deduction of Rs 75,000.
So, if someone is earning Rs 7–12 lakh, his/her in-hand salary will increase by up to Rs 6,667 per month. However, this depends upon the salary level, with the Rs 12.75 lakh earners receiving the maximum hike.
Furthermore, individuals with incomes exceeding Rs 12 lakh can expect substantial advantages from the revised tax slabs.
Tax Benefits:
| Income (Rs) | Tax Benefit (Rs) | Effective Tax Rate (%) |
|---|---|---|
| 12 lakh | 80,000 | 0.0 |
| 16 lakh | 50,000 | 7.5 |
| 18 lakh | 70,000 | 8.8 |
| 20 lakh | 90,000 | 10.0 |
| 25 lakh | 1,10,000 | 13.2 |
| 50 lakh | 1,10,000 | 21.6 |
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