Income Tax-Budget 2025: In the 2025 Union Budget, Finance Minister Nirmala Sitharaman provided much-needed relief to the middle class by introducing a significant update to the income tax slabs in the new tax regime.
As per the revised structure, individuals with yearly earnings not exceeding Rs 12 lakh will be relieved from paying income tax, offering a substantial advantage compared to previous years.
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FM Sitharaman announced that taxpayers with normal income up to Rs 12 lakh (excluding special rate income like capital gains) will receive a tax rebate in addition to the benefit from the reduction in slab rates. This will ensure that these taxpayers do not have to pay any taxes.
However, there is currently speculation circulating on social media regarding individuals who earn more than Rs 12 lakh per year.
Under the new tax slabs, income up to Rs 4 lakh is tax-free. The tax rate is 5% for income between Rs 4 lakh and Rs 8 lakh, 10% for Rs 8 lakh to Rs 12 lakh, and 15% for Rs 12 lakh to Rs 16 lakh. For income between Rs 16 lakh and Rs 20 lakh, the tax rate is 20%, while it rises to 25% for Rs 20 lakh to Rs 24 lakh. Any income above Rs 24 lakh is taxed at 30%.
Tax Slab 2025
The revised tax slabs introduced by FM Sitharaman Under New Tax Regime (FY 2025-26)
Income up to Rs 4 lakh – No tax Rs 4 lakh – Rs 8 lakh – 5% Rs 8 lakh – Rs 12 lakh – 10% Rs 12 lakh – Rs 16 lakh – 15% Rs 16 lakh – Rs 20 lakh – 20% Rs 20 lakh – Rs 24 lakh – 25% Above Rs 24 lakh – 30%
So how much tax one will have to pay in the following cases:
Under the New Tax Regime 2025, individuals with an annual income of up to Rs 12 lakh (or Rs 12.75 lakh for salaried taxpayers with a standard deduction of Rs 75,000) will be eligible for a zero tax slab.
In the FY 2024-25, an individual earning Rs 12 lakh under the new tax regime paid Rs 80,000 in taxes. Previously, the individual's taxes were calculated as follows: 5% on income between Rs 3-7 lakh after deducting the standard deduction of Rs 75,000, resulting in Rs 16,500. Additionally, 10% tax on the Rs 7-10 lakh income bracket amounted to Rs 30,000, and 15% on the Rs 10-12 lakh slab added another Rs 30,000. A 4% cess on the total tax amount further contributed Rs 3,050.
Tax slabs 2024
Annual Income Range Tax Rate (FY 2024-25) Up to Rs 3 lakh Nil Rs 3 lakh – Rs 7 lakh 5% Rs 7 lakh – Rs 10 lakh 10% Rs 10 lakh – Rs 12 lakh 15% Rs 12 lakh – Rs 15 lakh 20% Above Rs 15 lakh 30%
Explaining the tax calculations, X user by the name of Curious Shubham - NISM Certified explained:
> Salaried employees earning less than Rs 12 lakh are entitled to a full income tax rebate, exempting them from any tax payment. Despite tax calculations being based on income slabs, the rebate effectively nullifies tax liability for incomes up to Rs 12 lakh. > Individuals earning between Rs 12 lakh and Rs 12.75 lakh may qualify for the full rebate if certain deductions, such as standard deduction, bring their taxable income below Rs 12 lakh. > Those earning more than Rs 12.75 lakh are no longer eligible for the rebate. Tax brackets are applicable as indicated in the table, leading to normal tax calculations.
"For salaried employees earning below ₹12 lakh:
- They get a full rebate, meaning they don't have to pay any income tax.
- Even though tax is calculated based on slabs, the rebate cancels it out for incomes up to ₹12 lakh.
For those earning between ₹12 lakh and ₹12.75 lakh:
- Some deductions (like standard deduction) might bring their taxable income below ₹12 lakh, making them eligible for the full rebate.
For those earning above ₹12.75 lakh:
- The rebate no longer applies.
- The tax brackets apply as shown in the table, meaning tax is calculated normally.
So, If your income is below ₹12.75L then relax and enjoy and don't get into social media negative, Go out for party," he posted on social media X.