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Discover how the Union Budget 2025 reshapes income tax in India. Finance Minister Nirmala Sitharaman has unveiled significant changes aimed at benefitting taxpayers with revised tax slabs and increased rebates. Here’s everything you need to know about the latest tax reforms.
|
Income Range (in Rs) |
Tax Rate (%) |
|
Up to 4,00,000 |
0% |
|
4,00,001 - 8,00,000 |
5% |
|
8,00,001 - 12,00,000 |
10% |
|
12,00,001 - 16,00,000 |
15% |
|
16,00,001 - 20,00,000 |
20% |
|
20,00,001 - 24,00,000 |
25% |
|
Above 24,00,000 |
30% |
No Income Tax Payable up to Rs 12 Lakh Income: Section 87A rebate extended for taxpayers with net taxable income up to Rs 12 lakh—no tax payable.
Default Tax Regime: The new tax regime remains the default choice for taxpayers.
Higher Basic Exemption Limit: Increased to Rs 4 lakh, applicable to all taxpayers.
Standard Deduction: Salaried taxpayers can claim Rs 75,000 as a standard deduction.
NPS Contributions: Employers’ contributions up to 14% of basic salary are deductible under Section 80CCD(2).
Lower Surcharge: Reduced to 25% for incomes exceeding Rs 2 crore.
Complete New Income Tax Bill: To be introduced for simplifying provisions.
|
Total Income (Rs) |
Before Budget (Tax Rate) |
After Budget (Tax Rate) |
|
Upto 3 Lakh |
Nil |
Upto 4 Lakh: Nil |
|
3 Lakh – 7 Lakh |
5% |
4 Lakh – 8 Lakh: 5% |
|
7 Lakh – 10 Lakh |
10% + 20,000 |
8 Lakh – 12 Lakh: 10% + 20,000 |
|
10 Lakh – 12 Lakh |
15% + 50,000 |
12 Lakh – 16 Lakh: 15% + 40,000 |
|
12 Lakh – 15 Lakh |
20% + 80,000 |
16 Lakh – 20 Lakh: 20% + 1,20,000 |
|
More Than 15 Lakh |
30% + 1,40,000 |
20 Lakh – 24 Lakh: 25% + 2,00,000 |
|
|
|
More Than 24 Lakh: 30% + 3,00,000 |
|
Gross Total Income (Rs) |
Tax Payable (Before Budget) |
Tax Payable (After Budget) |
Savings (Rs) |
|
500,000 |
0 |
0 |
0 |
|
800,000 |
30,000 |
0 |
30,000 |
|
1,000,000 |
50,000 |
0 |
50,000 |
|
1,200,000 |
80,000 |
0 |
80,000 |
|
1,500,000 |
140,000 |
105,000 |
35,000 |
|
2,000,000 |
290,000 |
200,000 |
90,000 |
|
2,500,000 |
440,000 |
330,000 |
110,000 |
|
5,000,000 |
1,190,000 |
1,080,000 |
110,000 |
TDS Limit on Interest for Senior Citizens: Increased from Rs 50,000 to Rs 1,00,000.
TDS Limit on Rent: Increased from Rs 2.40 Lakh to Rs 6.00 Lakh.
LRS Limit: Increased from Rs 7.00 Lakh to Rs 10.00 Lakh.
TCS on Sale of Goods: Omitted.
Higher TDS Provisions: Applied only to cases without PAN.
Decriminalization: Non-compliance with TCS provisions decriminalized.
Updated Return Filing: Allowed up to four years.
House Property Income: Taxpayers can now consider two house properties as self-occupied for calculating income under "House Property."
Simplified Taxation: Lower tax rates with fewer exemptions simplify the tax process.
Increased Savings: More disposable income due to reduced tax liabilities.
Rebate Advantages: Higher tax rebate limits benefit middle-income taxpayers.
For Salaried Individuals: Select your tax regime when filing your income tax return each year.
For Business Taxpayers: Switching from the old to the new tax regime is a one-time option, with Form 10-IEA required for opting out.
If you prefer the old tax regime with its exemptions and deductions, select "No" under Section 115BAC when filing your ITR.
To make an informed decision between the old and new tax regimes, assess your income, available deductions, and financial goals. The new tax regime may offer better benefits for those who do not have significant tax-saving investments.
The Union Budget 2025 brings substantial changes that simplify tax compliance and reduce the financial burden for taxpayers. With increased tax rebates, relaxed TDS provisions, and a progressive tax slab structure, individuals across income levels are set to benefit.
For more expert insights and detailed tax updates, visit Dinesh Aarjav & Associates today.
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