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Updated Income Tax Slabs and Rates in India (Budget 2025)

The Union Budget 2025, presented by Finance Minister Nirmala Sitharaman, introduced significant revisions to India's income tax structure under the new tax regime. These changes aim to reduce the tax burden on individuals, increase disposable income, and boost economic activity.

Revised Income Tax Slabs for FY 2025-26
Annual Income (₹) Old Tax Slabs (Old Regime) New Tax Slabs (New Regime)
Up to ₹2,50,000 Nil -
₹2,50,001 - ₹3,00,000 5% -
₹3,00,001 - ₹4,00,000 5% Nil
₹4,00,001 - ₹8,00,000 5% 5%
₹8,00,001 - ₹12,00,000 20% 10%
₹12,00,001 - ₹16,00,000 30% 15%
₹16,00,001 - ₹20,00,000 30% 20%
₹20,00,001 - ₹24,00,000 30% 25%
Above ₹24,00,000 30% 30%

Key Highlights of Budget 2025 Tax Reforms
  • Increased Basic Exemption Limit: Raised from ₹3 lakh to ₹4 lakh.
  • Higher Tax-Free Income: Individuals earning up to ₹12 lakh will pay zero tax due to enhanced rebates.
  • Lower Tax Rates: Middle-income earners benefit from reduced tax rates.
  • Revised Standard Deduction: Increased from ₹50,000 to ₹75,000.
  • Enhanced Tax Rebate under Section 87A: Increased from ₹25,000 to ₹60,000.

Comparison: Old vs. New Tax Regime
Aspect Old Tax Regime New Tax Regime (2025-26)
Basic Exemption Limit ₹2,50,000 ₹4,00,000
Highest Tax Rate 30% for income above ₹10L 30% for income above ₹24L
Standard Deduction ₹50,000 ₹75,000
Tax Rebate (87A) ₹25,000 (income up to ₹5L) ₹60,000 (income up to ₹12L)
Deductions Allowed? Yes (80C, 80D, HRA, etc.) No
Simplicity Complex due to exemptions Simple with fixed slabs

Impact on Taxpayers

The revised tax slabs offer significant benefits to middle-income earners:

  • A salaried person earning ₹12 lakh will pay zero tax under the new regime, compared to ₹1.35 lakh under the old regime.
  • Individuals earning between ₹16 lakh and ₹24 lakh will see substantial savings due to reduced tax rates.

The new tax reforms aim to simplify taxation, increase take-home income, and encourage savings and investments in India's growing economy.

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