New Tax Regime 2025: Latest Updates, Revised Tax Slabs & Savings Explained : The Union Budget introduced significant updates to the new tax regime, making it more attractive for taxpayers. Finance Minister Nirmala Sitharaman announced major changes, including an increase in the tax rebate limit and revised tax slabs. This article provides a detailed breakdown of the new tax regime, tax slab revisions, and potential tax savings.
Key Announcements in the New Tax Regime
- The tax rebate under the new regime has been increased from ₹7 lakh to ₹12 lakh.
- Individuals with income up to ₹12 lakh will not have to pay any tax.
- The standard deduction of ₹75,000 remains applicable.
- This means income up to ₹12.75 lakh remains tax-free after deductions.
- The number of tax slabs has increased from six to seven.
- The minimum exemption limit has been raised from ₹3 lakh to ₹4 lakh.
Revised Tax Slabs (Post-Budget 2025)
| Income Range (₹) | Tax Rate |
|---|---|
| 0 – 4 lakh | No Tax |
| 4 – 8 lakh | 5% |
| 8 – 12 lakh | 10% |
| 12 – 15 lakh | 15% |
| 15 – 20 lakh | 20% |
| 20 – 25 lakh | 25% |
| Above 25 lakh | 30% |
Difference Between Old and New Tax Regime
| Feature | Old Tax Regime | New Tax Regime |
|---|---|---|
| Tax Deductions | Available | Not Available (except for standard deduction) |
| Standard Deduction | Not applicable | ₹75,000 |
| Section 87A Rebate | Up to ₹7 lakh | Up to ₹12 lakh |
Under Section 87A, a rebate is applied, making the final tax payable zero for income up to ₹12.75 lakh. However, if the income exceeds ₹12.75 lakh, tax calculations will apply without the rebate.
Tax Calculation Example
If a person earns ₹12.75 lakh per year:
- Standard Deduction: ₹75,000
- Taxable Income: ₹12 lakh
- Tax Calculation:
- No tax on income up to ₹4 lakh.
- Income between ₹4-8 lakh taxed at 5% = ₹20,000.
- Income between ₹8-12 lakh taxed at 10% = ₹40,000.
- Total tax liability = ₹60,000.
- Section 87A rebate applies, reducing tax to zero.
Tax Savings in Higher Income Brackets
The new tax regime provides substantial tax savings compared to the previous structure:
| Income (₹) | Old Tax (₹) | New Tax (₹) | Savings (₹) |
|---|---|---|---|
| 8 – 12 lakh | ₹1.25 lakh | 0 | ₹1.25 lakh |
| 15.75 lakh | ₹1.40 lakh | ₹1.05 lakh | ₹35,000 |
| 16 lakh | ₹1.70 lakh | ₹1.20 lakh | ₹50,000 |
| 18 lakh | ₹1.92 lakh | ₹1.22 lakh | ₹70,000 |
| 20 lakh | ₹2.90 lakh | ₹2 lakh | ₹90,000 |
| 25 lakh | ₹4.40 lakh | ₹3.30 lakh | ₹1.10 lakh |
Official Website
https://financialservices.gov.in/beta/en
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Conclusion
The Union Budget has made the new tax regime more beneficial, particularly for middle and high-income earners. With increased tax rebates, revised tax slabs, and reduced tax liabilities, taxpayers can maximize their savings. As a result, many individuals may find the new tax regime more appealing than the old one.
For personalized tax planning, consult a financial expert to understand the best regime for your income level.
Tag : New Tax Regime 2025: Latest Updates, Revised Tax Slabs & Savings Explained