In a major decision to facilitate the tax burden of the taxpayers of the middle class, the Minister of Finance Nirmala Sitharaman announced new tax slabs on Saturday under the new tax regime in the budget of the Union 2025-26.
The new tax slabs aim to give relief to people winning up to Rs 12 Lakh per year and the exemption limit is RS 12.75 Lakh for employees (including standard deductions).
Finance Minister Sitharaman Said That after the Changes Made Under the New Tax Regime, there will be a Saving of Rs 80,000 ON AN INTO of 12 LAKH, RS 70,000 ON AN INMIME OF RS 18 LAKH, AND RS 1,10.000 ON AN INCUME OF RS 25 Lakh.
Under the new tax slabs announced in the budget, there is no tax on annual income to Rs 4 Lakh.
For income between RS 4 Lakh and RS 8 Lakh, the tax rate will be 5%, while revenues between RS 8 Lakh and RS 12 Lakh will be taxed at 10%.
For higher income tranches, tax rates will gradually increase, with 15% for Rs 12 Lakh to Rs 16 Lakh, 20% for Rs 16 Lakh at Rs 20 Lakh, 25% for Rs 20 Lakh at Rs 24 Lakh, and 30% for income above RS 24 Lakh.
In addition to the revised tax slabs, the Minister of Finance Sitharaman also announced an increase in the tax delivery available under article 87A.
This means that people with net taxable income up to Rs 12 Lakh will not be required to pay an income tax.
However, if your annual income is exactly Rs 12 Lakh, you will always pay tax according to applicable slab levels, but will benefit from the discount, which will reduce your final tax obligation.
In simpler terms, if you are an employee or you earn other types of “regular income” up to Rs 12 Lakh, you will not have to pay a tax due to the improved discount and the slabs of revised tax.
However, capital gains income will not be eligible at a discount and will be imposed separately according to different rules.
The new tax regime will come into force from the new financial year 2025-2026, from April 1, 2025, provided that the proposals are approved by the Parliament.
In the current structure, individuals winning up to Rs 3 Lakh will pay no tax and tax rates will gradually increase as income increases.
However, under the old tax regime, the basic exemption limit was RS 2.5 Lakh and individuals had access to a range of deductions.
For income between RS 2.5 Lakh and RS 5 Lakh, a tax rate of 5% has been applied, while income between RS 5 Lakh and RS 10 Lakh were taxed at 20%.
For profits greater than RS 10 Lakh, a tax rate of 30% applies.
