The Union Budget 2025, presented by Finance Minister Nirmala Sitharaman, introduced significant changes to the income tax slabs and rates for the financial year 2025-26.
These changes aim to simplify the tax system, boost disposable income, and provide relief to taxpayers, especially the middle class.
Income Tax Slabs 2025 vs. 2024
New slabs and rates in new regime
| Income range (₹) | Tax rate |
|---|---|
| 0 – 4 lakh | Nil |
| 4 – 8 lakh | 5% |
| 8 – 12 lakh | 10% |
| 12 – 16 lakh | 15% |
| 16 – 20 lakh | 20% |
| 20 – 24 lakh | 25% |
| Above 24 lakh | 30% |
Key Announcements in Budget 2025
- No Income Tax for up to ₹12 Lakh: The Finance Minister announced that individuals earning up to ₹12 lakh per annum will not have to pay any income tax under the new regime.
- Introduction of 25% Tax Slab: The government has introduced a new tax slab of 25% for incomes between ₹20 lakh and ₹24 lakh.
- Increase in Basic Exemption Limit: The government has raised the basic exemption limit from ₹3 lakh to ₹4 lakh.
- Simplification of Tax Regime: The government has made the new tax regime the default option for all taxpayers, except those with business earnings.
- Enhanced Standard Deduction: The government has increased the standard deduction to ₹75,000 from ₹50,000.
Income Tax Slabs 2024 vs 2025: Comparison and Impact
The changes for 2025 aim to provide relief to taxpayers and boost consumer spending.
The 25% tax slab introduction and the basic exemption limit increase are expected to benefit the middle class significantly.
The simplification of the tax regime and the enhanced standard deduction will make it easier for taxpayers to file their returns and reduce their tax liability.
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