Income Tax Slabs Budget 2025 Highlights: How much income tax will middle class taxpayers save? FM Sitharaman's big tax announcements decoded

Income Tax Slabs 2025 Live: Should you buy or rent a home?

Is it better to stay on rent or get your own place? It’s complicated, to borrow a phrase from romantic conundrums. So, should one spend a big sum on a house property – especially with the help of a home loan – given that prices are higher and the capital appreciation in many towns is not as significant as it once was? Isn’t living on rent, perhaps closer to the office, easier? On the other hand, an investment in a house property is a secured and tangible investment. Plus, a house is not just four walls; there is a lot of emotion attached to it. Let’s look at it from the tax perspective…

RENTING A HOUSE

One of the biggest advantages of renting a house from a tax perspective is the exemption for house rent allowance (HRA), a tax-efficient salary component. If HRA is not a part of your salary package — for example if you are self-employed or a consultant— you can avail deduction of up to 5,000 a month from gross taxable income, under the old tax regime. The HRA exemption is not available to taxpayers who opt for the new tax regime. The exemption is on the lowest of the following:

● Rent paid less 10% of salary (basic salary and dearness allowance)
● 50% of salary if the house is in Delhi, Mumbai, Kolkata or Chennai, or 40% of salary in other cities
● Actual HRA received

OTHER PROS

● Rent may be lower than a home loan EMI
● More choice of location and type
● Easy to relocate to another area of city
● Tax benefits are available (under old tax regime)

CONS

● Rent, however high, does not go towards creating an asset
● Rents usually increase every year, leading to higher cash outflow
● No or limited scope of making structural changes
● One may have to vacate on short notice

BUYING A PROPERTY

Tax benefits are only available under the old tax regime. If you take a home loan to buy a house property, the EMI is typically made up of two parts: one part goes towards the principal (the amount you took as loan) and the other towards the interest (the cost of servicing the loan).

ON PRINCIPAL REPAYMENT: Deduction is available under the overall 1.5 lakh limit under Section 80C under the old tax regime. Principal repayment, stamp duty, registration fee and other expenses related to transfer of the house property qualify for the deduction, under this limit.

ON INTEREST PAID: Three situations apply: the house is self-occupied, vacant or rented out. For a self-occupied house property, there is deduction available on the interest paid on home loan up to 2 lakh per annum under the old tax regime. This can be set off against any other income. The same rules apply even if the house is vacant. If you have rented out the house, you can claim deduction for not only the interest paid on the home loan, but also municipal taxes paid and a standard deduction of 30% of the rental income.

SET-OFF AND CARRY FORWARD OF LOSS: If your house is a self-occupied property bought using a home loan, it means you do not earn any rental income from it. Therefore, interest paid on the home loan will result in a loss. Total loss up to 2 lakh from house property (either self-occupied or letout) can be adjusted in a financial year against any other head of income (such as salary or income from other sources). Loss exceeding 2 lakh can be carried forward for eight subsequent assessment years but can be setoff only against ‘Income from house property’.

NOTIONAL RENT:

The concept of notional rent applies when an individual owns three houses or more. In such cases, two house properties are considered self-occupied (without any conditions as per the 2025 Budget proposals) and the remaining are treated as ‘deemed let-out’, thus attracting notional rent. This is based on the expected market rent and becomes a taxable income.

PROS:

● A house is an asset and EMIs go towards creating this asset
● Substantial tax benefits on home loans

CONS:

● Heavy upfront costs such as down payment and registration, followed by property taxes and repairs
● House properties are illiquid as they cannot be sold quickly
● Property prices see fluctuations and may not fetch expected returns
● EMIs have to be paid regularly, mostly irrespective of situations like loss of income

Income Tax Slabs 2025 Live: Trading in crypto?

Cryptocurrencies such as Bitcoin and Ethereum (and many other popular ones) have rapidly transitioned from being niche digital assets to investment opportunities in India, attracting the attention of investors and tax authorities.

The Finance Act, 2022 introduced a framework to specifically tax VDAs, including cryptocurrencies, treating them as virtual digital assets (VDAs). Income from the transfer of VDAs is subject to a flat tax rate of 30%, along with any applicable surcharge and cess. The 2025 Budget proposals have widened the definition of VDAs to include any crypto-asset which is a digital representation of value that relies on cryptographically secured distributed ledger or similar technology to validate and secure transactions.

If you are a salaried individual, a 1% TDS is applicable on transfer of the VDA if the transaction amount exceeds 10,000. For business persons (below specific thresholds), the ceiling is set higher at 50,000.

The only deduction allowed from the sale proceeds is the cost of acquisition. Transaction fees and other related costs, however, cannot be claimed as deduction when calculating taxable income.

Investors must also take note of a significant provision that losses from VDAs cannot be set off against any other income, nor can losses from one VDA be offset against gains from another.

● Raj is not allowed to adjust the loss of 3,00,000 from the sale of Ethereum against the gain on sale of Bitcoins. Hence, Raj will have to pay tax at 30% plus applicable surcharge and cess on a profit of 6,00,000.

● Raj also cannot set-off the loss of 3,00,000 from the sale of Ethereum against the sale of listed shares and has to pay tax on sale of listed shares at the rate of 12.5%, as the capital gains is long term.

● Loss arising from sale of Ethereum cannot be carried forward to future financial years either.

YOU HAVE TO PAY CRYPTO TAX WHEN…

● You sell crypto to buy goods or services.
● You exchange it for other cryptocurrencies.
● Receive it as a gift.

DON’T HIDE YOUR INCOME

Individuals involved in cryptocurrency trading must report their income from VDAs in Schedule VDA in the applicable annual Income Tax Returns (ITR), which would be ITR-2 or ITR-3. The schedule asks for details like date of acquisition, date of transfer, cost of acquisition and consideration received. It is quite critical to disclose VDA income, as any under-reporting or mis-reporting of income can lead to penalties. Additionally, there will be interest implications on any unpaid tax.

Income Tax Slabs 2025 Live: Understanding capital gains

Two types– Long term capital gains (LTCG), Short term capital gains (STCG)

Indexation in capital gains tax adjusts the purchase price of an asset for inflation, reducing taxable gains and lowering the tax burden.

SET-OFF PROVISIONS FOR CAPITAL LOSSES

● Loss on a long-term capital asset can only be set off against gains from another long-term capital asset in the same year. A long-term capital loss cannot be set off against short-term capital gains.
● Loss from transferring a short-term capital asset can be set off against gains from any other capital asset in the same year.
● Any remaining capital losses can be carried forward for the next eight years and utilised in the same way as described above.
● However, to be able to carry forward any losses, make sure to file your income tax return on or before the due date.
As per the 2025 Budget proposals, any income earned from redemption of Unit Linked Insurance Plans (ULIPs) which is not exempt under Section 10(10D) will be considered as income from capital gains and taxation of such ULIPs will be similar to equity oriented mutual funds.

Income Tax Slabs 2025 Live: How incomes of consultants and salaried taxpayers are taxed

● Salary income is taxed as ‘Income from Salary.’
● Old tax regime allows several exemptions and deductions, such as fixed standard deduction of 50,000, exemption for HRA, LTA, etc. The new tax regime, which is the default tax regime, does not allow most exemptions and deductions. However, standard deduction of 75,000 can be availed.
● Tax on perks such as rent-free accommodation, use of car, driver, reimbursements for fuel and maintenance of car, stock incentives, gifts, club memberships, etc.
● As a salaried individual, you do not have to maintain books of accounts or be audited.
● If you have worked as a salaried employee for the same employer for five or more years, you are eligible for gratuity.

Income Tax Slabs 2025 Live: How incomes of consultants are taxed

Fees taxed as ‘Profits and Gains from Business or Profession’.
● No standard deduction but expenses you incur to run your business or profession can be deducted from gross receipts. A whole host of expenses are included, from staff salaries, office rent, laptop, printing and stationery, and utility bills to repairs and maintenance of premises and car. You can also get deduction for depreciation of assets (at different rates) used for business or profession.
● Can avail of presumptive taxation scheme which is simpler. If your total gross receipts in a financial year are 75 lakh or less and if the aggregate of what you receive in cash is up to 5%, a sum of 50% of the gross receipts or higher is considered for presumptive tax. This is only for specified professions such as medical, legal, accountancy, engineering, technical consultancy, interior decoration, etc. No deductions for business expenses available in this scheme.
● As a consultant or freelancer, you are required to maintain books of account if: a) income from the line of work is more than 2.5 lakh, or b) the gross receipts/ sales/ turnover exceeds 25 lakh in any one of the previous three financial years, or c) you do not opt for presumptive taxation. If gross receipts exceed 75 lakh, as mentioned above, the books of accounts need to be audited.
● Tax of 2% or 10% is deducted at source from what you receive as fee as a freelancer or consultant. The current threshold for TDS has been enhanced from 30,000 to 50,000 as per the 2025 Budget proposals. If the expected tax liability is higher than the TDS by 10,000, you need to pay advance tax every quarter. Else, interest is charged on the unpaid amount (as per prescribed rates).
● Any loss incurred can be set off against any other business income and unabsorbed losses can be carried forward for eight succeeding years.
● If your total receipts exceed 20 lakh in a financial year ( 10 lakh in certain states), you are required to register under GST, file periodic returns and issue GST compliant invoices. Filing returns, audit and other such requirements follow.

Income Tax Slabs 2025 Live: Tax laws for EVs

Individual taxpayers are entitled to a deduction of up to 1.5 lakh on the interest component of vehicle loans to purchase electric vehicles under Section 80EEB. But the loan must have been taken between April 1, 2019 and March 31, 2023.

As of now, income-tax laws have not prescribed for perquisite valuation norms for electric cars.

Income Tax Slabs 2025 Live: 10 things individual taxpayers should know

★ To provide relief to the middle class, FM has rationalised slab rates under the new tax regime, which continues to be the default regime. For example, under the new tax regime for FY 2025-26, individuals earning a taxable income of 25 lakh can save as much as 1,10,000 in taxes.
★ Aligning with the rationalisation of tax slabs, the tax rebate has been enhanced from 25,000 to 60,000 for those availing the new tax regime (not applicable for Non-Resident Indians).
★ Earlier, taxpayers could claim two houses as self-occupied if they lived in them or couldn’t stay in one because their place of work was elsewhere. The FM has now made it even simpler — owners can continue to claim two houses as self-occupied, whether they live in them or not, without needing to meet any specific conditions.
★ The threshold for Tax Collected at Source (TCS) on overseas remittances under the Liberalised Remittance Scheme (LRS) has been increased from 7 lakh to 10 lakh. Overseas travel, for instance, gets a boost.
★ Additionally, TCS will not apply to remittances made for educational expenses, where such remittance is out of a loan taken from a specified financial institution. Earlier, the TCS on this was applicable at 0.5% on remittance over 7 lakh.
★ Taxpayers can file an updated tax return to rectify any omissions or wrong statements made in their original tax return. The time limit to file the updated return has been increased from existing 24 months to 48 months, but with stiff additional tax and interest aggregating to 70%.
★ Tax deduction (under the old tax regime) for own contribution to National Pension System (NPS) of 50,000, has been extended to contributions made in the name of minors under NPS Vatsalya scheme.
★ The limit for tax deduction (TDS) on interest income for senior citizens has been increased from the present limit of 50,000 to 1 lakh. For other taxpayers, the limit has been enhanced to 50,000 from 40,000 for interest from deposits from banks, co-operative societies, post office and to 10,000 (from 5,000) in other cases.
★ Rent paid by non-individuals (such as a corporate tenant) entails a TDS obligation. The threshold limit of 2.4 lakh per annum for such TDS has been increased to 50,000 per month — or even part of a month.
★ There is an increase in the threshold limit of TDS on dividend income and income from mutual fund units from the existing threshold of 5,000 to 10,000.

Income Tax Slabs 2025 Live: Big dent in taxpayer base

Income Tax Slabs 2025 Live: New vs old - which regime should you opt for?

• The new tax regime proposed in Budget – with a tax rebate of Rs 60,000 on income up to Rs 12 lakh (and Rs 12.75 lakh for salaried people) – leaves the old tax regime, with three slabs of 5%, 20%, an 30%, with little appeal, even with all the deductions against investments in tax savings scheme from gross income.
The finance ministry has long endeavoured to delink savings schemes from tax liability so that taxpayers can make an independent and informed choice, solely to maximise their benefits.
• 
For income up to Rs 12 lakh (Rs 12.75 lakh for salaried people), new tax regime is better than the old even if one is availing maximum possible deductions of Rs 5,75,000 and 30% of salary as house rent allowance. However, it is purely theoretical for someone earning Rs 12.75 lakh to invest in tax savings schemes, avail HRA (Rs 3,82,500), and standard deduction, chalking it up to Rs 9,57,000.
• 
However, as the tax incidences under the new scheme go up sharply after the Rs 12 lakh level, the decision to pay tax under the old regime would make sense only if the taxpayer invests Rs 5.25 lakh in tax saving schemes.
• 
Even if the taxpayer with income of Rs 13.75 lakh does not avail of HRA, his tax liability at Rs 57,500 under old system will be lower than the outgo of Rs 75,000 under the new regime. Same is true for income up to Rs 15.75 lakh, where the tax liability without HRA in the old system will be lower than the new regime but the rider of Rs 5.25 lakh investment in savings schemes holds. Even with HRA, old regime would be a better choice.
• 
The picture changes at incomes of Rs 20 lakh (Rs 20.75 lakh for salaried) where new tax regime will be beneficial over the old. Setting HRA aside, a taxpayer’s liability on income of Rs 20 lakh will be Rs 2,40,000 under old system even after investing Rs 5.25 lakh in savings scheme, against Rs 2 lakh in the new system, where no deductions are allowed.
• 
At the income level of Rs 24 lakh also, the taxpayer will save Rs 60,000 under the new regime. Under the old system, his tax liability after investing the maximum possible of Rs 5.25 lakh in savings schemes will be Rs 3.60 lakh as against Rs 3 lakh in the old scheme.
Above the income of Rs 15,75,000, if a taxpayer is claiming HRA of more than Rs 3 lakh, he should opt for old tax system provided he invests Rs 5.25 lakh in savings schemes.

New vs old regime: Choice between lower rates and deductions

Income Tax Slabs 2025 Live: Tightening reins for those who engage in crypto trading

The existing 30% tax levy on crypto trading continues to be in force, so does the stringent regulation that prevents traders from offsetting losses incurred in crypto transactions against profits from other crypto trades or any alternative income sources.

In fact, other amendments have been made in this realm, which only tighten the reins for those who engage in crypto trading. For instance, in search cases, virtual digital assets will now be part of undisclosed income, attracting a higher tax rate. Or for that matter, while taxpayers had to disclose income from crypto trading in income-tax return, disclosure requirements have widened.

The Organisation for Economic Co-operation and Development has developed a Crypto Assets Reporting Framework, which provides for automatic exchange of tax relevant information on Crypto Assets. India is one of the jurisdictions implementing Automatic Exchange of Information.

Income Tax Slabs 2025 Live: What was the earlier limit of income for nil tax payment?

Earlier the limit of income for nil tax payment was Rs 7 lakh. By increasing this limit to Rs 12 lakh around one crore assessees who were earlier required to pay tax varying from Rs 20,000 to Rs 80,000 will be now paying nil tax.

Income Tax Slabs 2025 Live: How will a person earning Rs 12 lakh benefit?

Any individual earlier was required to pay a tax of Rs 80,000 (in the new regime) for an income of Rs 12 lakh. Now he will be required to pay nil tax on such income.

Income Tax Slabs 2025 Live: How to claim ZERO tax benefit?

The benefit of such Nil tax liability is available only in the new tax regime. This New tax regime is the default regime. To avail the benefit of rebate allowable under proposed provisions of new tax regime, only return is to be filed otherwise no other step is required to be taken.

Income Tax Slabs 2025 Live: What is the tax benefit for different category of taxpayers (0-24 lakh)?

Income Tax Slabs Budget 2025 Live: Top changes in TCS, TDS

Budget 2025 has sought to bring down the number of transactions liable for tax deducted at source (TDS) by setting higher threshold limits across a spectrum of income streams, thus benefitting small taxpayers receiving small payments.

• Similarly, the finance minister also proposed to raise the threshold to collect tax at source (TCS) on remittances under RBI’s Liberalised Remittance Scheme (LRS) from Rs 7 lakh to Rs 10 lakh.
• While TDS and TCS are set off against the final tax liability of an individual, a higher threshold definitely helps small taxpayers and props up their immediate cash flow. To illustrate: the threshold on TDS on dividend income has increased from Rs 5,000 to Rs 10,000. This will help a small taxpayer who has insignificant dividend income to avoid the hassle of adjusting the TDS against his tax liability and claiming a refund.
• Similarly, gig workers, who work for a multitude of entities, faced a TDS liability on payments made to them in excess of Rs 30,000 in a year by each entity. Section 194-J has increased the threshold limit to Rs 50,000.
• However, it should be noted that there has been no change in the TDS rates, which, for example, in case of dividend is 10% and, for gig workers (professional services), is 10%. Certain finer aspects also need to be kept in mind. If the tenant is an individual, they don’t have to deduct tax at source on paying rent. Thus, only if they have given out their flat to a tenant that is a corporate entity (many companies take flats on lease for their employees) will they benefit from the increase in threshold limits of TDS against rent payment.
• An individual can remit up to $2.5 lakh annually without seeking prior approval from Reserve Bank of India – this automatic route is under LRS, which enables them to send money to a child studying overseas (for education) or invest overseas or even indulge in a much-needed overseas vacation. However, outward remittances are subject to TCS.
• Tax collection at source requirements lead to an additional cash outflow at the time of remittance and pinch an individual’s pocket. Thus, the increase in threshold limit for TCS on outward remittances brings some respite. The finance minister also proposed to remove TCS on remittances for education purpose where such a remittance is out of a loan taken from a specified financial institution. Currently, in such cases, aTCS of 0.5% is attracted.

Income Tax Slabs Budget 2025 Live: Fewer transactions to attract TCS, TDS

Income Tax Slabs 2025 Live: Why no benefit of tax rebate on capital gains, lotteries?

Budget 2025 has clarified that the tax rebate will not be available in respect of income that attracts special rates, such as capital gains. Under Section 87A, a taxpayer with a total income of up to Rs 5 lakh under the old regime and up to Rs 7 lakh under the new regime was entitled to a tax rebate of Rs 12,500 and Rs 25,000, respectively. Under the new regime, Budget 2025 now proposes a maximum rebate of Rs 60,000 for taxpayers having income of up to Rs 12 lakh.

However, the Budget provisions clarify that no rebate is now available on income from capital gains or lotteries or any other income on which special rate has been provided in the Act. However, as Deepak Joshi, Supreme Court ad vocate, says, this amendment is not retrospective in nature.

There is a history behind such a clarification. In respect of FY24, the I-T department’s filing utility allegedly disabled this rebate from July 5, 2024, for those filing under the new regime in specific cases, such as when tax was levied at special rates: for example, tax at 15% on short-term capital gains or 10% on long-term capital gains on sale of equity shares or equity-oriented mutual funds.

In response to a PIL filed by The Chamber of Tax Consultants (CTC), Bombay HC recently held that the utility should not prevent taxpayers from making rebate claims, as the correctness of such claims can be examined during the assessment process. In fact, pursuant to an interim order by HC in Dec, Central Board of Direct Taxes had increased the time limit to filing of a revised return to Jan 15.

Ketan Vajani, past president, CTC told TOI, “The proposed amendment is with effect from FY26 and, therefore, implicitly the taxpayers are justified in taking a view that the rebate is available against capital gains for the preceding financial years. Hopefully, tax authorities will follow the correct principle of law while processing income-tax returns for FY24 and FY25. Otherwise, the taxpayers will need to resort to appellate proceedings to get this legitimate benefit.”

Income Tax Slabs 2025 Live: More time to revise returns - but there is a catch!

The tenure for filing an updated return has been extended, but it comes with a sting — in terms of steep additional taxes of up to 70% of the incremental tax liability.
Budget 2022 had introduced the facility to enable taxpayers to file an updated return. Referring to this in her speech, the FM said, “Our trust in taxpayers was proved right. Nearly 90 lakh taxpayers voluntarily updated their incomes by paying additional tax. Taking this trust further, I now propose to extend the time-limit to file updated returns for any assessment year, from the current limit of two years to four years.”

For a salaried employee who has to file a return by July 31, a revised one can be filed by Dec end. Thus, the facility of an updated return comes in handy, as it enables the taxpayer to avoid scrutiny, penalties and severe legal consequences for what would otherwise be held as undisclosed income.

Currently, an additional tax of 25% or 50% of the differential tax and interest is payable, depending on the delay in filing the updated return (that is, up to one year or more than one year from the end of the assessment year).

However, tax experts rue many other measures not being introduced. For instance, an updated return can be filed only when an additional income has to be offered to tax: it can’t be filed for making a tax benefit claim (such as a deduction for donations under old regime) that was earlier missed out. If the original return was a loss return, an updated return can’t be filed even to reduce the claim for loss.

Income Tax Slabs 2025 Live: Two self-occupied properties benefit explained

Budget 2025 has proposed an amendment to sub-section 2 of Section 23 of Income Tax Act, which relates to determination of annual value of house properties. “Sub-section (2) of the said section provides that where house property is in the occupation of the owner for the purposes of his residence or owner cannot actually occupy it due to his employment, business or profession carried on at any other place, in such cases, the annual value of such house property shall be taken to be nil,” it said.

Further, sub-section (4) provides that provisions of sub-section (2) will be applicable in respect of two house properties only, which are to be specified by the owner.
“With a view to simplifying the provisions, it is proposed to amend sub-section (2) so as to provide that the annual value of the property consisting of a house or any part thereof shall be taken as nil, if the owner occupies it for his own residence or cannot actually occupy it due to any reason,” the Budget stated.

The provision of sub-section (4), which allows this benefit only in respect of two of such houses, will continue to apply as earlier.

Income Tax Slabs 2025 Live: How much tax will you save at various salary levels?

* At a total taxable income of Rs 7 lakh, there is no additional benefit since under the earlier regime as well there was a tax rebate available up to Rs 7 lakh income
* At a total taxable income of Rs 10 lakh, there is an income tax benefit or saving of Rs 52,000/- including cess. The total income tax outgo will be NIL due to the rebate
* At a total taxable income of Rs 12 lakh, there is an income tax benefit or saving of Rs 83,200/- including cess. The total income tax outgo will be NIL due to the rebate
* At a total taxable income of Rs 20 lakh, there is an income tax benefit or saving of Rs 93,600/- including cess.
* At a total taxable income of Rs 27 lakh, there is an income tax benefit or saving of Rs 114,400/- including cess.
* At a total taxable income of Rs 55 lakh, there is an income tax benefit or saving of Rs 125,840/- including surcharge and cess.
* At a total taxable income of Rs 1.25 crore, there is an income tax benefit or saving of Rs 131,560/- including surcharge and cess.
* At a total taxable income of Rs 2.5 crore, there is an income tax benefit or saving of Rs 143,000/- including surcharge and cess.

Income Tax Slabs 2025 Live: Quick explainer on tax saving

* A tax payer in the new regime with an income of Rs 12 lakh will get a benefit of Rs 80,000 in tax (which is 100% of tax payable as per existing rates).
* A person having income of Rs 18 lakh will get a benefit of Rs 70,000 in tax (30% of tax payable as per existing rates).
* A person with an income of Rs 25 lakh gets a benefit of Rs 1,10,000 (25% of his tax payable as per existing rates).

Income Tax Slabs 2025 Live: What is the maximum total income for which tax liability for individual taxpayers is NIL?

According to Budget 2025, in the proposed new tax regime, the maximum total income for which tax liability for individual taxpayers is NIL or ZERO is Rs. 12 lakhs.

Income Tax Slabs 2025 Live: What happens to tax relief after salary hike?

The Budget announcement that an annual income of Rs 12 lakh will not be taxed has been met with cheer. For salaried employees, this nil tax limit will be Rs 12.75 lakh per annum, after taking into account standard deduction of Rs 75,000.

But what if there is an increment around the corner for your fine performance at work that pushes you into a higher tax slab? Suppose, your boss gives you a 10% hike on Rs 12.75 lakh, to, say, about Rs 14 lakh a year? The tax department could then take away Rs 82,000. This would leave you with Rs 13.18 lakh in hand — still a small hike, but nothing to jump about.

If your bosses are even more impressed (you might want to pray they are not) and you get a 20% hike on Rs 12.75 lakh, to, say, about Rs 15.3 lakh, this could mean that you might be shelling out tax of about Rs 1.02 lakh, leaving you a less exciting Rs 14.27 lakh in hand. This could mean you could end up with less in the pocket than you first thought.

Income Tax Slabs Budget 2025 Live: What are the tax slabs in earlier new regime?

The Finance (No.2) Act, 2024 had the following slabs in the new tax regime for person, being an individual or Hindu undivided family or association of persons [other than a cooperative society], or body of individuals, whether incorporated or not, or an artificial juridical person referred to in sub-clause (vii) of clause (31) of secƟon 2: -

• Upto 3,00,000 - Nil
• 3,00,001 to 7,00,000 - 5%
• 7,00,001 to 10,00,000 - 10%
• 10,00,001 to 12,00,000 - 15%
• 12,00,001 to 15,00,000 - 20%
• Above 15,00,000 - 30%

Income Tax Slabs Budget 2025 Live: What is ‘New tax Regime’?

New tax regime provides for concessional tax rates and liberal slabs. However, no deductions are allowed in the new regime (other than those specified for e.g. 80JJAA, 80M, standard deduction).

Income Tax Slabs Budget 2025 Live: How did the FM reach the magic zero-tax figure?

On Budget-eve, PM Modi invoked Goddess Lakshmi, and a day later, Indian taxpayers got a Diwali bonus in Feb. With Finance Minister Nirmala Sitharaman announcing revised tax slabs and rates under the new regime, the biggest bonanza is for those whose income is up to Rs 12 lakh (Rs 12.75 lakh for salaried taxpayers as they get a standard deduction of Rs 75,000) as their liability will become nil under the new proposed income tax regime. However, income such as capital gains are excluded and will be taxed at separate short and long-term rates.

So how did the FM reach this magic zero-tax figure?

• This was thanks to an increase in tax rebate to Rs 60,000 from the present level of Rs 25,000. Under the new regime, the tax liability on income of Rs 12 lakh and Rs 12.75 lakh for salaried persons is Rs 60,000 which is waived off due to rebate of up to Rs 60,000. Ergo, nil tax.
• But what if you earn more than Rs 12 lakh? If your taxable income is even a rupee more, you will not get the benefit of rebate but will have to pay taxes as per slab rates un der the new tax regime. But because of a rejig of tax slabs and standard deduction of Rs 75,000 under the new regime, everyone stands to gain. As per the rejig, for people earning over Rs 12 lakh per annum, there will be nil tax for income up to Rs 4 lakh, 5 per cent for income between Rs 4 and 8 lakh, 10 per cent for Rs 8-12 lakh, and 15 per cent for Rs 12-16 lakh.
• A 20% income-tax will be levied on income between 16 and 20 lakh, 25 per cent on 20-24 lakh and 30 per cent above 24 lakh per annum. How much you save will depend on your income level (see chart). The maximum benefit of Rs 1.1 lakh will accrue at an income level of Rs 24 lakh, where the tax liability under the proposed scheme would be Rs 3 lakh as against Rs 4.1 under the existing new scheme. Beyond the income level of Rs 24 lakh, the tax rates remained unchanged at 30%, so the benefit will remain at Rs 1.1 lakh.
• Earlier, the limit of income for nil tax payment was Rs 7 lakh. By increasing this limit to Rs 12 lakh, around 1 crore assesses who were earlier required to pay tax varying from Rs 20,000 to Rs 80,000 will be now paying nil tax. The provision will cost the exchequer revenue loss of Rs 1 lakh crore.

For those under the old regime — used usually by those who have home loans or HRA deductions — there is no change in either rates or slabs.

To come back to a point that often causes confusion, what happens to those with taxable incomes of just over Rs 12 lakh? In such cases, the taxpayer will get marginal relief to ensure that those earning just over Rs 12 lakh don't end up with post-tax incomes lower than those earning Rs 12 lakh. For instance, an individual has a taxable income of Rs 12.10 lakh. Without marginal relief, their tax liability would be 61,500 calculated as per tax slabs. However, with marginal relief in place, this taxpayer owes just 10,000. But there’s a cap — marginal relief is only admissible for incomes up to approximately 12.75 lakh. Beyond this, regular tax slabs apply.