Income Tax Budget 2025, Finance Minister Nirmala Sitharaman announced significant changes to the income tax structure, particularly under the new tax regime.
On Saturday, February 1, Finance Minister Nirmala Sitharaman unveiled the Union Budget 2025–2026 and announced that individuals making up to ₹12 lakh will not be required to pay taxes under the new tax structure. The new tax regime imposes zero percent income tax on incomes up to ₹12 lakh (₹12.75 lakh for salaried taxpayers with a baseline deduction of ₹75,000.
New tax slabs have been created by the government to greatly reduce middle-class taxes and increase their income, which will boost household spending, savings, and investment.
Income tax slab changes budget 2025: The tax slabs and rates are as follows
0-4 lakh rupees: Nil
4-8 lakh rupees: 5%
8-12 lakh rupees: 10%
12-16 lakh rupees: 15%
16-20 lakh rupees: 20%
20-24 lakh rupees: 25%
Above 24 lakh rupees: 30%
Individuals making up to ₹12 lakh a year will not be required to pay income tax under the new tax regime. According to the rejig, individuals who earn more than ₹12 lakh annually will pay no tax on income up to ₹4 lakh, 5% on income between ₹4 and 8 lakh, 10% on income between ₹8 and 12 lakh, and 15% on income between ₹12 and 16 lakh.
An annual income tax of 20% will be applied to income between ₹16 and 20 lakh, 25% to income between ₹20 and 24 lakh, and 30% to income beyond ₹24 lakh.
Income Tax Budget 2025 LIVE: Section 87A rebate
Due to the revised tax slab rates and changes in the Section 87A rebate, an assessee who does not opt out of the default tax regime always remains in a favourable position, even when deductions under Sections 80C, 80D and 24 (b) are claimed under the normal tax regime. Under Budget 2025, the Section 87A rebate will no longer apply to income taxed at special rates. Consequently, the rebate benefit under Section 87A will not be available to taxpayers having special rate income, Taxmann’s CA Shivam Gupta informed Livemint.
