Income Tax Budget 2025: Major Relief for Middle-Class Taxpayers
in a meaningful move aimed at easing the financial burden on the middle class, Finance Minister Nirmala Sitharaman announced sweeping changes to the income tax slabs during the Union Budget 2025. The new tax regime introduces substantial benefits for taxpayers, particularly those earning up to ₹13 lakh annually.
under the revised income tax slabs, no tax will be payable on earnings up to ₹12 lakh, or ₹12.75 lakh including standard deductions. This means a taxpayer in the new regime with an income of ₹12 lakh will enjoy a tax benefit of ₹80,000, effectively reducing their tax liability to zero.
“With the new tweaks being introduced, a taxpayer in the new regime with an income of ₹12 lakh will get a benefit of ₹80,000 in tax (100% of tax payable as per existing rates will be exempt). The effective income tax rate will be 0%,” the announcement stated.
This change also benefits those earning between ₹8 to 10 lakh. Even if they pay a 10% tax initially, they can claim a full refund, ensuring their payable income tax remains ₹0. Additionally, individuals earning up to ₹13 lakh can save on taxes due to a standard deduction of ₹75,000 and marginal relief of around ₹30,000.
The Union budget 2025 also introduces a new 25% tax slab for those earning between ₹20 lakh and ₹24 lakh, replacing the earlier 30% tax on incomes above ₹15 lakh. This adjustment is expected to provide further relief to higher-income earners.
The government’s decision to revise the income tax slabs is part of a broader strategy to boost household consumption, savings, and investment. By leaving more money in the hands of taxpayers, the Center aims to stimulate economic growth and improve financial stability for middle-class families.
Here’s a quick summary of the new tax rates for individuals earning above ₹12 lakh:
| Income range (₹) | Tax Benefit (₹) | Effective Tax Rate |
|——————|——————|——————–|
| 12 lakh | 80,000 | 0% |
| 16 lakh | 50,000 | 7.5% |
| 18 lakh | To be announced | To be announced |
These changes mark a pivotal shift in the income tax landscape, offering significant savings for millions of taxpayers. For more details on the Union Budget 2025 and its implications,stay tuned to our updates.
Note: All figures and details are based on the official announcement by Finance Minister nirmala Sitharaman during the Union Budget 2025.
Budget 2025-26: Key Changes in TDS and Tax Regimes
Table of Contents
- Budget 2025-26: Key Changes in TDS and Tax Regimes
- TDS Exemption Limit for Rent Increased to ₹6 Lakh
- No Changes in the Old Tax Regime
- New tax Regime: Key Highlights
- Impact on Taxpayers
- Conclusion
- Editor’s Questions: Understanding the New Tax Regime and Budget 2025 Changes
- Q1: What are the key highlights of the New Tax Regime introduced in the Budget?
- Q2: How do the new tax slabs under the New Tax regime impact taxpayers?
- Q3: What are the major changes in the TDS exemption limit for rental income?
- Q4: Can taxpayers still avail deductions under the New Tax Regime?
- Q5: How does the Budget 2025 impact take-home pay for salaried individuals?
- Q6: What should taxpayers consider when choosing between the Old and New Tax Regimes?
- Conclusion
The 2025-26 Budget has introduced significant reforms aimed at simplifying tax compliance, particularly for senior citizens and individuals earning rental income. Finance Minister Nirmala Sitharaman announced a major revision in the Tax Deduction at Source (TDS) exemption limit, alongside maintaining the existing Old Tax Regime. Here’s a detailed breakdown of the changes and their implications.
TDS Exemption Limit for Rent Increased to ₹6 Lakh
One of the standout announcements in the Budget is the increase in the TDS exemption limit on rental income. The threshold has been raised from ₹2.4 lakh to ₹6 lakh annually. This move is expected to reduce the number of transactions subject to TDS, benefiting small taxpayers who receive smaller payments.“This will reduce the number of transactions subject to TDS, benefiting small taxpayers receiving smaller payments,” sitharaman explained during her Budget speech.
This change is particularly beneficial for individuals with modest rental incomes, as it reduces their compliance burden and ensures more liquidity in their hands.
No Changes in the Old Tax Regime
the Old Tax Regime remains unchanged in the 2025-26 Budget.Taxpayers opting for this regime can continue to claim various exemptions and deductions,albeit with higher tax rates compared to the New Tax Regime.
here are the current tax slabs under the Old Tax Regime (applicable for FY 2024-25):
| Income Range | Tax Rate |
|—————————-|————–|
| Up to ₹2,50,000 | Nil |
| ₹2,50,001 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% |
For senior citizens aged 60-80 years, the basic exemption limit is ₹3,00,000, while for super senior citizens (above 80 years), it is ₹5,00,000.
The Old Tax Regime allows deductions under various sections,including:
- Section 80C: Up to ₹1.5 lakh for investments in specified instruments.
- Section 80D: Deductions for health insurance premiums.
- Section 24(b): Interest on home loans.
New tax Regime: Key Highlights
The New Tax Regime,introduced in the previous budget,continues to offer lower tax rates but without the benefit of most deductions and exemptions. Here’s a quick overview of the tax slabs under the New Tax Regime:
| Income Range | Tax Rate |
|—————————-|————–|
| Up to ₹4 lakh | Nil |
| ₹4 lakh to ₹8 lakh | 5% |
| ₹8 lakh to ₹12 lakh | 10% |
| ₹12 lakh to ₹16 lakh | 15% |
| ₹16 lakh to ₹20 lakh | 20% |
| ₹20 lakh to ₹24 lakh | 25% |
| Above ₹24 lakh | 30% |
Taxpayers can choose between the Old and New Tax Regimes based on their financial situation and eligibility for deductions.
Impact on Taxpayers
The increase in the TDS exemption limit for rental income is a welcome relief for small taxpayers, reducing their compliance burden and improving cash flow. Meanwhile, the unchanged Old Tax Regime ensures continuity for those who rely on deductions to lower their tax liability.
As an example, a taxpayer earning ₹10 lakh annually under the New Tax Regime will benefit from ₹70,000 in tax savings, resulting in an effective tax rate of 8.8%. Similarly, someone earning ₹20 lakh will save ₹90,000, with an effective tax rate of 10%.
Conclusion
The 2025-26 Budget strikes a balance between simplifying tax compliance and providing relief to specific taxpayer groups. The increase in the TDS exemption limit for rental income and the retention of the Old Tax Regime reflect the government’s focus on easing the tax burden while maintaining fiscal discipline.
Taxpayers are advised to evaluate their options carefully and choose the regime that best suits their financial needs. For more details on the Budget 2025-26, visit the official finance Ministry website.Income Tax Slabs Changed in Budget 2025: How Will It Impact Your Salary and Take-Home Pay?
The union Budget 2025, presented by Finance Minister Nirmala Sitharaman, has introduced significant changes to the income tax slabs, offering relief to taxpayers across the country. These revisions aim to simplify the tax structure and increase disposable income for individuals. Here’s a detailed breakdown of how these changes will impact your salary and take-home pay.
Key Changes in income Tax Slabs
Under the new tax regime, the nil tax slab has been raised from ₹7 lakh to ₹12 lakh, providing substantial relief to middle-income earners. The revised tax slabs are as follows:
- ₹0-4 lakh: NIL
- ₹4-8 lakh: 5%
- ₹8-12 lakh: 10%
- ₹12-16 lakh: 20%
This restructuring ensures that individuals earning up to ₹12 lakh will pay no tax, while those in higher brackets will benefit from reduced rates.
Impact on Take-Home Pay
The revised slabs are expected to increase disposable income for salaried individuals. For example,a taxpayer earning ₹10 lakh annually will now fall under the 10% tax bracket,significantly reducing their tax liability compared to the previous regime.
Deductions and Exemptions
While the new tax regime offers lower rates, taxpayers can still avail of deductions under sections like Section 80C, which allows up to ₹1.5 lakh for investments in PPF, ELSS, and LIC premiums.Additionally, Section 80D covers health insurance premiums, and Section 24(b) provides deductions of up to ₹2 lakh for home loan interest. Other exemptions like HRA and LTA remain unchanged, offering further savings.
Summary Table: Key Changes in Budget 2025
| Income Range (₹) | Tax Rate |
|———————–|————–|
| 0-4 lakh | NIL |
| 4-8 lakh | 5% |
| 8-12 lakh | 10% |
| 12-16 lakh | 20% |
Conclusion
The Union Budget 2025 has brought much-needed relief to taxpayers, with revised slabs and increased exemptions. These changes are poised to boost disposable income, providing a financial cushion for individuals and families. Stay informed about these updates to maximize your savings and plan your finances effectively.
Editor’s Questions: Understanding the New Tax Regime and Budget 2025 Changes
Q1: What are the key highlights of the New Tax Regime introduced in the Budget?
Guest: The New Tax Regime introduced in Budget 2025 offers lower tax rates but eliminates most deductions and exemptions. The tax slabs have been revised to provide relief to middle-income earners. For example, the nil tax slab has been raised from ₹7 lakh to ₹12 lakh. Taxpayers can choose between the Old and New Tax Regimes based on their financial needs.
Q2: How do the new tax slabs under the New Tax regime impact taxpayers?
Guest: the revised tax slabs ensure that individuals earning up to ₹12 lakh pay no tax. Those in higher income brackets benefit from reduced tax rates. As an example, a taxpayer earning ₹10 lakh annually will now fall under the 10% tax bracket, significantly reducing their tax liability compared to the previous regime. This restructuring increases disposable income for many taxpayers.
Q3: What are the major changes in the TDS exemption limit for rental income?
Guest: The increase in the TDS exemption limit for rental income is a significant relief for small taxpayers. this change reduces the compliance burden and improves cash flow, making it easier for individuals to manage their finances without worrying about additional tax deductions.
Q4: Can taxpayers still avail deductions under the New Tax Regime?
Guest: While the New Tax Regime offers lower tax rates, it does not allow most deductions. However, taxpayers can still avail deductions under sections like Section 80C, which covers investments in PPF, ELSS, and LIC premiums.Other exemptions like HRA and LTA remain unchanged, providing additional savings opportunities.
Q5: How does the Budget 2025 impact take-home pay for salaried individuals?
Guest: The revised tax slabs are expected to increase disposable income for salaried individuals. Such as, a taxpayer earning ₹10 lakh annually will benefit from ₹70,000 in tax savings under the New Tax Regime, resulting in an effective tax rate of 8.8%. Similarly, someone earning ₹20 lakh will save ₹90,000, with an effective tax rate of 10%.
Q6: What should taxpayers consider when choosing between the Old and New Tax Regimes?
Guest: taxpayers should evaluate their financial situation and eligibility for deductions before choosing between the Old and New Tax Regimes.While the new Regime offers lower tax rates,the Old Regime provides benefits through various deductions and exemptions.It’s essential to assess which regime aligns better with your financial goals and tax-saving strategies.
Conclusion
The Budget 2025 has introduced significant changes to the tax structure, offering relief to taxpayers and simplifying compliance. The revised tax slabs and increased TDS exemption limit aim to reduce the tax burden and improve disposable income. Taxpayers are advised to carefully evaluate their options and choose the regime that best suits their financial needs for maximum savings.