Income Tax: Big change in tax slab, know what will be the effect on your salary and take home..
Finance Minister Nirmala Sitharaman has given a big relief to the middle class employed people while presenting the Union Budget 2025. Now there will be no income tax on annual income up to Rs 12 lakh. Apart from this, this limit will increase to Rs 12.75 lakh including standard deduction, which will give more people the benefit of tax-free income.
According to the changes made in the new tax system, a tax exemption of Rs 80,000 will be available on income up to Rs 12 lakh. They will no longer have to pay any tax. This means that people earning Rs 8 to 10 lakh, who fall under the 10 percent tax bracket in the new tax regime, will be able to get a rebate of the entire amount.
If the salary is more than 12 lakh, how much tax will be levied? Now people with an annual income of Rs 13 lakh will be able to save income tax above the limit of Rs 12 lakh, which includes a standard deduction of Rs 75,000 and relief of about Rs 30,000. Earlier in the New and Old Tax Regime, income above Rs 15 lakh was taxed at 30 percent. Now, the tax slab for individuals with income of Rs 20 lakh to Rs 24 lakh is 25%. This has given some relief to high-income taxpayers.
The purpose of changing the tax slab in Budget 2025 is to reduce taxes for the middle class and leave more money in their hands, promote domestic consumption, savings and investment.
In such a situation, if your annual salary is less than Rs 12 lakh, then you will not have to pay any tax, but if the salary is more than 12 lakh, then how much tax will you have to pay. Let's understand here.
Annual income tax exemption How much tax will be levied-
₹12 lakh ₹80,000 0%
₹16 lakh ₹50,000 7.5%
₹18 lakh ₹70,000 8.8%
₹20 lakh ₹90,000 10%
₹25 lakh ₹1,10,000 13.2%
₹50 lakh ₹1,10,000 21.6%
Relief in TDS too-
The TDS exemption limit on annual income from rental has been increased from Rs 2.4 lakh to Rs 6 lakh. Senior citizens and small taxpayers will get relief from the scope of TDS. Sitharaman said in her budget speech, 'This will reduce the number of transactions subject to TDS, which will benefit small taxpayers in receiving lower payments.'
Any change in the old tax regime?
There is no change in the old tax regime in the latest announcement. According to this, taxpayers can claim various exemptions and deductions along with higher tax rates. This arrangement allows taxpayers to reduce their tax liabilities, while maintaining the stability of the old tax regime.
The current tax slabs under the old tax regime are as follows (applicable for FY 2024-25)-
Income Limit (in Rs) Tax Rate (%)
Up to Rs 2,50,000 0
2,50,001 – 7,00,000 5%
7,00,001 – 10,00,000 10%
10,00,001 – 12,00,000 15%
12,00,001 – 15,00,000 20%
Above Rs 15,00,000 30%
In the old tax regime, you can avail tax exemptions under various sections, such as…
Section 80C: Up to Rs 1,50,000 for investments like PPF, ELSS, and LIC premiums.
Section 80D: Health insurance premium.
Section 24(B): Interest up to Rs 2,00,000 on the home loan.
Other exemptions like HRA and LTA.
What is special for senior citizens-
For those in the age group of 60-80 years, the tax free limit will be Rs 3 lakh. Whereas for those above 80 years, the tax free limit will be Rs 5 lakh.
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