Salaries up to ₹12 lakh are now tax-free, but how much tax will be levied on earnings of ₹15 lakh, ₹20 lakh, and ₹25 lakh?

The February 2025 budget brought good news for salaried individuals. Finance Minister Nirmala Sitharaman addressed the long-standing demand of the middle class for an increase in the tax exemption limit. The biggest highlight of the 2025 budget was 'no tax on income up to ₹12 lakh'. Yes, you heard that right. If your annual taxable income is up to ₹12 lakh, you will not have to pay a single rupee as income tax to the government from this year onwards.

But wait, the world of taxes is not as simple as it seems. There's a catch. This 'zero tax' benefit is only for those whose income falls within the ₹12 lakh limit. If your income exceeds ₹12 lakh by even a single rupee, the tax calculation changes. In that case, the initial exemption you receive is reduced. When you file your return in 2026, you should be fully aware of these new rules. Let's understand how the government has changed the tax slabs and how much you will save based on your salary.

What are the new tax slabs?

The government has made the new tax regime even simpler. Now, the tax rates will be as follows:

₹0 to ₹4 lakh: No tax (0%)

₹4 to ₹8 lakh: 5% tax

₹8 to ₹12 lakh: 10% tax

₹12 to ₹16 lakh: 15% tax

₹16 to ₹20 lakh: 20% tax

₹20 to ₹24 lakh: 25% tax

Above ₹24 lakh: 30% tax

The real truth about 'zero tax' up to ₹12 lakh
Many people are confused about why the tax slabs start from ₹4 lakh if ​​there is no tax up to ₹12 lakh.

Actually, the government has increased the 'rebate' limit in the new tax regime. The rule is that if your total taxable income is up to ₹12 lakh, the government will give you a full tax rebate under Section 87A. But as soon as your income exceeds ₹12 lakh, you will only get the benefit of 0% tax on the first ₹4 lakh. Tax will be levied on the remaining income according to the applicable tax slabs.

Tax Calculation: How will it affect your salary?
Let's now understand the tax calculation at different income levels. Here, we will also include the standard deduction of ₹75,000, which the government provides to every employee as a direct deduction without any investment. Tax on an annual income of ₹15 lakh
If your annual income is ₹15 lakh, the calculation will be as follows:

Total income: ₹15,00,000

Subtract standard deduction: ₹15,00,000 - ₹75,000 = ₹14,25,000 (Taxable income)

Tax calculation:

On the first ₹4 lakh: 0 (0%)

On ₹4 lakh to ₹8 lakh (5% of ₹4 lakh): ₹20,000

On ₹8 lakh to ₹12 lakh (10% of ₹4 lakh): ₹40,000

On ₹12 lakh to ₹14.25 lakh (15% of ₹2.25 lakh): ₹33,750

Total tax: ₹93,750

Cess (4% Cess): ₹3,750

Final tax: ₹97,500

Tax on an annual income of ₹20 lakh
If your salary is ₹20 lakh, here's the calculation of your savings and tax:

Total income: ₹20,00,000

After standard deduction: ₹19,25,000

Tax calculation:

Up to ₹4 lakh: 0

On ₹4-8 lakh (5%): ₹20,000

On ₹8-12 lakh (10%): ₹40,000

On ₹12-16 lakh (15%): ₹60,000

On ₹16-19.25 lakh (20% of ₹3.25 lakh): ₹65,000

Total tax: ₹1,85,000

Cess (4% Cess): ₹7,400

Final tax: ₹1,92,400

Tax on an annual income of ₹25 lakh
There is relief for high-salaried individuals as well, but the tax amount increases:

Total income: ₹25,00,000

After standard deduction: ₹24,25,000

Tax calculation: Mathematics:

Up to 4 lakhs: 0

4-8 lakhs (5%): ₹20,000

8-12 lakhs (10%): ₹40,000

12-16 lakhs (15%): ₹60,000

16-20 lakhs (20%): ₹80,000

20-24 lakhs (25%): ₹1,00,000

24-24.25 lakhs (30% of 25,000): ₹7,500

Total Tax: ₹3,07,500

Cess (4%): ₹12,300

Final Tax: ₹3,19,800

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