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New income tax slabs released in Budget for FY 2025-26 | Check full details
New income tax slabs: Nirmala Sitharaman made a historic announcement that there will be no income tax payable for those with an income upto ₹12 lakh.
New Income Tax Slabs: Union finance minister Nirmala Sitharaman on Saturday presented the Union Budget 2025-2026 in the Parliament and introduced a massive relief for income tax payers.
In a historic announcement, the finance minister announced that there will be no income tax payable for those with an income upto ₹12 lakh.
“I propose to revise tax rate structures as follows: 0 to ₹4 Lakhs - nil, ₹4 Lakhs to ₹8 Lakhs - 5%, ₹8 Lakhs to ₹12 Lakhs - 10%, ₹12 Lakhs to ₹16 Lakhs - 15%, ₹16 Lakhs to ₹20 Lakhs - 20%, ₹20 Lakhs to ₹24 Lakhs - 25% and above ₹24 Lakhs - 30%. To taxpayers up to ₹12 Lakhs of normal income other than special rate income such as capital gains, a tax rebate is being provided in addition to the benefit due to slab rate reduction in such a manner that there is no tax payable by them,” Nirmala Sitharaman said.
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Tax payers have the option to choose between two tax systems - the old tax regime and new tax regime.
The old tax regime allows exemptions on housing rentals, insurance and other long-term investment schemes. The new tax regime, which was brought in the year 2020, offers slightly lower rates but doesn't allow for exemptions.
Income Tax Slab: New Regime
Under the new tax regime, the finance minister proposed a revised tax structure, which is as follows:
- 0-4 lakh rupees: Nil
- 4-8 lakh rupees: 5 per cent
- 8-12 lakh rupees: 10 per cent
- 12-16 lakh rupees: 15 per cent
- 16-20 lakh rupees: 20 per cent
- 20-24 lakh rupees: 25 per cent
- Above 24 lakh rupees: 30 per cent.
According to the proposed tax structure, those with annual salaries up to ₹12 lakh will pay no taxes.
ALSO READ | Income tax slab for FY 2025-26: How much do you save? Calculation of benefits
Those with an income of ₹12 lakh used to pay a tax of ₹80,000. The government in Union Budget 2025 has proposed a tax of ₹60,000. The remaining tax will be ₹20000. Under the new structure, the government has given a tax rebate, which means the net tax payable will be zero for such individuals.
Here are all the calculations according to the Budget document.
Income Tax slabs: Union Budget 2024
In 2024, the finance minister had brought significant changes to the personal income tax structures, bringing in multiple reforms. The Centre also revised tax slabs under the new tax regime, offering taxpayers a potential annual saving of about ₹17,500.
In the 2024 Union Budget, the finance minister had also increased the standard deducting ceiling from ₹50,000 to ₹75,000 as well as from ₹15,000 to ₹25,000 for family pensioners under the new tax regime.
