Finance Minister Nirmala Sitharaman announced that taxpayers with salaries up to Rs 12 lakh would not be required to pay tax in the new tax regime. Sitharaman also proposed changes in the slab structure of the new income tax regime.
Finance Minister Nirmala Sitharaman fulfilled expectations and hopes of a major income tax relief as she presented the Union Budget for the financial year 2025-2026 on Saturday. People with incomes of up to Rs 12 lakh will not have to pay a single rupee in income tax, the Finance Minister announced, as she also proposed rejigging the tax slabs under the new income tax regime.
According to the income tax changes proposed in the Budget, salaried employees would effectively pay no tax on incomes up to Rs 12.75 lakh after taking into account the benefit of standard deduction. This effective exemption limit earlier was Rs 7.75 lakh.
Nirmala Sitharaman also announced changes in the slab structure of the new income tax regime, expanding the first slab – attracting nil income tax – from Rs 0–3 lakh to Rs 0–4 lakh.
The old income tax regime, which allows for several deductions and exemptions on the total taxable income, saw no changes, indicating a push by the government towards the new regime. The new income tax regime, first introduced in 2020, follows a simplified structure with no deductions.
“I am now happy to announce that there will be no income tax payable up to income of Rs 12 lakh under the new regime,” the finance minister said in Parliament as she presented a record eighth consecutive budget.
Here are the updated slabs under the new income tax regime:
“The new structure will substantially reduce the taxes of the middle class and leave more money in their hands, boosting household consumption, savings and investment,” Sitharaman also said in her Budget speech.
As per the rejig, for people earning more than Rs 12 lakh per annum, there will be nil tax for income up to Rs 4 lakh, 5 per cent for income between Rs 4 and 8 lakh, 10 per cent for Rs 8-12 lakh, 15 per cent for Rs 12-16 lakh.
A 20 per cent income tax will be levied on income between Rs 16 and 20 lakh, 25 per cent on Rs 20-24 lakh and 30 per cent above Rs 24 lakh per annum. A taxpayer in the new regime with an income of Rs 12 lakh will get a benefit of Rs 80,000 in tax. A person having income of Rs 18 lakh will get a benefit of Rs 70,000 in tax.
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%
Article source: indiatoday.in
