New Delhi:

Finance Minister Nirmala Sitharaman in her Union Budget 2025 speech today announced a new tax slab that has been refreshed across the board.

Under the new regime, there is no tax on income up to Rs 12 lakh, and no tax on income up to Rs 12.75 lakh for salaried people, due to the standard deduction of Rs 75,000.

The new tax regime slab is as follows:

Up to Rs 4 lakh – 0 per cent

Rs 4-8 lakh – 5 per cent

Rs 8 12 lakh – 10 per cent

Rs 12-16 lakh – 15 per cent

Rs 16-20 lakh – 20 per cent

Rs 20-24 lakh – 25 per cent

Above Rs 24 lakh – 30 per cent

So, how much would you save?

Ms Sitharaman said for those with income up to Rs 12 lakh (other than special rate income such as capital gains), the 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.

The total tax benefit of slab rate changes and rebate at different income levels can be illustrated with these examples:

A taxpayer in the new regime with an income of Rs 12 lakh will get a benefit of Rs 80,000 in tax (which is 100 per cent of tax payable as per existing rates).

A person having income of Rs 18 lakh will get a tax benefit of Rs 70,000 (30 per cent of tax payable as per existing rates).

A person with an income of Rs 25 lakh gets a benefit of Rs 1,10,000 (25 per cent of tax payable as per existing rates).

Example calculations of tax benefit (table below)

“Democracy, demography and demand are the key support pillars in our journey towards Viksit Bharat. The middle class provides strength for India’s growth. This government under the leadership of Prime Minister Narendra Modi has always believed in the admirable energy and ability of the middle class in nation building. In recognition of their contribution, we have periodically reduced their tax burden,” Ms Sitharaman said.

Finance Minister Nirmala Sitharaman holding the Budget Papers at the North Block in New Delhi on February 01, 2023.
| Photo Credit: R.V. Moorthy

Finance Minister Nirmala Sitharaman on February 1 raised the personal income tax rebate limit, doled out sops on small savings, and announced one of the biggest hikes in capital spending in the past decade as she did a tightrope walk in the Budget between staying fiscally prudent and meeting public expectations in the year before general elections.

Ms. Sitharaman’s fifth straight Budget comes at a time when the economy is slowing and there is a need for increased spending on social sectors as well as ramping up incentives for local manufacturing. The Modi government will seek third term next year and the BJP will face nine Assembly elections this year.

Announcing its last full budget before the 2024 elections, the NDA government focused on a slew of measures that expanded Capital Expenditure spending and tied in various priorities including Green Growth, Youth Power, and Inclusive Development. This was also accompanied by major tax announcements for the salaried class, with changes in tax slabs and a clear intention to shift to the new tax regime.

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