Budget 2025: What Are The New Income Tax Slabs For FY 2025-26?

One of the major changes in the Union Budget is the massive increase in the slab rates for the new regime and the increase in the limit of Rebates under Section 87A. There will be no income tax payable upto net income of Rs. 12 lakh (other than special rate income such as capital gains) under the new regime. This income limit will be Rs. 12.75 lakh for salaried taxpayers, due to a standard deduction of Rs. 75,000 under the new regime.

The relevant changes have been made to Section 87A providing a rebate of Rs. 60,000 from the existing Rs. 25,000. This rebate is available only for individual residents in India.
Special rates income like capital gains would not be eligible for Rebate of tax u/s 87A.
In this case, Individual, HUF, an association of persons, body of individuals, artificial juridical person having a higher income above Rs. 12,00,000 and opting for the new regime have to pay taxes as per the revised slab rates which are tabulated as under as per an exclusive interview with CA (Dr.) Suresh Surana.

New Income Tax Slabs Under New Regime

Income Slabs (in Rs.)	Tax rate**
0-400,000	Nil
400,000 -800,000	5%
800,000-12,00,000	10%
12,00,000-16,00,000	15%
16,00,000-20,00,000	20%
20, 00,000- 24, 00,000	25%
Above 24,00,000	30%

** exclusive of applicable surcharge and cess.

As per the old regime, income slabs and tax rates remain unchanged as per last year. The new slab structure under new regime will substantially reduce the taxes of the middle class people and would leave more money in their hands, boosting household consumption, savings and investment and thereby boosting the Indian economy at large.

Simpler Taxation Ahead: New Income Tax Bill to Be Introduced Next Week

The Finance Minister has announced in her Budget speech that the new Income-tax Bill will be introduced next week. The new income tax bill will be clear and direct in text with close to half of the present law, in terms of both chapters and words. It will be simple to understand for taxpayers and tax administration, leading to tax certainty and reduced litigation.

This is a welcome move and would definitely boost trust and certainty for the taxpayers. This sets the context for a complete structural direct tax reform which has been partly unleashed by the changes in the personal tax rate slabs and rates as well as increase in the rebate, said CA (Dr.) Suresh Surana.

Nil Tax Up to Rs 12.75 Lakh, But Beware the Threshold Trap in Budget 2025

According to Vivek Banka, Founder - GoalTeller and Financial Services veteran, the great budget will spur demand and consumption that was lagging post the 2 years post-pandemic surge. Don't ignore global cues, but despite any short-term worries, if at all, this keeps the India Growth story shining. Let's hope the FM is able to maintain the aggressive fiscal deficit target and hence we need to also see what lies in store in the fine print as they have been known to add devils in the detail.

"Important to note here that capital gains and other incomes are not part of the exemption and hence the benefit is quite directed to the salaried class. Taxes upto 12.75 lacs will be nil but the minute you cross that threshold the tax will move up from 0 - 63750 ( in the case of 13 lacs of income). Focus has been more on direct taxes, however, no clear path has still been given on indirect taxes especially GST which is a critical element that hopefully shall be addressed soon," commented Vivek Banka.