new income tax slabs 2025-26

Big Relief for Taxpayers! No Income Tax Up to ₹12 Lakhs in Budget 2025-26

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Finance Minister Nirmala Sitharaman delivered a major boost to taxpayers in the Union Budget 2025-26, announcing a historic change: no income tax for individuals earning up to ₹12 lakh! This move is set to significantly ease the tax burden for a large segment of the population.

Revised Income Tax Slabs for 2025-26:

https://incometaxindia.gov.in/Documents/Budget/budget-2025/faqs-budget-2025.pdf

The budget proposes a revamped tax structure with the following slabs:

  • ₹0 – ₹4 Lakhs: Nil
  • ₹4 Lakhs – ₹8 Lakhs: 5%
  • ₹8 Lakhs – ₹12 Lakhs: 10%
  • ₹12 Lakhs – ₹16 Lakhs: 15%
  • ₹16 Lakhs – ₹20 Lakhs: 20%
  • ₹20 Lakhs – ₹24 Lakhs: 25%
  • Above ₹24 Lakhs: 30%

How is the ₹12 Lakhs Tax Exemption Possible?

While the new slabs offer lower rates, the key to the ₹12 lakh exemption lies in a tax rebate. For taxpayers with a normal income (excluding special income like capital gains) up to ₹12 lakhs, this rebate, combined with the slab rate reductions, effectively brings their tax liability to zero.

Old vs. New Tax Regime: The Choice is Yours

Taxpayers still have the option to choose between the old and new tax regimes.

  • Old Tax Regime: This regime allows deductions for investments in housing rentals, insurance, and other long-term savings schemes.
  • New Tax Regime: Introduced in 2020, this regime offers lower tax rates but does not allow for these deductions.

Significant Savings for Taxpayers:

Previously, someone earning ₹12 lakh would have paid ₹80,000 in taxes. Under the new budget proposals, their tax liability is reduced to ₹60,000. However, thanks to the tax rebate, the final tax payable becomes zero. This represents a substantial saving of ₹80,000!

What Does This Mean for You?

This change is a significant positive for middle-income earners. It puts more money back in their pockets, allowing them to save, invest, or spend as they see fit.

Stay Informed:

Keep an eye on our blog for more detailed analysis of the budget and its impact on your finances. We will continue to provide updates and insights on tax-related matters.

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