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The Union Budget 2025 has brought major relief for individual taxpayers, particularly the middle class, with a significant overhaul of the income tax structure.
Finance Minister Nirmala Sitharaman, in her Budget speech, announced new income tax slabs under the revised tax regime, ensuring that individuals earning up to ₹12 lakh will not have to pay any income tax. This move is expected to leave more disposable income in the hands of taxpayers, boosting consumption and economic growth.
What are the revised income tax slabs for FY 2025-26 under the new tax regime?
The government has introduced revamped tax slabs for individuals, Hindu Undivided Families (HUFs), and associations of persons under the new tax regime. Below is the updated tax structure:
Income Tax Slabs (FY 2025-26) Under New Regime
| Total Income (₹) | Tax Without Marginal Relief (₹) | Tax Payable with Marginal Relief (₹) |
|---|---|---|
| 12,10,000 | 61,500 | 10,000 |
| 12,50,000 | 67,500 | 50,000 |
| 12,70,000 | 70,500 | 70,000 |
| 12,75,000 | 71,250 | 71,250 (No marginal relief) |
2. What is the maximum total income for which tax liability is NIL?
Under the new tax regime, individuals with an income of up to ₹12 lakh will not have to pay any tax. For salaried taxpayers, the threshold extends to ₹12.75 lakh, considering the standard deduction of ₹75,000.
3. What steps are required to avail NIL tax liability?
The new tax regime is the default regime. To avail the benefit of NIL tax liability, taxpayers only need to file their Income Tax Return (ITR)—no additional steps are required.
4. Who will benefit from the change in tax slabs?
The new tax regime applies to:
- Individuals
- Hindu Undivided Families (HUFs)
- Associations of persons (excluding co-operative societies)
- Bodies of individuals
- Artificial juridical persons
- All taxpayers falling under these categories will benefit from the revised tax slabs and rates.
| Total Income (₹) | Tax as per Existing Rates (₹) | Tax as per Proposed Rates (₹) | Benefit of Rate/Slab Change (₹) | Rebate Benefit (₹) | Total Benefit (₹) |
|---|---|---|---|---|---|
| 8,00,000 | 30,000 | 20,000 | 10,000 | 20,000 | 30,000 |
| 9,00,000 | 40,000 | 30,000 | 10,000 | 30,000 | 40,000 |
| 10,00,000 | 50,000 | 40,000 | 10,000 | 40,000 | 50,000 |
| 11,00,000 | 65,000 | 50,000 | 15,000 | 50,000 | 65,000 |
| 12,00,000 | 80,000 | 60,000 | 20,000 | 60,000 | 80,000 |
| 13,00,000 | 1,00,000 | 75,000 | 25,000 | 0 | 25,000 |
| 14,00,000 | 1,20,000 | 90,000 | 30,000 | 0 | 30,000 |
| 15,00,000 | 1,40,000 | 1,05,000 | 35,000 | 0 | 35,000 |
| 16,00,000 | 1,70,000 | 1,20,000 | 50,000 | 0 | 50,000 |
| 17,00,000 | 2,00,000 | 1,40,000 | 60,000 | 0 | 60,000 |
| 18,00,000 | 2,30,000 | 1,60,000 | 70,000 | 0 | 70,000 |
| 19,00,000 | 2,60,000 | 1,80,000 | 80,000 | 0 | 80,000 |
| 20,00,000 | 2,90,000 | 2,00,000 | 90,000 | 0 | 90,000 |
| 21,00,000 | 3,20,000 | 2,25,000 | 95,000 | 0 | 95,000 |
| 22,00,000 | 3,50,000 | 2,50,000 | 1,00,000 | 0 | 1,00,000 |
| 23,00,000 | 3,80,000 | 2,75,000 | 1,05,000 | 0 | 1,05,000 |
| 24,00,000 | 4,10,000 | 3,00,000 | 1,10,000 | 0 | 1,10,000 |
| 25,00,000 | 4,40,000 | 3,30,000 | 1,10,000 | 0 | 1,10,000 |
5. How much tax did a person earning ₹12 lakh pay earlier, and how much now?
Previously, under the new tax regime, an individual earning ₹12 lakh was required to pay ₹80,000 in income tax. With the latest changes, this tax liability has been reduced to NIL.
6. How much extra money will taxpayers save due to these changes?
The government estimates that approximately ₹1 lakh crore will remain in the hands of taxpayers due to the revised slabs and rebate adjustments.
7. What is marginal relief, and how does it work?
Marginal relief ensures that taxpayers with income slightly above ₹12 lakh do not pay excessive tax compared to those earning ₹12 lakh or below.
Income Tax with and without Marginal Relief
| Total Income (₹) | Tax Without Marginal Relief (₹) | Tax Payable with Marginal Relief (₹) |
|---|---|---|
| 12,10,000 | 61,500 | 10,000 |
| 12,50,000 | 67,500 | 50,000 |
| 12,70,000 | 70,500 | 70,000 |
| 12,75,000 | 71,250 | 71,250 (No marginal relief) |
If a taxpayer earns ₹12,10,000, they would normally pay ₹61,500 in tax. However, under marginal relief, they will pay only ₹10,000, ensuring their net income remains close to ₹12 lakh.
8. What is the maximum rebate available to taxpayers?
The maximum rebate available is ₹60,000, applicable to taxpayers earning up to ₹12 lakh.
9. What was the earlier limit for NIL tax payment?
Previously, the NIL tax threshold was ₹7 lakh. This budget has increased the limit to ₹12 lakh, benefiting over 1 crore taxpayers.
10. Is the standard deduction available under the new regime?
Yes, the standard deduction of ₹75,000 is available in the new tax regime. In the old tax regime, the standard deduction was ₹50,000.
11. How many taxpayers will benefit from these new slabs?
Approximately 8.75 crore individuals have filed ITRs for AY 2024-25. A large section of these taxpayers will benefit from the revised rates and increased NIL tax threshold.
12. Does the rebate apply to capital gains, lottery winnings, or special rate income?
No, the rebate does not apply to capital gains, lottery winnings, or other income taxed at special rates under the Income Tax Act. It is applicable only to slab-based income under section 115BAC.
13. What is the difference between rebate and marginal relief?
Rebate: A deduction from tax that eliminates tax liability for those earning up to ₹12 lakh.
Marginal relief: A provision ensuring taxpayers earning slightly above ₹12 lakh do not pay disproportionately high taxes compared to those earning ₹12 lakh or below.
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