The Union Budget 2025 has introduced significant changes to the income tax slabs under the new tax regime. Here's a breakdown of the new slab rates for FY 2025-26 (Assessment Year 2026-27):
Comparison between new and old tax slab rate
As per New Tax Slab Rate for FY25-26 | For FY24-25 | ||||
Net Taxable Income | Tax Rate | Tax | Net Taxable Income | Tax Rate | Tax |
4,00,000 | Nil | - | Up to Rs 3 lakh | Nil | - |
4,00,001 to 8,00,000 | 5% | 20,000 | Rs 3 lakh - Rs 7 lakh | 5% | 20,000 |
8,00,001 to 12,00,000 | 10% | 40,000 | Rs 7 lakh - Rs 10 lakh | 10% | 30,000 |
12,00,001 to 16,00,000 | 15% | 60,000 | Rs10 lakh - Rs 12 lakh | 15% | 30,000 |
16,00,001 to 20,00,000 | 20% | 80,000 | Rs 12 lakh - Rs 15 lakh | 20% | 60,000 |
20,00,001 to 24,00,000 | 25% | 1,00,000 | Above Rs 15 lakh | 30% |
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Above 24,00,000 | 30% |
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Key Points:
Increased Rebate: The tax rebate under Section 87A has been increased to Rs. 60,000. This means individuals with a net taxable income of up to Rs. 12 lakhs will pay no income tax.
No Change in Old Regime: The old tax regime slabs and rates remain unchanged for FY 2025-26.
Highest Slab Rate: The highest slab rate under the new regime is 30%, applicable to incomes exceeding Rs. 24 lakhs.
Standard Deduction: A standard deduction of Rs. 75,000 is available for salaried taxpayers in the new regime.
Surcharge: Surcharge rates remain the same as before.
Health and Education Cess: A 4% Health and Education Cess will be added to the income tax liability.
What if your taxable income is Rs.13 Lakhs
As per New Tax Slab Rate for FY25-26 | For FY24-25 | ||||
Net Taxable Income | Tax Rate | Tax | Net Taxable Income | Tax Rate | Tax |
4,00,000 | Nil | - | Up to Rs 3 lakh | Nil | - |
4,00,001 to 8,00,000 | 5% | 20,000 | Rs 3 lakh - Rs 7 lakh | 5% | 20,000 |
8,00,001 to 12,00,000 | 10% | 40,000 | Rs 7 lakh - Rs 10 lakh | 10% | 30,000 |
12,00,001 to 13,00,000 | 15% | 15,000 | Rs10 lakh - Rs 12 lakh | 15% | 30,000 |
Total Tax Payable |
| 75,000 | Rs 12 lakh - Rs 13 lakh | 20% | 20,000 |
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| Total Tax Payable |
| 1,00,000 |
So, 1,00,000-75,000 = Total Saving Rs25,000/-
What if your taxable income is Rs.25 Lakhs
As per New Tax Slab Rate for FY25-26 | For FY24-25 | ||||
Net Taxable Income | Tax Rate | Tax | Net Taxable Income | Tax Rate | Tax |
4,00,000 | Nil | - | Up to Rs 3 lakh | Nil | - |
4,00,001 to 8,00,000 | 5% | 20,000 | Rs 3 lakh - Rs 7 lakh | 5% | 20,000 |
8,00,001 to 12,00,000 | 10% | 40,000 | Rs 7 lakh - Rs 10 lakh | 10% | 30,000 |
12,00,001 to 16,00,000 | 15% | 60,000 | Rs10 lakh - Rs 12 lakh | 15% | 30,000 |
16,00,001 to 20,00,000 | 20% | 80,000 | Rs 12 lakh - Rs 15 lakh | 20% | 60,000 |
20,00,001 to 24,00,000 | 25% | 1,00,000 | Above Rs 15 lakh | 30% | 3,00,000 |
Above 24,00,000 | 30% | 30,000 | Total Tax Payable |
| 4,40,000 |
Total Tax Payable |
| 3,30,000 |
So, 4,40,000-3,30,000= Total Savings Rs.1,10,000/-
The government has made several revisions to TDS (Tax Deducted at Source) and TCS (Tax Collected at Source) provisions.
The TDS threshold on interest income for senior citizens has been doubled from Rs 50,000 to Rs 1 lakh, and for others, it has increased from Rs 40,000 to Rs 50,000.
The rental income threshold for TDS has increased from an annual limit of Rs 2.4 lakh to Rs 6 Lakh.
The threshold for TCS on foreign remittances under the Liberalised Remittance Scheme (LRS) has increased from Rs 7 lakh to Rs 10 lakh.
TCS on education-related remittances financed by loans has been removed.
The TDS threshold for dividend payouts from mutual funds has increased from Rs 5,000 to Rs 10,000.
The tax deduction threshold for professional services has been increased to ₹50,000, up from ₹30,000.
Removal of TCS on Sale of Goods: TCS on the purchase of goods will be removed, effective from April 1, 2025.
This information is based on the announcements made in the Union Budget 2025. It is advisable to consult with a tax professional for personalized advice.
We hope the above blog was helpful in enhancing your knowledge on the matter. In case of any queries feel free to get in touch with our team of experts.
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