New Tax Regime: Finance Minister Nirmala Sitharaman gave relief to middle class taxpayers in her 8th budget. She has changed the tax slabs under the new tax regime, due to which many people are finding it difficult to understand how much they will benefit. Let us know what are the new tax slabs and what will be right for you
New Tax Regime: Finance Minister Nirmala Sitharaman gave relief to middle class taxpayers in her 8th budget. She has changed the tax slabs under the new tax regime, due to which many people are finding it difficult to understand how much they will benefit. Let us know what is in the new tax slabs and what will be right for you.
What are the new tax slabs?
According to the new tax regime in Budget 2025, now there will be no tax on income up to Rs 4 lakh.
- 5% tax on income between Rs 4 lakh and Rs 8 lakh
- 10% tax on Rs 8 to 12 lakh
- 15% on Rs 12 to 16 lakh
- 20% on Rs 16 to 20 lakh
- 25% on Rs 20 to 24 lakh
- There will be 30% tax on income above Rs 24 lakh.
Compared to earlier, the zero tax limit has been increased from Rs 3 lakh to Rs 4 lakh. The income limit of every tax bracket has also been increased now so that more people can benefit.
How to get tax exemption on income up to Rs 12 lakh?
The government has decided to give tax exemption to those earning up to Rs 12 lakh. Salaried people will also get a standard deduction of Rs 75,000, which will reduce the total taxable income. For example, a tax exemption of up to Rs 80,000 will be available on an income of Rs 12 lakh.
If your salary is Rs 16 lakh then how will tax be levied?
- Upto Rs 4 lakh – No tax
- 5% on Rs 4-8 lakh = Rs 20,000
- 10% on Rs 8-12 lakh = Rs 40,000
- 15% on Rs 12-16 lakh = Rs 60,000
- Total tax = Rs 1,20,000
- This will be around Rs 50,000 less than the current tax.
If your salary is Rs 50 lakh then how much tax?
Under the new regime, now Rs 10.8 lakh tax will have to be paid on an income of Rs 50 lakh. This is Rs 1.1 lakh less than the old tax system.
Old tax regime or new – what to choose?
If you can claim more exemptions (like HRA, 80C, home loan etc.) in the old tax system, then it can be beneficial for you. For example, if you claim an exemption of Rs 4 lakh on an income of Rs 16 lakh, then you will have to pay a tax of Rs 1,77,500 in the old regime, whereas in the new regime you will have to pay a tax of only Rs 1,20,000. In such a situation, the new tax regime can prove to be better for you.
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