New Tax Slab 2025: Those whose annual salary income is Rs 12.75 lakh will not have to pay any income tax. Let us tell you, before this, there was no income tax on income up to Rs 7 lakh under the new tax regime.
If you are told that your salary has increased from today i.e. 1st April 2025 without appraisal, then you will probably think what kind of joke is this? But the truth is, if you come under the purview of Income Tax or are going to come under its purview from the new financial year, then for them the New Tax Regime is no less than an appraisal.
Actually, the new tax regime has come into effect from April 1, 2025, and this was announced in the budget. Finance Minister Nirmala Sitharaman has made major changes in the new tax regime and announced no income tax on income up to Rs 12 lakh annually, which will benefit the middle class the most. Apart from this, the new tax regime will also benefit from a standard deduction of Rs 75,000.
That means those whose annual salary is Rs 12.75 lakh will not have to pay any income tax. Let us tell you, before this, there was no income tax on income up to Rs 7 lakh in the new tax regime. But there was a provision of tax on income above this in both the new tax regime and the old tax regime.
A big announcement was made in the budget
Now people whose salary is up to Rs 12.75 lakh do not have to worry about income tax. Under section 87A, there was already tax exemption on income up to Rs 7 lakh, which has now been increased to Rs 12 lakh. Let’s understand with an example… If someone’s salary was Rs 10 lakh in the last financial year, and he had chosen the new tax regime. So he would have had to pay income tax in any case, but this year he will not have to pay any tax, that is, the amount he paid as income tax last year will be saved directly this year.
Employed people can switch between the new and old regime every year, so that a better option can be chosen according to their income and expenses. But most people will now prefer to go with the new tax regime, because it has many benefits.
What will happen to those in the old tax regime from April 1, 2025?
It is worth noting that the financial year 2025-26 is starting from April 1, 2025, and this will be the first full year of making the new tax regime the default option. However, the old tax regime will still exist. If it is beneficial based on your income and deductions, then you can choose it. Especially employed people can opt for it every year while filing their ITR.
For whom is the old tax regime beneficial now?
There were no major changes in the slabs or exemptions of the old regime in Budget 2025. Income up to Rs 2.5 lakh will be tax-free, and thereafter slabs of 5%, 20%, and 30% will apply, deductions such as 80C (1.5 lakh), 80D (25,000-50,000), and home loan interest (up to 2 lakh) will remain available. If you avail HRA, home loan, or make large investments, the old regime can still be beneficial. If you live on rent, pay home loan, or incur large medical expenses, then you can think about the old tax regime.
If your income is more than 15 lakhs and you avail deductions, then the tax can be reduced in the old regime. The tax slabs may be less in the new regime, but the total tax may increase due to lack of exemptions. Investors should compare both on the basis of their income, expenses, and investments and choose the right option. Let us know the advantages and disadvantages of the new tax slab.
Question- When can taxpayers shift to the new tax regime?
Answer- Taxpayers can shift to the new tax slab from the financial year 2025-26, i.e. from 1 April 2025. If you also want to avail tax exemption on income up to Rs 12 lakh, then you can now choose this regime. Especially those in the old tax regime can shift to it, whose income is up to Rs 12.75 lakh, because now they will not have to pay even a single rupee of income tax. Those in the old tax regime will only have to choose the new tax regime.
Question- How will there be no income tax on income up to Rs 12.75 lakh?
Answer- Under the new tax system in the budget, there will be no income tax on income up to Rs 12 lakh. Earlier this limit was Rs 7 lakh. If we include the standard deduction of Rs 75,000, then there will be no tax on personal income up to Rs 12.75 lakh. However, this exemption will apply only on salary. Income from other sources, such as capital gains, will continue to be taxed.
Question- Will the New Tax Slab-2025 prove beneficial?
Answer- Finance Minister Nirmala Sitharaman says that with the change in the new tax slab, now one crore taxpayers will not have to pay any tax. This simply means that now 9 out of 10 salaried persons will not have to pay income tax. According to CBDT Chairman Ravi Agarwal, in the financial year 2024-25 itself, more than 75 percent of the people have adopted the new tax regime, and now when income up to Rs 12 lakh has also been made tax free, then after this 90 percent to 97 percent of taxpayers can join this new tax system.
Question- For whom can the old tax regime still be beneficial?
Answer- Now the old scheme will be beneficial only for those who claim deduction under Chapter 6-1. Those who come in the salary class, who get HRA, and are also paying home loan. That is, those who invest in life insurance, mutual funds, house rent, children’s school fees, home loan, medical insurance, NPS in income tax can save tax by taking advantage of deduction. But now more than 95 percent of people will shift to the new tax regime.
Question- How many people pay income tax in the country?
Answer- According to the income tax return data of assessment year 2023-24, 7.54 crore salaried persons had filed tax returns. Out of these, the annual salary of 5.89 crore persons was less than Rs 7 lakh. According to the government, according to the new exemption limit of Rs 12 lakh, the number of people exempted from tax will increase to 6.77 crore. This means that now 89.8% of the salaried people will not pay any kind of income tax. Not only this, if we keep in mind the limit of Rs 12.75 lakh, then this number will increase to 6.92 crore, due to which 91.7% of the salaried people will be exempted from tax. This decision will benefit about 1.5 crore people, whose annual income is between Rs 7 lakh and Rs 12 lakh. Now they will not have to pay any tax on their salary income.
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