The government has expected an increase of ₹ 14.3 lakh crore in financial year 26 to an increase of ₹ 14.3 lakh crore in financial year 26, compared to a revised estimate of ₹ 12.5 lakh crore for the financial year ending March 2025.
Now how do new income tax slabs work?
- There is no tax on income up to ₹ 4 lakh.
- 5% tax on income from ₹ 4 lakh to ₹ 8 lakh.
- 10% tax on income from ₹ 8 lakh to ₹ 12 lakh.
For income beyond ₹ 12 lakh, high tax rates apply:
- 15% tax on income from ₹ 12 lakh to ₹ 16 lakh.
- 20% tax on income from ₹ 16 lakh. 2 million.
- 25% tax on income from ₹ 20 lakh. 24 lakhs.
- 30% tax on income above ₹ 24 lakh.
So, how is ₹ 12 lakh tax-free?
Under these rates, there will be tax liability for income of ₹ 12 lakh:
There is no tax at the first ₹ 4 lakh.
5% ₹ 4 lakh to ₹ 8 lakh = ₹ 20,000.
10% ₹ 12 lakh at ₹ 8 lakh = ₹ 40,000.
Total tax = ₹ 60,000.
However, with discounts and deductions, this tax is completely forgiven.
For salaried persons with a standard deduction of ₹ 75,000, taxable income limit is spread up to 12.75 lakhs.
Savings for high income
A taxpayer earns ₹ 12 lakhs, ₹ 80,000, prevents 100% reduction in tax.
A person with ₹ 18 lakh income is saved ₹ 70,000 (30% tax reduction).
A taxpayer makes a profit of ₹ 25 lakh from ₹ 1.1 lakh tax deduction (reduction of 25%).
In particular, the old tax regime remains unchanged, which has a basic discount limit at ₹ 2.5 lakh.
Additionally, the government will introduce a new direct tax bill to simplify tax laws and reduce litigation. The Finance Minister assured that the new law would be clear, direct and easy to understand.
The purpose of these changes is to impose more money, expenses and investment in the hands of taxpayers.
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first published: February 1, 2025 2:18 First
(Tagstotransite) Budget 2025 (T) Income Tax (T) Budget 2025 Tax Offer (T) New Tax Government (T) New vs. Old Tax Governance
