Union Budget 2025 Tax Slabs Decoded: All You Need To Know

The Union Budget 2025 has brought significant changes to the tax slabs, leaving many wondering how it will impact their finances. Get a clear understanding of the new tax slabs from our expert in this article.
union budget 2025 tax slabs explanation

As the government's annual financial blueprint unfolds, taxpayers across the country are eager to know how the new tax slabs will impact their hard-earned money. Will the Budget 2025 bring tax relief or increased burdens? What are the key tax reforms and deductions that you need to know about? In this article, we'll delve into the intricacies of the Union Budget 2025 tax slabs, decoding the changes, benefits, and implications for you with our expert,CA Sakchi Jain.

CA Sakchi said, "The Union Budget 2025 has introduced major tax relief for individuals by restructuring the new tax regime. With a focus on reducing the tax burden on the middle class, these changes simplify compliance and offer significant savings."

New Tax Slabs Under the New Regime

New Tax Slabs Under the New Regime

  • ₹0 - ₹4 lakh → 0% (No tax)
  • ₹4 - ₹8 lakh → 5%
  • ₹8 - ₹12 lakh → 10%
  • ₹12 - ₹16 lakh → 15%
  • ₹16 - ₹20 lakh → 20%
  • ₹20 - ₹24 lakh → 25%
  • Above ₹24 lakh → 30%

₹12 Lakh Income = Zero Tax! Here’s How:

"The biggest relief comes from Section 87A rebate, which ensures that if your total taxable income is ₹12 lakh or lower, your tax liability becomes zero after applying the rebate," explained the expert.

Important Note: This rebate does not apply to special rate income like short-term capital gains (STCG) from share sales, which are taxed separately.

Tax Savings Compared to the Previous Regime

With the revised slabs, taxpayers will save significantly under the new regime:

  • ₹12 lakh income → ₹80,000 saved
  • ₹18 lakh income → ₹70,000 saved
  • ₹25 lakh income → ₹1.1 lakh saved

What If Your Income Exceeds ₹12 Lakh

Marginal Tax Relief: What If Your Income Exceeds ₹12 Lakh?

A key provision in Budget 2025 is marginal tax relief, which prevents excessive tax jumps for individuals whose income slightly exceeds ₹12 lakh.

For instance, if your income is ₹12,01,000, the rebate no longer applies, leading to a higher tax burden. Marginal relief smoothens this jump, ensuring fairness in taxation.

Old vs New Tax Regime: Which One Should You Choose?

While the old tax regime with deductions and exemptions remains, the new regime is now more attractive due to lower tax rates, simplified compliance, and greater savings.

Budget 2025’s tax reforms are a step towards a simpler and more progressive tax system, putting more money in the hands of the middle class. This means higher disposable income, better financial planning opportunities, and a positive impact on savings and investments.

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