During the Union Budget 2025 speech, Finance Minister Nirmala Sitharaman announced that people earning up to Rs. 12 lakh will not have to pay any income tax. This is a big relief for taxpayers and especially the middle class. Also, effectively those earning up to Rs 13 lakh will now be able save income tax as over and above the Rs 12 lakh income limit, there is a standard deduction of Rs 75,000, and a marginal relief of around Rs 30,000.
In addition, the income tax slabs and rates are being changed to make the system fairer. People earning up to Rs 25 lakh will get a tax benefit of up to Rs. 1.1 lakh, reducing the financial burden on middle-income earners. A person earning Rs. 12 lakh will save Rs. 80,000 in taxes. Someone with Rs. 18 lakh income will save Rs. 70,000.
In the new tax regime, the revised tax rate structure is Rs 0-4 lakh (zero tax), Rs 4-8 lakh (5 per cent), Rs 8-12 lakh (10 per cent), Rs 12-16 lakh (15 per cent), Rs 16-20 lakh (20 per cent), Rs 20-24 lakh (25 per cent), and above Rs 24 lakh (30 per cent).
Revised tax slabs under new tax regime
| Income Tax Slabs (Rs) | Tax Rate (%) |
| Up to 3,00,000 | 0% |
| 3,00,001 – 7,00,000* | 5% |
| 7,00,001 – 10,00,000 | 10% |
| 10,00,001 – 12,00,000 | 15% |
| 12,00,001 – 15,00,000 | 20% |
| Above 15,00,000 | 30% |
Income Tax Slab Under Old Tax Regime AY 2024-25
The government has not introduced any revisions in the income tax slabs under the old tax regime. The slabs vary based on the taxpayer’s age, offering different exemption limits for general taxpayers, senior citizens, and super senior citizens.
Deductions available Under the Old Tax Regime
Taxpayers opting for the old tax regime can continue to avail deductions under:
- Section 80C: Up to Rs 1.5 lakh for investments in PPF, ELSS, LIC, etc.
- Section 80D: Up to Rs 25,000 for health insurance (Rs 50,000 for senior citizens).
- Section 80TTA: Up to Rs 10,000 deduction on interest from savings accounts.
- Section 80CCD(1B): Additional Rs 50,000 deduction on NPS contributions.
- Exemptions on House Rent Allowance (HRA) and Leave Travel Allowance (LTA).
- Under the old tax regime, individuals with taxable income up to Rs 5 lakh qualify for a tax rebate under Section 87A, ensuring zero tax liability.
