
In Union Budget 2025 Finance Minister Mrs. Nirmala Sitharaman has announced new income tax slabs.
The new income tax slabs under new tax regime are as follows:
Taxable Income (in rupees) | Tax Rate |
0 to 4 Lakhs | NIL |
4 Lakhs to 8 Lakhs | 5% |
8 Lakhs to 12 Lakhs | 10% |
12 Lakhs to 16 Lakhs | 15% |
16 Lakhs to 20 Lakhs | 20% |
20 Lakhs to 24 Lakhs | 25% |
Above 24 Lakhs | 30% |
No Tax if Individual is having taxable income below INR 12 Lakhs (INR 12.75 Lakhs including standard deduction) under New Tax Regime
Government has increased the tax rebate under section 87A, because of this the individuals whose taxable income is below INR 12 Lakhs will not have to pay tax.
The new income tax slabs and above rebate under section 87A will be effective from 1st April 2025 for Financial Year 2025-26, provided the proposed bill is passed by parliament as is.
In the union budget 2024-25, government increased the limit of standard deduction from INR 50,000 to INR 75,000 in the New Tax Regime for salaried and pensioners.
Hence, as per the Finance Bill presented today on 1st February 2025 by FM Nirmala Sitharaman there would be no tax if the taxable income of salaried individuals is below INR 12.75 Lakhs.
These updates are aimed at boost the demand in the economy by leaving more money in the hands of tax payers especially middle class by substantially reducing their tax burden.
Other notable changes in Finance Bill (in Income Tax / TDS / TCS provisions)
- Threshold for TDS on Rent is increased from INR 2.4 Lakhs to INR 6 Lakhs per annum. This mean entities (other than individual & HUF) are required to deduct TDS if annual rent payment exceeds INR 6 Lakhs.
- Threshold for TCS on remittances under Liberalised Remittance Scheme (LRS) is increased from INR 7 Lakhs to INR 10 Lakhs per annum. This means no TCS will be collected on foreign remittance under LRS scheme if annual remittance amount is below INR 10 Lakhs.
- Threshold under section 194J, towards fee for professional or technical services is increased from INR 30,000 to INR 50,000 in a financial year.
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