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Finance Minister Nirmala Sitharaman announced a significant change in the Union Budget 2025, raising the income tax rebate limit under the new tax regime. Individuals with a net taxable income up to ₹12 lakh will now pay zero tax. For salaried individuals, the tax-free threshold increases to ₹12.75 lakh, thanks to the standard deduction benefit of ₹75,000. This is a substantial rise from the previous ₹7 lakh limit.
The revised tax slabs are as follows:
- ₹0 to ₹4 lakh: Nil tax
- ₹4 lakh to ₹8 lakh: 5% tax
- ₹8 lakh to ₹12 lakh: 10% tax
- ₹12 lakh to ₹16 lakh: 15% tax
- ₹16 lakh to ₹20 lakh: 20% tax
- ₹20 lakh to ₹24 lakh: 25% tax
- Above ₹24 lakh: 30% tax
The rebate under Section 87A has been increased from ₹25,000 to ₹60,000. However, this rebate does not apply to special rate incomes like capital gains. The new tax regime aims to simplify tax compliance and provide relief to middle-class taxpayers, promoting higher disposable income and boosting consumption.
