The Union Budget 2025 has introduced groundbreaking changes to the income tax structure, offering significant relief to middle-class taxpayers in India. With revised tax slabs and enhanced exemptions, the government aims to reduce the financial burden on individuals while promoting economic growth. In this article, we’ll explore the new income tax slabs for FY 2025-26, the major tax relief for incomes up to ₹12 lakh, and why filing your Income Tax Return (ITR) is still essential.
Comparison of Old vs. New Tax Regime
The Union Budget 2025 has revised the income tax slabs to make taxation more progressive and taxpayer-friendly. Here’s a detailed comparison of the new tax slabs for 2025-26 versus the previous year:
Financial Year 2025-26
| Income Range | Tax Rate (2025-26) |
|---|---|
| Up to ₹4 lakh | No Tax (Nil) |
| ₹4 lakh – ₹8 lakh | 5% |
| ₹8 lakh – ₹12 lakh | 10% |
| ₹12 lakh – ₹16 lakh | 15% |
| ₹16 lakh – ₹20 lakh | 20% |
| ₹20 lakh – ₹24 lakh | 25% |
| Above ₹24 lakh | 30% |
Financial Year 2024-25
| Income Range | Tax Rate (FY 2024-25) |
|---|---|
| Up to ₹3 lakh | No tax |
| ₹3 lakh – ₹7 lakh | 5% |
| ₹7 lakh – ₹10 lakh | 10% |
| ₹10 lakh – ₹12 lakh | 15% |
| ₹12 lakh – ₹15 lakh | 20% |
| ₹15 lakh and above | 30% |
Compare to last financial year budget to this year budget we can find the following differences:
-
- In the FY 24-25 no tax up to 7 lakhs but this year up to 12 lakhs
- In the FY 24-25 difference between tax range is 3 lakhs commonly but this year 4 lakhs rupees
- In the FY 24-25 30% tax for above 15 lakhs but this year 24 lakh rupees
To calculate your tax amount according to the new Tax slab Click Here
Here’s a detailed breakdown of the new tax slabs for FY 2025-26. For a visual explanation, check out this video:
No Tax up to ₹12 Lakh: Major Relief for Middle-Class
One of the most significant announcements in the Union Budget 2025 is the tax relief for individuals earning up to ₹12 lakh per annum. While the tax slabs indicate a liability starting from ₹4 lakh, the government has introduced deductions and exemptions of ₹75,000, ensuring that no tax is payable for incomes up to ₹12 lakh.
Key Points:
- No Tax Payable: If your income is below ₹12 lakh, you won’t need to pay any tax after claiming deductions.
- File ITR Mandatory: Even if no tax is payable, filing your Income Tax Return (ITR) is compulsory to claim these benefits and comply with financial regulations.
- Example: If your income is ₹12,75,000, you’ll receive a standard deduction of ₹75,000, bringing your taxable income to ₹12 lakh. No tax is payable in this case.
Why Filing ITR is Mandatory Even with No Tax Liability?
You might wonder why you need to file an ITR if no tax is due. Here’s why:
- Claim Refunds: Filing your ITR ensures you can claim refunds for any excess tax deducted (e.g., TDS).
- Financial Compliance: ITR filing is a legal requirement and helps maintains financial transparency.
- Future Benefits: A filed ITR is often required for loans, visas, and government schemes.
Government’s Focus on Middle-Class Welfare
The Union Budget 2025 highlights the government’s commitment to supporting the middle class, a key driver of India’s economic growth. By exempting incomes up to ₹12 lakh from taxation, the government aims to:
- Increase disposable income for individuals.
- Boost consumer spending and investments.
- Stimulate overall economic activity.
New Tax Slabs Effective from Next Week
The revised tax slabs will come into effect starting next week, providing immediate relief to taxpayers. Individuals and businesses are advised to:
- Review their financial plans.
- Ensure timely filing of ITR to avail of the new benefits.
FAQs on Union Budget 2025 Tax Changes
- What is the new tax regime in Budget 2025?
The new tax regime offers lower tax rates with fewer deductions. For FY 2025-26, incomes up to ₹12 lakh are effectively tax-free after deductions.
- How to claim tax exemptions up to ₹12 lakh?
To claim exemptions, ensure you file your ITR and provide details of eligible deductions (e.g., standard deduction of ₹75,000).
- Is filing ITR mandatory if no tax is payable?
Yes, filing ITR is mandatory if your income exceeds the basic exemption limit (₹2.5 lakh for individuals below 60 years).
Conclusion
The Union Budget 2025 marks a significant step toward easing the tax burden on middle-class taxpayers. With no tax payable for incomes up to ₹12 lakh and simplified tax slabs, the government has demonstrated its focus on economic inclusivity and growth. However, taxpayers must ensure timely filing of ITR to comply with regulations and claim benefits.
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