The Union Budget 2025-26 has introduced significant tax relief measures, particularly benefiting the middle class. The new income tax structure offers substantial savings for taxpayers, encouraging higher household consumption and investment.
No Income Tax on Annual Income Up to Rs.12 Lakh
Under the new tax regime, individuals earning up to Rs.12 lakh annually will pay no income tax. For salaried individuals, this limit increases to Rs.12.75 lakh due to a standard deduction of Rs.75,000.
Revised Tax Slabs for FY 2025-26
The updated income tax rates under the new regime are as follows:
| Income Slab (Rs.) | Tax Rate (%) |
|---|---|
| 0 – 4 lakh | Nil |
| 4 – 8 lakh | 5% |
| 8 – 12 lakh | 10% |
| 12 – 16 lakh | 15% |
| 16 – 20 lakh | 20% |
| 20 – 24 lakh | 25% |
| Above 24 lakh | 30% |
Standard Deduction for Salaried Individuals
The standard deduction for salaried taxpayers has been increased to Rs.75,000, effectively raising the tax-free income limit to Rs.12.75 lakh for salaried employees.
Tax Benefits Under the New Regime
The following table illustrates the tax savings under the revised tax structure:
| Income | Present Tax (Rs.) | Proposed Tax (Rs.) | Benefit per Slab (Rs.) | Rebate Benefit (Rs.) | Total Benefit (Rs.) | Tax After Rebate (Rs.) |
| 8 lakh | 30,000 | 20,000 | 10,000 | 20,000 | 30,000 | 0 |
| 9 lakh | 40,000 | 30,000 | 10,000 | 30,000 | 40,000 | 0 |
| 10 lakh | 50,000 | 40,000 | 10,000 | 40,000 | 50,000 | 0 |
| 11 lakh | 65,000 | 50,000 | 15,000 | 50,000 | 65,000 | 0 |
| 12 lakh | 80,000 | 60,000 | 20,000 | 60,000 | 80,000 | 0 |
| 16 lakh | 1,70,000 | 1,20,000 | 50,000 | 0 | 50,000 | 1,20,000 |
| 20 lakh | 2,90,000 | 2,00,000 | 90,000 | 0 | 90,000 | 2,00,000 |
| 24 lakh | 4,10,000 | 3,00,000 | 1,10,000 | 0 | 1,10,000 | 3,00,000 |
| 50 lakh | 11,90,000 | 10,80,000 | 1,10,000 | 0 | 1,10,000 | 10,80,000 |
Key Benefits of the New Tax Regime
- Higher Tax-Free Limit: Individuals earning up to Rs.12 lakh (or Rs.12.75 lakh for salaried individuals) will pay no income tax.
- Reduced Tax Burden: The revised tax slab rates significantly lower tax liability, leading to increased disposable income.
- Simplified Tax Filing: The new regime eliminates the need for complex tax deductions and exemptions, making tax compliance easier.
Conclusion
The new income tax structure for FY 2025-26 brings substantial tax relief, benefiting middle-class taxpayers and boosting economic activity. Taxpayers should evaluate their financial situation and choose the regime that best aligns with their income and investment goals.
