New Tax Regime for 2025: Key Updates
The Union Budget 2025 has introduced significant changes to the income tax slabs in India. Here’s a breakdown of the key updates:
Revised Tax Slabs:
| Income Range | Old Tax Rate | New Tax Rate |
|---|---|---|
| Up to Rs 3 lakh | No tax | – |
| Up to Rs 4 lakh | 5% | No tax |
| Rs 4 lakh to Rs 5 lakh | 5% | 5% |
| Rs 5 lakh to Rs 8 lakh | 20% | 5% |
| Rs 8 lakh to Rs 10 lakh | 20% | 10% |
| Rs 10 lakh to Rs 12 lakh | 30% | 10% |
| Rs 12 lakh to Rs 16 lakh | 30% | 15% |
| Rs 16 lakh to Rs 20 lakh | 30% | 20% |
| Rs 20 lakh to Rs 24 lakh | 30% | 25% |
| Above Rs 24 lakh | 30% | 30% |
Key Changes:
- Increased Exemption Limit: The zero-tax ceiling has been raised from Rs 3 lakh to Rs 4 lakh.
- Revised Slab Structure: The income tax slabs have been restructured, with changes in the income ranges for each tax rate.
- Higher Tax Rates for Higher Incomes: The new regime introduces higher tax rates for individuals with income above Rs 16 lakh, with a maximum rate of 30% for income above Rs 24 lakh.
Impact on Taxpayers:
The new tax regime aims to provide relief to middle-class taxpayers by increasing the exemption limit and reducing the tax burden for lower-income groups. However, individuals with higher incomes may face increased tax liability due to the higher tax rates in the upper slabs.
Old vs. New Regime:
Taxpayers can choose between the new tax regime and the old tax regime. The old regime offers various deductions and exemptions, while the new regime offers lower tax rates but fewer deductions. Individuals should carefully evaluate both options to determine the most beneficial regime for their specific financial situation.
Additional Points:
- The government may provide rebates to those earning up to Rs 12 lakh, effectively making income up to this amount tax-free.
- The standard deduction for salaried individuals has been increased to Rs 75,000.
Conclusion:
The new tax regime for 2025 brings significant changes to the income tax structure in India. While it aims to provide relief to middle-class taxpayers, it also introduces higher tax rates for higher income groups. Taxpayers should carefully assess their financial situation and compare both the new and old regimes to make an informed decision about their tax options.
What’s Cheaper and What’s Costlier in Union Budget 2025?
Here’s what you need to know about what’s becoming more affordable and what might pinch your pockets a bit more:
Cheaper:
| Category | Details |
|---|---|
| Medicines | 36 life-saving medicines, including those for cancer and rare diseases, fully exempt from BCD. |
| Critical Minerals | Cobalt and lithium-ion battery scrap exempt from BCD. |
| Textile Machinery | Two new types of looms exempt from BCD. |
| Electronics | BCD on parts for making LED/LCD TVs and mobile phone batteries reduced or exempted. |
| Mobile Phones | 28 more goods used in mobile phone battery production added to the exempted capital goods list. |
| Seafood | Import duties on frozen fish paste and fish hydrolysate cut. |
| Leather | Wet Blue leather imports exempt from BCD, export duty on crust leather removed. |
| Handicrafts | Export timeline extended, easing the process for exporters. |
| Shipbuilding | Raw materials for shipbuilding and repairs exempt from BCD for the next ten years. |
Costlier:
| Category | Details |
|---|---|
| Electronics (IFPD) | BCD on Interactive Flat Panel Displays increased from 10% to 20%. |
| Textiles (Knitted Fabrics) | BCD on knitted fabrics revised, leading to a slight price increase. |
Economic Outlook:
The Economic Survey presented in Parliament projects India’s economic growth to be between 6.3% and 6.8% for the financial year 2025-26. The survey indicates stable economic fundamentals, thanks to a strong external account, fiscal discipline, and private consumption. It also highlights the government’s focus on supporting long-term industrial growth through research and development, MSMEs, and capital goods.
Food inflation is expected to decrease in the last quarter of FY25 due to lower vegetable prices and the arrival of the Kharif harvest. A good Rabi harvest may help control food prices in early FY26. However, inflation risks remain due to uncertain weather and rising global agricultural prices.
Stay tuned for more updates on the Union Budget 2025 and how it affects you!
