New income tax slabs in Budget 2025
By Sharawan Rawat February, 01 2025 07:34 AMNew income tax slabs have been announced by Finance Minister Nirmala Sitharaman in the Union Budget 2025. A big update for salaried taxpayers, Finance Minister Nirmala Sitharaman announced that there will be no income tax to be paid for income levels up to Rs 12 lakh. This limit will be Rs 12.75 lakh for salaried tax payers, due to standard deduction of Rs 75,000.
The new income tax slabs under new tax regime are as follows:
| Income tax slabs (In Rs) | Income tax rate (%) |
| up to 400000 | 0 |
| 400001 – 800000 | 5% |
| 800001 – 1200000 | 10% |
| 1200001 – 1600000 | 15% |
| 1600001 – 2000000 | 20% |
| 2000001 – 2400000 | 25% |
| Above 2400001 | 30% |
0 tax income up to 400000, 5% tax income up to 800000, 10% tax on income up to 12lac, 15% tax on income up to 16lac and 20% tax on income up to 20lac.
30% tax now starts at Rs 24 lakh, 25%and New tax rate introduced for incomes between Rs 20-Rs 24 lakh 24%
A tax payer in the new regime with an income of Rs 12 lakh will get a benefit of Rs 80,000 in tax (which is 100% of tax payable as per existing rates).
A person having income of Rs 18 lakh will get a benefit of Rs 70,000 in tax (30% of tax payable as per existing rates).
A person with an income of Rs 25 lakh gets a benefit of Rs 1,10,000 (25% of his tax payable as per existing rates).
The government will set up a new Fund of Funds for startups with an investment of Rs 10,000 crore. This fund will then give money to Alternative Investment Funds directly investing in startups. The central government launched the Fund of Funds Scheme for Startups in 2016, with an initial investment of Rs 10,000 crore.
The central government will register gig workers on the e-Shram portal. By issuing unique identification numbers, gig workers will be provided healthcare under PM Jan Arogya Yojana and other benefits.
Infra-related ministries will develop 3-year plans for projects that can be implemented under the Public-Private Partnership model. The government has also proposed Rs 1.5 lakh crore for capital expenditure via 50-year interest-free loans to states.
To develop 100 GW of nuclear energy by 2047, the government proposed operationalizing at least 5 Small Modular Reactors (SMRs) by 2033. A Rs 20,000 crore investment will establish a Nuclear Energy Mission for the development of SMRs.
A Maritime Development Fund with a capital of Rs 25,000 crore will be set up. The government will contribute up to 49% of the fund.
Increase in the foreign direct investment (FDI) limit for the insurance sector from 74% to 100% has been made.
The government has also estimated the fiscal deficit to be 4.4% of GDP in the upcoming financial year (vs 4.8% for FY25).
How to calculate your tax under new tax slab
If your total income is 12lac per year you don’t need to pay any tax if you are a salaried person then you will get 75000 standard deduction so you don’t need to pay tax on 1275000 income in a year.
If you getting more than 12lac then you need to calculate your tax as per given calculation below.
suppose your salary is 15lac then you need to calculate:
Your taxable income 15lac – 75000 = 1425000
up to 4lac = 0
4lac to 8lac = income 4lac 5% = 20000
8lac to 12lac = income 4lac 10% = 40000
12lac to 1425000 = income 225000 15% = 33750
Total tax = 93750 on net income of 15lac
What is Standard Deduction
Standard deduction on income tax was introduced in Interim Budget 2019 and replaced two deductions that were offered earlier – travel allowance and medical deduction. The standard deduction is a flat amount deducted from taxable salary income, allowing taxpayers to reduce their taxable income without submitting any proof or disclosures.
Finance Minister Nirmala Sitharaman announced an increase in the standard deduction for salaried individuals from ₹50,000 to ₹75,000 in Budget 2025 for New tax regime, offering further relief to salaried individuals.
How Can Reduce Taxable Income with Standard Deduction ?
To get better understanding how salaried tax payers and pensioners can benefit from standard deduction on salary, let’s consider an example:
Sumit’s gross salary is ₹15 lakh. Person has decided to select the New tax regime. In this case, net taxable income before Section 80C deduction will look like this:
| Annual Salary | ₹15 lakh |
| Standard Deduction | (-)₹75,000 |
| Net Taxable Income | ₹14.25 lakh |
| Tax Savings due to standard deduction | ₹11,250 |
