Budget 2025: Govt Revises Tax Slabs Under New Tax Regime, Know Details

Union Minister of Finance Nirmala Sitharaman announced changes in the tax slab rates under the new tax regime in her Budget Speech in Parliament, as part of the government’s effort to boost consumption and put more money at the disposal of people.

A major change in Budget 2025-26 was regarding the revision of income tax slab rates (under the new tax regime) and an increase in the limit of Rebate under Section 87A.

Now, taxpayers earning a net income of Rs 12 lakh (other than special rate income such as capital gains) will have to pay nil income tax under the new tax regime.

Says Suresh Surana, chartered accountant: “This income limit will be Rs 12.75 lakh for salaried taxpayers, due to standard deduction of Rs. 75,000 under the new regime. The relevant changes have been made to Section 87A providing a rebate of Rs. 60,000 from existing Rs. 25,000. This rebate is available only for individual residents in India.”

He adds, “Special rates income like capital gains would not be eligible for Rebate of tax u/s 87A.”

Individuals, Hindu Undivided Families (HUFs), association of persons, body of individuals, artificial juridical persons having higher income above Rs. 12 lakh (under the new tax regime) will pay taxes as per the revised slab rates as follows:

0- Rs 4 lakh: No Tax

Rs 4 -8 lakh: 5 per cent

Rs 8 to Rs 12 lakh: 10 per cent

Rs 12 - Rs 16 lakh: 15 per cent

Rs 16-20 lakh: 20 per cent

Rs 20-Rs 24 lakh: 25 per cent

Above Rs 24 lakh: 30 per cent

The income slabs and tax rates remain unchanged for the old tax regime.

Here’s the Old Tax Regime Structure:

Up to Rs 2.5 lakh: Nil

Rs 2.5 - Rs 3 lakh: 5 per cent

Rs 3 - Rs 5 lakh: 5 per cent

Rs 5 to Rs 10 lakh: 20 per cent

Rs 10 lakh and above: 30 per cent

Catch all latest Budget 2025 Updates Here

Implications Of This Tax Revision

According to experts, the new slab structure will substantially reduce the taxes of middle class people and boost consumption.

“The new slab structure under new regime will substantially reduce the taxes of the middle class people and would leave more money in their hands, boosting household consumption, savings and investment and thereby boosting the Indian economy at large,” says Surana.

While the full extent of measures announced today will be understood once the new Income Tax Bill is announced, for now it looks like a big relief to the middle class.

Adds Sumit Rai, managing director and CEO Edelweiss Life Insurance, “While we will understand the full extent of the measures once the new Income Tax Bill is announced, prima facie it looks like a big relief to the middle class. It can potentially accelerate financialisation of savings, as disposable income improves. It will also boost consumption, thereby supporting the overall economic growth. Having said that, we expect the new Income Tax Bill might provide clarity on whether deductions under old regime will remain available.”