Year Ender 2025: Tax Policy Changes And Their Real Impact On Salaried Individuals And Corporates

Budget 2025 brought about significant changes in the taxes for salaried individuals and corporates. We take a look.

What Changed For Salaried Individuals 

For salaried individuals, the biggest shift has been the growing emphasis on the new tax regime.

In 2025, tax policy focused on simplification and relief. “For individuals, since the new tax regime brought with it wider slabs, an increased rebate and a higher standard deduction, it became more lucrative and attractive since it effectively made income up to about Rs 12–12.75 lakh tax-free for many salaried taxpayers, which basically resulted in higher disposable income,” says Ritika Nayyar, partner, Singhania & Co. People with an income up to the threshold limit will be left with an additional Rs 80,000 in hand every year.

For salaried individuals, the biggest shift has been the growing emphasis on the new tax regime. The new tax regime offers lower rates, but it does away with almost all the deductions, like those on housing loans, insurance premiums, and provident fund contributions. Also, from Financial Year (FY) 2023-24, the new tax regime is the default tax regime, which means that one needs to opt into the old tax regime.

An individual needs to calculate their taxes under both regimes to see where the taxes are lower. The old tax regime might make sense only if one is availing maximum deductions under 80C and also on a home loan. It is likely that, going ahead, the old tax regime may be abolished. What this means is that taxpayers may not be encouraged to save or invest to save taxes, and investments need to be driven by financial goals and not by tax deductions. Thus, the take-home pay for middle-income salaried individuals has gone up.

This has also made it simpler for taxpayers, as under the new tax regime, they do not need to provide proof for various deductions, and the changed tax slabs and deductions make the process automatic.

What Had Changed For Corporates 

For corporates, tax rates were mostly stable, though the emphasis was to streamline compliance through clarity in provisions, digital systems, etc., which would ultimately result in reducing litigation and uncertainty. “Primarily, it aimed to bring in simplicity, certainty, and better growth for the economy as a whole,” says Nayyar.