New Tax Slabs in India (2025) and Their Benefits
In the Union Budget 2025, India introduced revised income tax slabs under the new tax regime, effective from April 1, 2025. The updated tax structure is as follows:
| Annual Income (₹) | Tax Rate (%) |
|---|---|
| 0 – 4,00,000 | 0 |
| 4,00,001 – 8,00,000 | 5 |
| 8,00,001 – 12,00,000 | 10 |
| 12,00,001 – 16,00,000 | 15 |
| 16,00,001 – 20,00,000 | 20 |
| 20,00,001 – 24,00,000 | 25 |
| Above 24,00,000 | 30 |
Key updates include an increased basic exemption limit from ₹3 lakh to ₹4 lakh, a higher standard deduction of ₹75,000 (up from ₹50,000), and an enhanced tax rebate under Section 87A. This rebate ensures that individuals with a taxable income of up to ₹12 lakh pay no income tax.
Benefits of the New Tax Slabs:
- Higher Savings: With increased exemptions and deductions, taxpayers will retain more of their income, boosting their savings potential.
- Simplified Tax Filing: The streamlined slab structure makes it easier for individuals to understand and calculate their tax obligations.
- Support for Middle-Income Groups: Reduced tax rates for middle-income earners encourage higher spending, potentially stimulating economic growth.
- Attractive New Tax Regime: The benefits are designed to make the new tax regime more appealing compared to the older one, encouraging more people to shift to it.
These reforms aim to reduce the tax burden, encourage consumer spending, and simplify tax compliance for individuals.