The Union Budget 2025, presented by Finance Minister Nirmala Sitharaman on February 1, 2025, introduced significant changes to India's income tax structure. The revisions aim to provide tax relief to individuals, boost consumption, and drive economic growth.
Revised Income Tax Slabs for FY 2025-26
The new tax regime has restructured the income tax slabs as follows:
- Income from ₹0 to ₹04 lakh → No tax
- Income from ₹04 lakh to ₹08 lakh → 5%
- Income from ₹08 lakh to ₹12 lakh → 10%
- Income from ₹12 lakh to ₹16 lakh → 15%
- Income from ₹16 lakh to ₹20 lakh → 20%
- Income from ₹20 lakh to ₹24 lakh → 25%
- Income above ₹24 lakh → 30%
This adjustment raises the tax-free income threshold to ₹12 lakh, providing substantial relief to middle-class taxpayers.
Impact on Taxpayers
- Higher Disposable Income: With the tax-free limit raised and lower tax rates for mid-income earners, individuals will have more disposable income.
- Encouragement for Higher Earnings: Reduced tax burden in higher income brackets makes earning more financially rewarding.
- Simplified Taxation: The new structure makes compliance easier, reducing the complexities of the previous regime.
Other Key Tax Announcements
Apart from changes in tax slabs, the Union Budget 2025 also introduced:
1. Higher Deductions for Salaried and Pensioners
- Standard Deduction increased from ₹50,000 to ₹75,000
- Higher deduction limits for NPS contributions
2. Incentives for Homebuyers
- New ₹2 lakh deduction on interest paid for first-time homebuyers under affordable housing schemes
3. Digital Transactions and Compliance Ease
- Reduced TDS rates on digital payments to freelancers and professionals
- Simplified GST returns for small businesses
Additional Budget Highlights
- Agriculture: Special incentives for farmers to increase crop production.
- Startups & MSMEs: Lower tax rates and extended tax holiday benefits.
- Clean Energy: ₹1 lakh crore fund for green energy projects, including solar and nuclear initiatives.
Conclusion
The Union Budget 2025's revised income tax slabs provide relief to individual taxpayers and promote economic growth. With a higher tax-free limit and lower mid-income tax rates, individuals will have more savings and investment opportunities.
Taxpayers should review their financial plans and consult professionals for effective tax planning under the new regime.
For expert guidance on tax planning and compliance, contact Verotus Finlegal Solutions LLP at 7066336680 or visit www.verotusllp.com.
