Income Tax Slabs 2025 No income tax upto Rs 12 lakhs, check new slab rates here

Income Tax Slabs 2025: No income tax upto Rs 12 lakhs, check new slab rates here

Income Tax Slabs 2025: No Tax on Income up to ₹12 Lakh in the New Regime

Finance Minister Nirmala Sitharaman, in her Union Budget 2025 speech, delivered great news for taxpayers—no income tax will be charged on earnings up to ₹12 lakh under the new tax regime. This move aims to make taxation simpler and more beneficial, especially for the middle class.

Along with this, tax slabs have been restructured to create a more progressive system. Individuals earning up to ₹25 lakh can now enjoy tax benefits of up to ₹1.1 lakh, providing some much-needed financial relief.

New Tax Slabs for AY 2025-26

Income Range (₹ in Lakh)Tax Rate (%)
0 – 4 lakhNil
4 – 8 lakh5%
8 – 12 lakh10%
12 – 16 lakh15%
16 – 20 lakh20%
20 – 24 lakh25%
Above 24 lakh30%

Thanks to the revised rules, income up to ₹12 lakh is tax-free, and with standard deductions, this increases to ₹12.7 lakh. However, this benefit is only available if taxpayers claim exemptions under sections like 80C (₹1.5 lakh), 80CCC, and home loan interest deductions.

What FM Sitharaman Said:

“For taxpayers earning up to ₹12 lakh in regular income (excluding special rate income like capital gains), we are providing a tax rebate, ensuring they pay no tax at all.”

For those earning beyond this limit, the tax rates will apply in a structured manner. Income up to ₹4 lakh remains fully tax-free, while different slabs follow a progressive tax structure, capping at 30% for income above ₹24 lakh.


Key Takeaways of the 2025 New Tax Regime:

  • No income tax on earnings up to ₹12 lakh
  • Simplified slabs with reduced rates for middle-class taxpayers
  • Taxpayers earning up to ₹25 lakh get benefits up to ₹1.1 lakh
  • 30% tax rate only for income above ₹24 lakh

Comparing Tax Regimes: Old vs New (AY 2024-25)

While the new Income Tax regime became the default choice from April 1, 2023, taxpayers without business income can still opt for the old Income Tax regime each financial year. Here’s how they compare:

Current Tax Slabs (New Regime)

Income Slab (₹)Tax Rate (%)
Up to 3,00,0000%
3,00,001 – 7,00,0005%
7,00,001 – 10,00,00010%
10,00,001 – 12,00,00015%
12,00,001 – 15,00,00020%
Above 15,00,00030%

An additional 4% cess applies, along with surcharges for high-income earners.

Old Tax Regime Slabs (For Individuals Below 60 Years)

Income Slab (₹)Tax Rate (%)
Up to 2,50,0000%
2,50,001 – 5,00,0005%
5,00,001 – 10,00,00020%
Above 10,00,00030%

Deductions Available in the Old Regime:

  • Section 80C – ₹1.5 lakh for PPF, ELSS, LIC, etc.
  • Section 80D – Up to ₹25,000 for health insurance (₹50,000 for seniors).
  • Section 80TTA – ₹10,000 deduction on savings account interest.
  • Section 80CCD(1B) – Additional ₹50,000 deduction for NPS.
  • HRA & LTA Exemptions

Under the old regime, those earning up to ₹5 lakh get a full tax rebate under Section 87A, ensuring zero tax liability.


Surcharge Rates: Who Pays More?

Income (₹)Surcharge (New Regime)Surcharge (Old Regime)
Up to 50 lakhNilNil
50 lakh – 1 crore10%10%
1 crore – 2 crore15%15%
Above 2 crore25%37%

🔹 Key Difference: The old regime applies a 37% surcharge for ultra-high earners (₹5 crore+), while the new regime caps it at 25%.


Choosing the Right Tax Regime

Since April 1, 2023, the new regime is the default, meaning your taxes will be automatically calculated under it unless you opt for the old regime.

🔹 Who should choose the new tax regime?

  • Salaried individuals with no major deductions (e.g., HRA, investments in 80C, etc.).
  • Those who prefer simpler tax calculations with lower base rates.

🔹 Who should stay in the old regime?

  • Individuals with home loans, insurance policies, tuition fees, and HRA benefits.
  • Taxpayers who maximize deductions (80C, 80D, etc.) to lower taxable income.


Final Thoughts

The 2025 budget has made taxation simpler and more beneficial for many taxpayers, particularly the middle class. While the new tax regime removes deductions, it offers lower Income Tax rates and increased exemptions, making it an attractive option for many.

If you have significant deductions, the old regime might still be better. Otherwise, the new Income Tax regime provides a hassle-free way to pay lower taxes.

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