Income Tax Budget 2025
Income Tax Budget 2025: The Finance Minister has introduced substantial savings for individuals earning above ₹15 lakh by significantly reducing tax rates for incomes between ₹15 lakh and ₹24 lakh.
The income tax rebate limit from ₹7 lakh to ₹12 lakh, effectively ensuring that individuals earning up to ₹12 lakh will have zero tax liability.
Does this mean that someone earning ₹15 lakh will only be taxed on ₹3 lakh?
No, the rebate applies only to those earning up to ₹12 lakh. If your taxable income exceeds ₹12 lakh, even by a single rupee, you will have to pay taxes according to the new tax regime’s slab rates.
Previously, under the new tax regime, individuals earning ₹12 lakh had to pay ₹80,000 in taxes. However, with the revised tax structure, if your taxable income is ₹12.1 lakh, your tax liability would now be ₹61,500. This means that once your income crosses ₹12 lakh, you no longer qualify for the full rebate, and standard tax rates will apply to your entire taxable income.
How Will Your Taxes Be Affected by the New Tax Regime?
See how your taxes compare between the previous New Tax Regime and the updated version introduced in the latest budget.
This is because, if your income is above ₹12 lakh, you’ll be taxed at different rates for different income ranges. You’ll pay 5% on income between ₹4 lakh and ₹8 lakh, 10% on income between ₹8 lakh and ₹12 lakh, and 15% on income between ₹12 lakh and ₹16 lakh. So, for someone earning ₹15 lakh, the total tax would be ₹1,05,000.
What Are the Benefits for Those Earning Above ₹15 Lakh?
The Finance Minister has introduced significant tax relief for those earning above ₹15 lakh by reducing tax rates for incomes between ₹15 lakh and ₹24 lakh. Previously, incomes above ₹15 lakh were taxed at a flat 30%. Now, the tax structure is more tiered: income between ₹12 lakh and ₹16 lakh will be taxed at 15%, income between ₹16 lakh and ₹20 lakh at 20%, and income between ₹20 lakh and ₹24 lakh at 25%. The 30% tax rate will only apply to income above ₹24 lakh. As a result, individuals earning above ₹24 lakh could save up to ₹1.1 lakh under the new tax regime.
