Income Tax Slabs 2025 How to calculate ?
Budget 2025 Income Tax Updates: The middle class was hoping for a favourable change in the income tax slabs ahead of the Union Budget 2025-26, and they were not disappointed. Check which income tax regime will work best for you—the old one, the new (existing one), or the new (proposed one).
Budget 2025-26 highlights
NPS Vatsalya to be treated at par with other NPS accounts
Section 87A rebate under the new tax regime has been increased from Rs 25,000 to Rs 60,000
The basic income tax exemption limit was raised from Rs 3,00,000 in the existing new regime to Rs 4,00,000 in proposed new regime
Proposed increase in TCS threshold on remittances under RBI’s Liberalized Remittance Scheme (LRS) from Rs. 7 lakh to Rs. 10 lakh
TCS is not applicable to educational remittances funded by loans from specified financial institutions
Time for filing updated returns for any AY extended by 2 years
No Income payable on income of up to Rs 12,00,000 in the new tax regime
Here is what the new (proposed) tax regime will now look like:
Zero to Rs 4,00,000- No Tax
Rs 4,00,000 to Rs 8,00,000—5%
Rs 8,00,0001 to Rs 12,00,000—10%
Rs 12,00,001 to Rs16 lakh–15%
Rs 16,00,001 to Rs 20 lakh–20%
Rs 20,00,001 to Rs 24 lakh– 25%
Above 24 lakh—30%
Your total tax liability before any deductions and rebates is calculated as follows:
Rs 4–Rs 8 lakh slab (5%) = Rs 20,000
Rs 8–Rs 12 lakh slab (10%) = Rs 40,000
Total tax liability = Rs 60,000
How tax rebate and Standard Deduction reduce tax to zero
Section 87A rebate has been increased from Rs 25,000 to Rs 60,000, which offsets the entire tax liability of Rs 60,000.
Additionally, a standard deduction of Rs 75,000 further benefits taxpayers. This means that for an annual income of Rs 12.75 lakh (Rs 12 lakh + Rs 75,000 deduction), the final tax liability remains zero.
