Big update for taxpayers. There’s less than a month to go before the unveiling of the General Budget for 2025-26. The government has the opportunity to introduce incentives for taxpayers to encourage the adoption of the new tax regime in this upcoming budget. In the previous Budget 2024, Finance Minister Nirmala Sitharaman made notable adjustments to the income tax slabs under the new tax regime, aiming to make it more appealing to taxpayers. Alongside these changes, the standard deduction limit has also been raised. Additionally, modifications have been made regarding employees’ contributions to the Family Pension and National Pension System (NPS). However, the old tax regime remains unchanged. The new tax regime was first introduced by Finance Minister Nirmala Sitharaman in her budget presentation on February 1, 2020.
Here are 5 key highlights of the new tax regime:
The income tax slabs have been revised under the new tax regime. There will be no tax on income up to Rs 3 lakh. For income between Rs 3 lakh and Rs 7 lakh, the tax rate is 5%, while income from Rs 7 lakh to Rs 10 lakh will be taxed at 10%. Income between Rs 10 lakh and Rs 12 lakh will incur a tax of 15%, and income from Rs 12 lakh to Rs 15 lakh will be taxed at 20%. Any income exceeding Rs 15 lakh will continue to be taxed at 30%.
– Up to 3 lakh – No tax
– 3-7 lakh – 5%
– 7-10 lakh – 10%
– 10-12 lakh – 15%
– 12-15 lakh – 20%
– Above 15 lakh – 30%
Standard Deduction for Salaried Individuals
The government has increased the standard deduction limit for salaried individuals from Rs 50,000 to Rs 75,000 under the new tax regime.
Standard Deduction for Family Pensioners
For family pensioners, the standard deduction limit has been raised from Rs 15,000 to Rs 25,000.
National Pension System (NPS)
According to Section 80CCD(2), employees can enjoy tax-free contributions of up to 10% of their basic salary in the pension scheme. For those opting for the new tax regime, this limit is increased to 14%.
How much tax can you save?
With the adjustments made to the income tax slabs under the new tax regime, taxpayers have the potential to save more.
