Big news for income taxpayer’s. There’s not much time left in the financial year 2024-25, and the new financial year 2025-26 kicks off on April 1. If you haven’t settled your taxes yet, you’ve got until March 31, 2025, to do so.
Right now, taxpayers can choose between the New Tax Regime and the Old Tax Regime, but it can get a bit confusing. If you’re an individual taxpayer, you can switch from the New Tax Regime to the Old Tax Regime whenever you want.
For instance, if you opted for the Old Tax Regime for the 2024-25 financial year, you can switch to the New Tax Regime for 2025-26. And if you prefer, you can do the reverse as well.
The New Tax Regime was introduced by our Union Finance Minister, Nirmala Sitharaman, during the Union Budget presented in July.
Here are the updates in the New Tax Regime:
In the 2025-26 budget, Finance Minister Nirmala Sitharaman announced that there will be no tax on income up to Rs 12 lakh. Additionally, there have been changes to the tax slabs. For example, under the New Tax Regime, income between Rs 4 lakh and Rs 8 lakh is taxed at 5%. If your income is between Rs 8 lakh and Rs 10 lakh, you’ll pay 10%, and for income between Rs 12 lakh and Rs 16 lakh, the tax rate is 15%.
Moreover, if your income falls between Rs 16 lakh and Rs 20 lakh, you’ll be taxed at 20%, and for income between Rs 20 lakh and Rs 24 lakh, the tax rate is 25%.
Keep in mind that in the New Tax Regime, you won’t be able to claim many tax deductions. This means you won’t benefit from deductions under section 80C, section 80D, home loans, and more. However, you won’t have to pay any tax on income up to Rs 12 lakh.
To avoid paying taxes on income up to Rs 12 lakh, you’ll need to opt for the new tax regime. The old tax regime doesn’t provide this benefit.