The Union Budget 2025, presented by Finance Minister Nirmala Sitharaman on February 1, 2025, introduces significant changes to India’s income tax structure, aiming to enhance the spending power of the middle class and stimulate economic growth.
Previous Income Tax Slabs:
Under the old tax regime, the income tax slabs were as follows:
- Up to ₹2,50,000: No tax
- ₹2,50,001 to ₹5,00,000: 5%
- ₹5,00,001 to ₹10,00,000: 20%
- Above ₹10,00,000: 30%
These rates applied to individuals below 60 years of age.
Revised Income Tax Slabs in Budget 2025:
The new tax regime has restructured the income tax slabs to provide relief to taxpayers:
- Up to ₹4,00,000: No tax
- ₹4,00,001 to ₹8,00,000: 5%
- ₹8,00,001 to ₹12,00,000: 10%
- ₹12,00,001 to ₹16,00,000: 15%
- ₹16,00,001 to ₹20,00,000: 20%
- ₹20,00,001 to ₹24,00,000: 25%
- Above ₹24,00,000: 30%
The standard deduction for salaried individuals has also increased from ₹50,000 to ₹75,000.
Key Highlights:
- Increased Tax-Free Income Threshold: The tax-free income threshold has been raised to ₹4,00,000, providing relief to low-income earners.
- Simplified Tax Structure: The revised slabs aim to simplify the tax structure and reduce the tax burden on the middle class.
- Encouragement for Higher Earnings: The new slabs are designed to incentivize individuals to increase their earnings without the fear of a steep tax burden.
Impact on Taxpayers:
The revised tax slabs are expected to leave more disposable income in the hands of taxpayers, thereby boosting consumption and contributing to economic growth. For instance, individuals earning up to ₹12,00,000 will now fall under a lower tax bracket than the previous regime, resulting in significant tax savings.
In summary, the Union Budget 2025 introduces substantial reforms in the income tax structure, aiming to provide relief to taxpayers and stimulate economic activity.
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