The much-anticipated Budget 2025 has brought significant changes, particularly in the realm of income tax. Union Finance Minister Nirmala Sitharaman presented the budget on February 1, 2025, unveiling revised tax slabs that aim to provide relief to the middle class while ensuring a fair tax structure for higher income groups. Let’s break down the changes, analyze their implications, and understand how they will affect taxpayers across different income brackets.
Budget 2025: Income Tax Slabs Revised
One of the standout announcements in Budget 2025 is the revision of income tax slabs. These changes are expected to benefit millions of taxpayers, particularly those in the middle-income group.
Revised Tax Slabs at a Glance
Below is a detailed table of the new tax rates:
| Income Range (INR) | Tax Rate |
|---|---|
| Up to ₹4,00,000 | No Tax |
| ₹4,00,000 – ₹8,00,000 | 5% |
| ₹8,00,000 – ₹12,00,000 | 10% |
| ₹12,00,000 – ₹16,00,000 | 15% |
| ₹16,00,000 – ₹20,00,000 | 20% |
| ₹20,00,000 – ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
The government also introduced a tax-exemption for annual incomes up to ₹12 lakh (₹12.75 lakh for salaried taxpayers due to a standard deduction of ₹75,000) under the new tax regime.
Why Were These Changes Made?
Budget 2025 aims to address several pressing economic concerns:
- Boosting Middle-Class Savings: With inflation impacting disposable income, these changes are expected to offer financial relief.
- Simplifying Tax Compliance: By revising and clearly defining tax slabs, the government aims to reduce tax-related confusion.
- Encouraging Higher Investments: Lower tax rates for certain income groups are intended to boost household spending and investments.
Key Highlights of the New Tax Regime
1. Complete Tax Exemption for Lower Incomes
Income up to ₹4 lakh is now entirely tax-free. This move is expected to benefit entry-level professionals and small business owners.
2. Moderate Tax Rates for Middle-Income Brackets
Individuals earning between ₹4 lakh and ₹12 lakh will see tax rates ranging from 5% to 10%, significantly reducing their tax burden.
3. Simplified Taxation for Higher Incomes
Those earning above ₹24 lakh will continue to be taxed at a 30% rate, maintaining equity within the system.
4. Standard Deduction Benefits
Salaried taxpayers can now enjoy a standard deduction of ₹75,000, making it easier to claim tax exemptions.
Comparison with Previous Tax Slabs
Here’s how the new tax regime stacks up against the old one:
| Income Range (INR) | Previous Tax Rate | New Tax Rate |
| Up to ₹4,00,000 | No Tax | No Tax |
| ₹4,00,000 – ₹8,00,000 | 10% | 5% |
| ₹8,00,000 – ₹12,00,000 | 15% | 10% |
| Above ₹12,00,000 | 30% | 15%-30% |
Implications for Taxpayers
1. Relief for Middle-Class Families
With tax exemptions up to ₹12 lakh, middle-income households will have more disposable income.
2. Increased Investments
Lower tax rates are expected to drive investments in sectors like real estate and mutual funds.
3. Positive Impact on Consumer Spending
Tax savings are likely to translate into increased consumer spending, which could boost the economy.
Expert Opinions on Budget 2025
Economists and tax experts have largely welcomed the revisions.
“This budget strikes a balance between tax relief and fiscal responsibility. It’s a win-win for taxpayers and the government alike,” said Dr. Ramesh Gupta, a leading economist.
FAQs about Budget 2025
1. What are the new tax rates under Budget 2025?
The tax rates range from 0% for income up to ₹4 lakh to 30% for income above ₹24 lakh.
2. Who benefits the most from the revised tax slabs?
Middle-class taxpayers earning between ₹4 lakh and ₹12 lakh are the biggest beneficiaries.
3. Is there any change for salaried employees?
Yes, salaried employees can claim a standard deduction of ₹75,000.
4. How does this budget compare to previous years?
The tax rates have been lowered for middle-income groups, providing greater financial relief compared to previous budgets.
5. What is the highest tax rate under Budget 2025?
The highest tax rate is 30% for income above ₹24 lakh.
6. Is this applicable under the old tax regime too?
No, these changes are specific to the new tax regime.
Conclusion
Budget 2025 marks a pivotal step in reforming India’s tax structure, offering substantial relief to the middle class while maintaining a fair approach for high-income earners. These revisions are expected to have a positive impact on savings, investments, and overall economic growth. Stay tuned for more updates and insights as the changes take effect.
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