The Union Budget 2025 has introduced new income tax slab rates aimed at reducing the tax burden on individuals and boosting disposable income. These changes are expected to benefit the middle class while simplifying the tax structure.
This article provides a detailed breakdown of the revised tax slabs and their impact on taxpayers, along with guidance on filing income tax returns under the new regime.
Revised Income Tax Slabs for FY 2025-26 (AY 2026-27)
The new income tax slab rates for individuals under the revised tax regime are as follows:
| Annual Income Range (ā¹) | Tax Rate |
|---|---|
| Up to 4,00,000 | Nil |
| 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% |
Under this new tax regime:
ā Individuals earning up to ā¹4 lakh annually are fully exempt from tax.
ā Income up to ā¹12 lakh qualifies for lower tax rates, significantly reducing tax liability.
ā The highest tax rate of 30% applies only to incomes exceeding ā¹24 lakh per year.
The new structure aims to provide tax relief, especially for the middle-income group, while ensuring a progressive taxation system.
Impact of the New Income Tax Slabs on Taxpayers
1. Increased Tax Savings for the Middle Class
ā Tax-free income limit increased from ā¹7 lakh to ā¹12 lakh, reducing tax burdens on salaried professionals.
ā Higher exemptions will increase disposable income, leading to more savings and spending.
2. Simpler Tax Filing Process
ā The revised tax regime eliminates multiple deductions and exemptions, making income tax return (ITR) filing easier.
ā Taxpayers can now focus on their actual income without worrying about complex deductions.
3. Boost to Economic Growth
ā With more money in hand, individuals can increase consumption, positively impacting industries like real estate, automobiles, and retail.
ā Encourages investment in financial instruments, boosting the stock market and economic activity.
Which Tax Regime to Choose ā New or Old?
With these changes, individuals must decide whether to opt for the new tax regime or continue with the old one.
ā New Tax Regime: Lower tax rates but fewer deductions and exemptions.
ā Old Tax Regime: Allows deductions like 80C, 80D, HRA, and standard deduction, reducing taxable income.
š” Tip: If you claim multiple deductions (like home loan interest, insurance premiums, and ELSS investments), the old regime may be beneficial. However, if you prefer simpler tax filing with lower rates, the new regime is a better choice.
Filing Income Tax Returns Under the New Slabs
With the revised tax slabs, income tax return (ITR) filing must be done as per the new structure. Hereās how taxpayers can ensure smooth tax filing:
1ļøā£ Choose the Right Tax Regime
ā Before filing, decide whether to opt for the old regime or the new one.
2ļøā£ Keep Your Financial Documents Ready
ā Maintain records of salary slips, investment proofs, rent receipts, and other financial statements.
3ļøā£ File ITR Before the Due Date
ā The deadline for ITR filing is July 31, 2025 for individuals and October 31, 2025 for businesses.
4ļøā£ Use an Online Tax Filing Portal
ā Taxpayers can file returns online through the income tax e-filing portal for a hassle-free process.
Conclusion
The new income tax slab rates for 2025 bring significant relief to taxpayers, especially the middle-income group, by increasing tax exemptions and lowering rates. While filing income tax returns, individuals should carefully evaluate their financial situation and decide whether to opt for the new or old tax regime.
To ensure compliance and maximize tax benefits, taxpayers should file ITR on time and maintain proper documentation. If needed, seeking professional tax advisory services can help make the most of available tax benefits under the latest income tax return rules.
Also read: UN Business News
