Budget 2025 Updated | Zero tax up to ₹12 Lakh
✓ Zero tax up to ₹12 Lakh | ✓ Basic exemption increased to ₹4 Lakh | ✓ New slab: ₹20-24L at 25%
New regime offers better tax savings
Basic Exemption Hiked: Increased from ₹3 lakh to ₹4 lakh under new regime
Zero Tax up to ₹12 Lakh: With enhanced Section 87A rebate of ₹60,000
New Tax Slab Added: ₹20-24 lakh bracket now taxed at 25% (earlier 30%)
Tax Savings: Up to ₹1.14 lakh annual savings for middle-income taxpayers
| Income Range | Tax Rate | Tax Amount (Approx) |
|---|---|---|
| Up to ₹4,00,000 | 0% (Nil) | ₹0 |
| ₹4,00,001 - ₹8,00,000 | 5% | ₹20,000 (on ₹4L) |
| ₹8,00,001 - ₹12,00,000 | 10% | ₹40,000 (on ₹4L) |
| ₹12,00,001 - ₹16,00,000 | 15% | ₹60,000 (on ₹4L) |
| ₹16,00,001 - ₹20,00,000 | 20% | ₹80,000 (on ₹4L) |
| ₹20,00,001 - ₹24,00,000 | 25% (NEW) | ₹1,00,000 (on ₹4L) |
| Above ₹24,00,000 | 30% | 30% on excess |
Important: With Section 87A rebate of ₹60,000, income up to ₹12,00,000 is completely tax-free under new regime! Including ₹75,000 standard deduction, salaried individuals earning up to ₹12.75 lakh pay ZERO tax.
| Feature | Old Tax Regime | New Tax Regime |
|---|---|---|
| Basic Exemption | ₹2.5L (₹3L for seniors) | ₹4 Lakh (Budget 2025) |
| Zero Tax Limit | Up to ₹5 Lakh | Up to ₹12 Lakh |
| Deductions Allowed | ✓ 80C, 80D, HRA, LTA, etc. | ✗ Only Standard Deduction |
| Standard Deduction | ₹75,000 | ₹75,000 |
| Tax Slabs | 3 slabs (5%, 20%, 30%) | 7 slabs (0%-30%) |
| Best For | High deductions (₹3L+) | Low/No deductions |
Under the new tax regime for FY 2025-26: ₹0-4L (0%), ₹4-8L (5%), ₹8-12L (10%), ₹12-16L (15%), ₹16-20L (20%), ₹20-24L (25%), Above ₹24L (30%). With rebate under Section 87A, income up to ₹12 lakh is effectively tax-free. For salaried individuals with ₹75,000 standard deduction, income up to ₹12.75 lakh is tax-free.
Budget 2025 has made the new tax regime significantly more attractive with relaxed slabs. Choose new regime if: you don't have many deductions (80C, 80D, home loan), your income is below ₹15 lakh, or you want simplicity. Choose old regime if: you have substantial deductions (₹1.5L in 80C + home loan interest + 80D), your income is high, or total deductions exceed ₹3 lakh.
For FY 2025-26, the standard deduction is ₹75,000 for salaried individuals and pensioners under both old and new tax regimes. This deduction is automatically available without any investment or proof, reducing your taxable income by ₹75,000.
Section 87A rebate has been increased in Budget 2025. Under the new tax regime, if your taxable income is up to ₹12 lakh, you get a rebate of up to ₹60,000, making your tax liability zero. Under the old regime, rebate is available for income up to ₹5 lakh with a maximum rebate of ₹12,500.
Under old regime: Section 80C (₹1.5L for PPF, ELSS, life insurance, home loan principal), Section 80D (₹25K for health insurance, ₹50K for senior citizens), Section 24(b) (₹2L for home loan interest), Section 80E (education loan interest), HRA exemption, LTA, and various other deductions. These are NOT available under new regime except standard deduction.