income tax

New tax slabs introduced with a focus on middle-class relief. Exemptions for senior citizens and rental income enhanced. No significant changes in the old tax system. Taxpayer Relief in Union Budget 2025: Major Shifts in Income Tax Slabs In a move aimed at providing much-needed relief to the middle class and salaried taxpayers, Finance Minister Nirmala Sitharaman, in the 2025 Union Budget, introduced revised income tax slabs. The new structure is designed to ease the tax burden, particularly for individuals with an annual income of up to ₹12.75 lakh, who will be exempt from paying taxes under the revised scheme. The budget has expanded the number of tax slabs to seven, making it more progressive for taxpayers. For example, a person earning ₹12.80 lakh, after deducting the standard ₹75,000, will pay tax on ₹12.05 lakh. Tax will not be applicable for ₹4 lakh, and the remaining ₹8.05 lakh will be taxed at 5% and 10%, with the balance taxed at 15%. In total, this person will pay ₹60,750 as tax. Centre Allocates ₹1.28 Lakh Crore for Education, Boosts Medical & IIT Seats Additionally, exemptions related to Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) have been raised. For senior citizens, the exemption limit on interest income has increased from ₹50,000 to ₹1 lakh. Meanwhile, the TDS exemption for others has gone up from ₹40,000 to ₹50,000. Rental income has also been given a boost, with the exemption limit increasing from ₹2.4 lakh to ₹6 lakh annually. The introduction of new tax slabs, however, marks a significant shift away from the old tax regime, which remains unchanged. Taxpayers have the option to choose between the old and new systems. However, with fewer exemptions available in the new regime, there are concerns about its impact on long-term savings and investment decisions, especially for the middle class. Kisan Credit Card Limit Increased to ₹5 Lakh in Latest Union Budget Overall, the changes reflect the government’s focus on improving tax compliance while encouraging spending and saving by reducing tax burdens for many. Yet, the debate about the phasing out of the old tax regime continues to stir discussions among financial experts.

Income Tax Changes in Budget 2025: A Breath of Relief for the Middle Class