New Delhi: In Budget 2025, Finance Minister Nirmala Sitharaman announced there will be no Income Tax on annual income up to Rs 12 lakh under New Tax Regime. The limit will be Rs 12.75 lakh for salaried tax payers with Standard Deduction of RS 75,000.
“There will be no income tax payable upto income of Rs. 12 lakh (i.e. average income of Rs.1 lakh per month other than special rate income such as capital gains) under the new regime. This limit will be Rs.12.75 lakh for salaried tax payers, due to standard deduction of Rs 75,000,” the Finance Minister said in her Budget 2025 speech.
Here’s what FM Sitharaman proposed in the new tax regime
| 0-4 lakh rupees | Nil |
| 4-8 lakh rupees | 5 per cent |
| 8-12 lakh rupees | 10 per cent |
| 12-16 lakh rupees | 15 per cent |
| 16-20 lakh rupees | 20 per cent |
| 20- 24 lakh rupees | 25 per cent |
| Above 24 lakh rupees | 30 per cent |
When is the old tax system beneficial?
If Income is Rs 12.75 lakh, then it would be beneficial for the individual to avail the benefit of zero tax by switching to the new tax regime.
Income of Rs 15 lakh: In this scenario, if you can save tax up to Rs 5.43 lakh in a year, tax cut will be same for both old tax system and new tax system, which is Rs 97,500.
Income of Rs 18 lakh: Individuals falling in this category need tax saving of Rs 6.41 lakh, so that the old and new system becomes equal and the tax becomes Rs 1,50,800.
People placed in the bracket of income of Rs 20 lakh need tax saving of Rs 7.08 lakh so that the tax under the new regime becomes Rs 1,92,400.
Income 25 lakh: Tax saving of up to Rs 8 lakh is needed. In this case, people in the old tax regime will be able to pay as much tax as the new system which will be Rs 3,19,800.
| Income (Rs) | How much deduction will be required (Rs) | Tax in old tax regime | Tax in new tax regime |
| Income up to Rs 12.75 lakh | It is beneficial to switch to the new tax regime | – | 0 |
| 15 lakh | 543750 | 97500 | 97500 |
| 18 lakh | 641667 | 150800 | 150800 |
| 20 lakh | 708333 | 192400 | 192400 |
| 25 lakh | 800000 | 319800 | 319800 |
| 30 lakh | 800000 | 475800 | 475800 |
| 40 lakh | 800000 | 787800 | 787800 |
Data taken from Value Research
Note: The standard deduction amount of Rs 50,000 of the old tax regime has not already been included in the tax saving figures mentioned above. Besides, 4% cess has also been added in the calculation of tax.
- Section 80C: Exemption up to Rs 1.50 lakh in PPF, small savings schemes, etc.
- Section 80CCC: Rebate up to Rs 1.50 lakh, this savings is also included in the limit of 80C.
- Section 80CCD(1B): Rebate of up to Rs 50,000 in NPS and additional Rs 50,000 in NPS Vatsalya.
- Section 80EEA: Rs 2 lakh on home loan interest
- Section 80D: Health Insurance Rs 25000
- Section 80DDB: Medical treatment
- Section 80G: Donation
Finance Minister Nirmala Sitharaman in her Budget 2025 speech made the New Tax Regime more attractive by announcing that there will be no personal income tax payable upto income of Rs 12 lakh (i.e. average income of Rs 1 lakh per month other than special rate income such as capital gains) under the new regime. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
