Here's a detailed breakdown of the Income Tax Budget 2025 for your blog, covering all key points, including new tax slabs, exemptions, and how individuals can save up to ₹2.6 lakh under the new tax regime.

Income Tax Budget 2025: Major Announcements & Detailed Analysis

The Union Budget 2025-26, presented by Finance Minister Nirmala Sitharaman on February 1, 2025, introduced significant changes to India's income tax structure. The new regime aims to reduce the tax burden on the middle class, increase disposable income, and boost savings, investments, and consumption.

One of the biggest highlights is that individuals earning up to ₹12 lakh annually will now pay zero tax, providing massive relief to salaried employees and the middle class. The budget also brings revised tax slabs, changes in TDS provisions, and new benefits under the NPS Vatsalya scheme.

Let's break down these changes and understand how they impact taxpayers.

New Income Tax Slabs for FY 2025-26 (AY 2026-27)

Under the revised new tax regime, the income tax slabs and rates are as follows:

Key Takeaways from the New Tax Regime:

✅ No tax for individuals earning up to ₹12 lakh under the new regime, thanks to the ₹75,000 standard deduction.
✅ Simplified tax slabs with lower rates to boost household consumption and savings.
✅ Marginal relief ensures that individuals earning slightly over ₹12 lakh do not face a sudden high tax burden.

💡 Example Calculation:

• Earlier, a person earning ₹12 lakh had to pay ₹80,000 in taxes.
• Now, the tax liability for the same person is zero under the new tax regime.
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How to Save Up to ₹2.6 Lakh Under New Tax Rates?

With the revised tax structure and deductions, individuals can maximize their tax savings. Here’s how:

1. Standard Deduction Increased to ₹75,000

• Salaried individuals automatically get ₹75,000 as a deduction from their taxable income.
• This means someone earning ₹12.75 lakh will pay zero tax since ₹75,000 is deducted first, bringing their taxable income to ₹12 lakh.
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2. Marginal Relief for Taxpayers Slightly Above ₹12 Lakh

• If your taxable income is just above ₹12 lakh, marginal relief applies to ensure you don’t pay excessive taxes.
• Example: If you earn ₹12.1 lakh, instead of paying ₹61,500, marginal relief ensures your tax burden is limited to ₹10,000 only.
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3. Tax Benefits for Salaried Employees & Pensioners

• The increase in exemption limits means higher take-home pay.
• More disposable income leads to higher savings and investments.
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4. Lower TDS Burden on Renters

• The TDS threshold on rental income has been raised from ₹2.4 lakh to ₹6 lakh, reducing compliance issues for landlords and tenants.
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5. NPS Vatsalya Scheme – Additional ₹50,000 Tax Benefit

• Contributions to NPS Vatsalya (a pension scheme for minors) are eligible for an extra ₹50,000 tax exemption under the old tax regime.
• This is beneficial for parents investing in long-term savings for their children.
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Comparison: New vs. Old Tax Regime

✅ The new tax regime offers lower tax rates but removes most deductions.
✅ The old tax regime allows deductions but has higher tax rates.

💡 Who Should Choose the New Tax Regime?

• Salaried individuals without major investments in tax-saving instruments.
• Those earning ₹12-15 lakh benefit the most from the zero-tax threshold.
• Individuals who prefer higher take-home pay over deductions.
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Industry Reactions & Expert Opinions

1. Vivek Jalan (Tax Expert, Tax Connect Advisory Services LLP)

• "This budget favors the three Ms – Manufacturing, Middle Class, and MSMEs. The biggest highlight is zero tax up to ₹12 lakh, which will significantly boost consumer spending."
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2. Christian de Guzman (Senior VP, Moody’s Ratings)

• "The new tax relief measures will support growth, but the fiscal deficit will have to be managed carefully to sustain spending on infrastructure and social sectors."
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Impact of the Budget on Stock Markets & Economy

• Stock Market Reaction:

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  • Nifty & Sensex remained stable post-budget, reflecting positive investor sentiment.
  • FMCG, real estate, and auto stocks surged as lower taxes will boost demand.

• Boost to Indian Economy:

  • More disposable income = Higher Consumption & Savings
  • Encourages investments in the stock market & mutual funds
  • Supports MSMEs & Manufacturing through tax benefits
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Final Thoughts: Is This a ‘People’s Budget’?

🔹 For Middle-Class Taxpayers: The new structure provides significant tax relief, ensuring higher savings and spending power.

🔹 For Businesses & MSMEs: Lower TDS burden & import duty rationalization will boost business growth.

🔹 For the Indian Economy: The reforms aim to increase domestic consumption, stabilize inflation, and drive economic growth.

✅ Budget 2025 is a landmark move towards a simpler, taxpayer-friendly system.
✅ With ₹12 lakh tax-free income and a ₹75,000 standard deduction, millions of Indians will benefit.
✅ Now, it’s time for individuals to make smart financial decisions based on the new tax slabs.

FAQs on Budget 2025 & Taxation

1. Will I pay tax if my salary is ₹12 lakh?

• No, under the new tax regime, ₹12 lakh annual income is tax-free due to the ₹75,000 standard deduction.
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2. What if I earn ₹15 lakh?

• Tax calculation:
  • ₹12 lakh = No tax
  • ₹12-16 lakh = 15% tax on ₹3 lakh → ₹45,000
  • Total tax = ₹1,05,000
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3. Should I shift to the new tax regime?

• If you don’t have major investments in tax-saving schemes, the new tax regime is better.
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4. What is the NPS Vatsalya scheme?

• A pension scheme for minors, now with ₹50,000 additional tax exemption under the old regime.
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