In the Union Budget for the financial year 2025-2026, significant changes have been introduced to the income tax structure to provide relief to taxpayers and stimulate economic growth.
In the Union Budget 2025-26, significant revisions were made to India's income tax slabs under the new tax regime, effective from the Financial Year 2025-26 (Assessment Year 2026-27). The key changes are as follows:
Revised Income Tax Slabs for FY 2025-26:
| Income Range (₹) | 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% |
Additionally, the standard deduction has been increased from ₹50,000 to ₹75,000, effectively raising the income threshold for tax exemption to ₹12,75,000.
Examples:
Individual with Annual Income of ₹13,00,000:
- Taxable Income: ₹13,00,000 - ₹75,000 (standard deduction) = ₹12,25,000
- Tax Calculation:
- ₹4,00,000 at 5% = ₹20,000
- ₹4,00,000 at 10% = ₹40,000
- ₹4,00,000 at 15% = ₹60,000
- ₹25,000 at 20% = ₹5,000
- Total Tax Payable: ₹20,000 + ₹40,000 + ₹60,000 + ₹5,000 = ₹1,25,000
Individual with Annual Income of ₹25,00,000:
- Taxable Income: ₹25,00,000 - ₹75,000 (standard deduction) = ₹24,25,000
- Tax Calculation:
- ₹4,00,000 at 5% = ₹20,000
- ₹4,00,000 at 10% = ₹40,000
- ₹4,00,000 at 15% = ₹60,000
- ₹4,00,000 at 20% = ₹80,000
- ₹4,00,000 at 25% = ₹1,00,000
- ₹25,000 at 30% = ₹7,500
- Total Tax Payable: ₹20,000 + ₹40,000 + ₹60,000 + ₹80,000 + ₹1,00,000 + ₹7,500 = ₹3,07,500
These revisions aim to provide significant relief to middle-class taxpayers, encouraging increased savings and consumption.
Note: The above calculations are based on the tax slabs announced in the Union Budget 2025 and should not be considered as tax advice. For the most accurate and personalized tax planning, it's advisable to consult with a tax professional.