New Tax Slabs from April 1: What Taxpayers Need to Know & How It Affects You

Starting April 1, 2025, India's income tax structure will undergo significant revisions aimed at simplifying the tax system and increasing taxpayers' disposable income. These changes, introduced in the Union Budget 2025, impact both the new and old tax regimes.

Revised Income Tax Slabs

Under the new tax regime, the updated income tax slabs are as follows:
 

Up to Rs 4 lakh: Nil

Rs 4 lakh to Rs 8 lakh: 5%

Rs 8 lakh to Rs 12 lakh: 10%

Rs 12 lakh to Rs 16 lakh: 15%

Rs 16 lakh to Rs 20 lakh: 20%

Rs 20 lakh to Rs 24 lakh: 25%

Above Rs 24 lakh: 30%

Additionally, the standard deduction has been increased from Rs 50,000 to Rs 75,000, providing further relief to salaried individuals and pensioners.

Key Features of the New Tax Regime

Higher Tax-Free Income Limit: Individuals earning up to Rs 12 lakh annually will be exempt from income tax, a substantial increase from the previous threshold. ​

Simplified Tax Structure: The new regime offers a streamlined approach with concessional tax rates and broader income slabs, aiming to reduce the compliance burden on taxpayers.

Limited Deductions: While the standard deduction is available, most other exemptions and deductions, such as those under Section 80C, are not permitted in the new regime.

Old vs. New Tax Regime

The old tax regime continues with its existing tax slabs and allows for various exemptions and deductions, such as those under Section 80C and House Rent Allowance (HRA). In contrast, the new tax regime offers lower tax rates but eliminates most exemptions and deductions. Taxpayers must evaluate their financial situations to determine which regime is more beneficial. 

As the new financial year approaches, taxpayers should assess their income, eligible deductions, and financial goals to choose between the old and new tax regimes. Consulting with financial advisors can provide personalized insights, ensuring optimal tax planning under the revised structure.