New Tax Slabs from April 1: Which Regime Saves You More?

Starting April 1, 2025, significant revisions to India's income tax structure will come into effect, offering taxpayers updated options between the old and new tax regimes. Understanding these changes is crucial for making informed financial decisions.

Starting April 1, 2025, India’s new income tax slabs kick in for the financial year 2025-26. Announced by Finance Minister Nirmala Sitharaman in the Budget , these changes aim to make taxes simpler and help people save more.

Revised Income Tax Slabs

The Union Budget 2025 introduced new tax slabs under the revised tax regime:

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, effectively making income up to Rs 12.75 lakh tax-free. 

Old vs. New Tax Regime

Under the old tax regime, taxpayers could avail themselves of various deductions and exemptions, such as those under Sections 80C and 80D. However, the new tax regime offers lower tax rates but limits the availability of these deductions. Taxpayers must evaluate their financial situations to determine which regime offers greater benefits.

Impact on Taxpayers

The revised tax structure aims to increase disposable income, thereby boosting household consumption and savings. For instance, individuals earning up to Rs 12 lakh will now be exempt from paying income tax, a significant increase from the previous threshold of Rs 7 lakh. 

In an official release, the PIB announced enhancements to the new tax regime, including an increase in the standard deduction from Rs 50,000 to Rs 75,000, providing additional relief to salaried individuals and pensioners. ​

What Government Say

During the Union Budget 2025-26 presentation, she introduced a new Income Tax Bill to simplify the tax system and reduce compliance burdens. She emphasized the government's commitment to making the tax regime more straightforward and taxpayer-friendly.

The CBDT has highlighted that the new tax regime offers lower tax rates with fewer exemptions, aiming to simplify tax compliance and encourage voluntary compliance among taxpayers. 

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.