Updated 19:16 IST, February 1st 2025
Revised Income Tax Slabs: Key Differences Between Old and New Regimes Explained After Budget 2025
In her eighth consecutive Budget, Finance Minister Nirmala Sitharaman announced zero income tax for income up to Rs 12 lakh under the new tax regime.

New Delhi: Union Finance Minister, Nirmala Sitharaman's eighth consecutive Budget is the relief for middle-class salaried taxpayers, though the revised tax slabs have left many confused about the exact benefits.
In a major announcement, Finance Minister Nirmala Sitharaman has announced zero income tax for income up to Rs 12 lakh under the new tax regime.
What is The Revised Tax Slab?
New regime tax slabs have been revised in Budget 2025, with zero tax for annual income up to Rs 4 lakh, and increasing rates for higher income brackets.
- Rs 4 lakh to Rs 8 lakh: 5% income tax
- Rs 8 lakh to Rs 12 lakh: 10% income tax
- Rs 12 lakh to Rs 16 lakh: 15% income tax
- Rs 16 lakh to Rs 20 lakh: 20% income tax
- Rs 20 lakh to Rs 24 lakh: 25% income tax
How Income Up to Rs 12 Lakh Can Be Tax-Free Under New Slabs
The Budget document reveals that the government will offer rebates to individuals earning up to Rs 12 lakh. For salaried individuals, this limit extends to Rs 12.75 lakh, factoring in the standard deduction of Rs 75,000. A table in the document shows rebates starting at Rs 10,000 for an income of Rs 8 lakh, reaching up to Rs 80,000 for those earning Rs 12 lakh.

What Happens to Old Tax Regime?
The Budget document outlines that the new tax slabs apply to those opting for the New Tax Regime, reflecting the Centre’s push to simplify personal tax by eliminating exemptions. Neither Finance Minister Nirmala Sitharaman nor the Budget document mentions the old tax regime, indicating that the slabs under the old system remain unchanged.
Old vs New Tax Regime
Deciding whether to opt for the new regime depends on your financial profile and the exemptions you can claim under the old regime. For instance, if your income is Rs 16 lakh and you claim exemptions of Rs 4 lakh, your taxable income would be Rs 12 lakh. Under the old tax regime, this would result in an income tax of Rs 1,72,500—Rs 52,000 more than what you would pay under the new regime.
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Published 19:16 IST, February 1st 2025