Finance Minister Nirmala Sitharaman highlighted the pivotal role of democracy, demography, and demand in fueling India's economic growth. In a major announcement, she declared that individuals earning up to Rs 12 lakh annually will not have to pay income tax under the new tax regime. Additionally, for salaried employees, the exemption limit has been set at Rs 12.75 lakh, considering a standard deduction of Rs 75,000.
Comparison of New and Old Tax Slabs
The Finance Minister also introduced the revised tax slabs under the new regime. Below is a comparative overview of the new and old tax slabs.
New Tax Slabs (Budget 2025)
Income Range
Tax Rate
₹0 to ₹4 lakh
Nil
₹4 lakh to ₹8 lakh
5%
₹8 lakh to ₹12 lakh
10%
₹12 lakh to ₹16 lakh
15%
₹16 lakh to ₹20 lakh
20%
₹20 lakh to ₹24 lakh
25%
₹24 lakh and above
30%
Old Tax Slabs (Before Budget 2025)
Income Range
Tax Rate
₹3,00,000 and below
Nil
₹3,00,001 to ₹7,00,000
5% (Exemption up to ₹7 lakh under Section 87A)
₹7,00,001 to ₹10,00,000
10%
₹10,00,001 to ₹12,00,000
15%
₹12,00,001 to ₹15,00,000
20%
₹15,00,000 and above
30%
Tax Slabs Under the Old Tax Regime
Income Range
Tax Rate
₹2,50,000 and below
Nil
₹2,50,001 to ₹7,00,000
5%
₹7,00,001 to ₹10,00,000
10%
₹10,00,001 to ₹12,00,000
15%
₹12,00,001 to ₹15,00,000
20%
Above ₹15,00,000
30%
Historical Changes in Income Tax Rates
Year
Key Changes
1997-98
Introduction of 40% tax on income above ₹5 lakh
2009-10
Surcharge on personal income tax removed, later reintroduced in 2010-11 for income above ₹10 lakh
2014-15
Revised tax regime with exemption for income up to ₹2.5 lakh
2018-19
Increased health and education cess to 4%
2020-21
Covid-19 relief measures, but tax rates remained stable for high-income groups
2021-22
Efforts towards tax stability, with minor increases for higher income brackets
These new tax slabs aim to provide relief to middle-income taxpayers while simplifying the tax structure. The new tax regime is expected to encourage more individuals to adopt the updated framework, benefiting from the increased exemption limits and rationalized tax brackets.
