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Income Tax, Union Budget 2025: Hereâs the existing revenue tax obligation prices and pieces under both the New Tax Regime and the Old Tax Regime.
Income Tax: In the upcoming Budget 2025, the federal government is most likely to offer tax obligation alleviation for those gaining as much as Rs 15 lakh yearly.
New Tax Regime Vs Old Tax Regime: As India waits for the news of the Union Budget 2025-26 on February 1, 2025, among one of the most expected subjects is revenue tax obligation. Individuals and specialists alike are eager to see if the federal government presents tax obligation advantages or modifications to the present revenue tax obligation framework. Among one of the most waited for statements is a feasible decrease in revenue tax obligation for people gaining as much as Rs 15 lakh yearly. Hereâs the existing revenue tax obligation prices and pieces under both the New Tax Regime and the Old Tax Regime.
Current Tax Slabs Under the New Tax Regime (Applicable FY 2024-25)
The New Tax Regime, presented in the Budget 2020, provides reduced tax obligation prices however less exceptions and reductions. Here are the existing tax obligation pieces:
- Income as much as Rs 3,00,000: Nil
- Income from Rs 3,00,001 to Rs 7,00,000: 5% (tax obligation refund under Section 87A as much as Rs 7 lakh)
- Income from Rs 7,00,001 to Rs 10,00,000: 10%
- Income from Rs 10,00,001 to Rs 12,00,000: 15%
- Income from Rs 12,00,001 to Rs 15,00,000: 20%
- Income over Rs 15,00,000: 30%
This is the default tax obligation program. Under this program, taxpayers can go with reduced prices however need to discard preferred exceptions like HRA, LTA, and reductions under Sections 80C, 80D, and others.
However, taxpayers can use a common reduction. The common reduction restriction for employed staff members was enhanced to Rs 75,000 in the Budget 2024-25. For family members pensioners, it was treked to Rs 25,000.
Current Tax Slabs Under the Old Tax Regime (Applicable FY 2024-25)
The Old Tax Regime, while keeping greater prices, permits taxpayers to assert numerous exceptions and reductions. Here are the pieces:
- Income as much as Rs 2,50,000: Nil
- Income from Rs 2,50,001 to Rs 7,00,000: 5%
- Income from Rs 7,00,001 to Rs 10,00,000: 10%
- Income from Rs 10,00,001 to Rs 12,00,000: 15%
- Income from Rs 12,00,001 to Rs 15,00,000: 20%
- Income over Rs 15,00,000: 30%
For seniors aged 60-80 years, the standard exception restriction is Rs 3,00,000. For incredibly seniors (over 80 years), it is Rs 5,00,000.
The Old Tax Regime permits reductions under numerous areas, such as:
- Section 80C: Up to Rs 1,50,000 for financial investments like PPF, ELSS, and LIC costs.
- Section 80D: Health insurance coverage costs.
- Section 24( b): Interest on mortgage as much as Rs 2,00,000.
- Other exceptions like HRA and LTA.
Key Differences Between the Two Regimes
| Aspect | New Tax Regime | Old Tax Regime |
|---|---|---|
| Tax Rates | Lower prices without exceptions | Higher prices with exceptions |
| Exemptions & & Deductions | Not permitted | Allowed |
| Best For | Individuals with less financial investments | Individuals with high financial investments |
Choosing the Right Tax Regime
Choosing in between the New and Old Tax Regime depends upon a personâs monetary account. The New Tax Regime is preferable for those that choose simpleness and have very little financial investments. Conversely, the Old Tax Regime advantages taxpayers that increase exceptions and reductions.
Expectations for Budget 2025
The federal government might think about increasing the standard exception restriction or presenting extra pieces to profit middle-income teams. According to records, the federal government is most likely to offer tax obligation alleviation for those gaining as much as Rs 15 lakh.
Industry bodies have actually likewise increased need for that. Last week, Sanjiv Puri, chairman of the Confederation of Indian Industries (CII), claimed, âFrom a point of view of increasing intake, we have actually recommended that there be some alleviation supplied to revenue tax obligation as much as a Rs 20 lakh on the low revenue tax obligation price to ensure that it increases intake, there is even more non reusable revenue and consequently likewise brings about buoyancy in earnings.â
FM Nirmala Sitharaman in the last Budget 2024-25 in July announced a comprehensive review of the Income Tax Act. Following this, the review committee was constituted led by Chief Commissioner of Income Tax V K Gupta.
