Budget 2025: No Income Tax For Earnings Up To Rs 12 Lakh. How It Will Reflect In Salaries

Last Updated:February 01, 2025, 12:42 IST

Union Budget 2025: With the new tweaks being introduced, a taxpayer in the new regime with an income of ₹12 lakh will get a benefit of ₹80,000 in tax

Union Budget 2025: Finance Minister Nirmala Sitharaman announced on Saturday during the Union Budget 2025 that no income tax will be payable on earnings up to Rs 12 lakh, or up to Rs 12.75 lakh including standard deductions, under the new regime.

With the new tweaks being introduced, a taxpayer in the new regime with an income of ₹12 lakh will get a benefit of ₹80,000 in tax (100% of tax payable as per existing rates will be exempt). The effective income tax rate will be 0%.

Here’s a look at the new tax rates for people earning more than Rs 12 lakh per annum.

• A person earning ₹16 lakh will receive a tax benefit of ₹50,000, resulting in an effective tax rate of just 7.5%.
• A person earning ₹18 lakh will benefit from ₹70,000 in tax savings, bringing the effective tax rate to 8.8%.
• For someone earning ₹20 lakh, the tax benefit will be ₹90,000, leading to an effective tax rate of 10%.
• A person with an income of ₹25 lakh will get a tax benefit of ₹1,10,000, resulting in an effective tax rate of 13.2%.
• A person earning ₹50 lakh will also receive a tax benefit of ₹1,10,000, with an effective tax rate of 21.6%.

Here’s a table highlighting the new tax slabs in the new tax regime.