The Indian government has introduced a major tax relief in Budget 2025, increasing the nil tax slab to ₹12 lakh. This means individuals earning up to ₹12 lakh per year will not have to pay any income tax. Additionally, an extra exemption of ₹75,000 has been introduced for those earning above ₹12 lakh. Let’s break down the new tax slabs, understand how tax will be calculated, and see some real examples.
New Income Tax Slabs for FY 2025-26
| Income Range | Tax Rate |
| ₹0 – ₹4 lakh | 0% |
| ₹4 – ₹8 lakh | 5% |
| ₹8 – ₹12 lakh | 10% |
| ₹12 – ₹16 lakh | 15% |
| ₹16 – ₹20 lakh | 20% |
| ₹20 – ₹24 lakh | 25% |
| Above ₹24 lakh | 30% |
How Tax is Calculated Under the New Slabs?
Income tax is calculated in a progressive manner, meaning different portions of your income are taxed at different rates as per the slabs. Here’s how it works:
For example, if your income is ₹15 lakh, tax will be calculated as follows:
- ₹0 – ₹4 lakh → 0% tax → ₹0
- ₹4 – ₹8 lakh → 5% tax → ₹20,000
- ₹8 – ₹12 lakh → 10% tax → ₹40,000
- ₹12 – ₹15 lakh → 15% tax → ₹45,000
Total tax = ₹0 + ₹20,000 + ₹40,000 + ₹45,000 = ₹1,05,000
Tax Calculation for Different Salaries
Here’s how tax will be calculated for different salary brackets:
Example 1: Income ₹12 lakh
- ₹0 – ₹4 lakh → 0% tax → ₹0
- ₹4 – ₹8 lakh → 5% tax → ₹20,000
- ₹8 – ₹12 lakh → 10% tax → ₹40,000
- Total tax = ₹0 + ₹20,000 + ₹40,000 = ₹60,000
Example 2: Income ₹18 lakh
- ₹0 – ₹4 lakh → 0% tax → ₹0
- ₹4 – ₹8 lakh → 5% tax → ₹20,000
- ₹8 – ₹12 lakh → 10% tax → ₹40,000
- ₹12 – ₹16 lakh → 15% tax → ₹60,000
- ₹16 – ₹18 lakh → 20% tax → ₹40,000
- Total tax = ₹0 + ₹20,000 + ₹40,000 + ₹60,000 + ₹40,000 = ₹1,60,000
Example 3: Income ₹25 lakh
- ₹0 – ₹4 lakh → 0% tax → ₹0
- ₹4 – ₹8 lakh → 5% tax → ₹20,000
- ₹8 – ₹12 lakh → 10% tax → ₹40,000
- ₹12 – ₹16 lakh → 15% tax → ₹60,000
- ₹16 – ₹20 lakh → 20% tax → ₹80,000
- ₹20 – ₹24 lakh → 25% tax → ₹1,00,000
- ₹24 – ₹25 lakh → 30% tax → ₹30,000
- Total tax = ₹0 + ₹20,000 + ₹40,000 + ₹60,000 + ₹80,000 + ₹1,00,000 + ₹30,000 = ₹3,30,000
How Does the ₹75,000 Exemption Work?
The new tax regime allows an additional exemption of ₹75,000 for individuals earning more than ₹12 lakh. This means that taxable income will be reduced by ₹75,000 before applying tax calculations.
For example, if someone earns ₹15 lakh:
- Taxable income = ₹15 lakh – ₹75,000 = ₹14.25 lakh
- Tax is then calculated on ₹14.25 lakh instead of ₹15 lakh, reducing the total tax liability.
New Tax Calculator:
Budget 2025 Tax Calculator
Enter your annual income (in ₹) to calculate your income tax under the new tax regime.
Key Takeaways
✅ No tax on income up to ₹12 lakh
✅ Progressive tax slabs for higher incomes
✅ ₹75,000 exemption for income above ₹12 lakh
✅ Higher disposable income for middle-class earners
This new tax regime makes taxation simpler and more beneficial for salaried individuals. If you’re looking for financial assistance, Kreditbazar can help you get the best personal loan offers to manage your expenses efficiently.
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