Mumbai: For the middle class taxpayer, a great fillip from the union budget 2025-26 seems to promise through reforms towards boosting disposable income and domestic consumption, otherwise this has been in the slowing-down trajectory of economy. On Wednesday, finance minister Nirmala Sitharaman announced that in the New Tax Regime 2025 or NTR salaried employees will be exempt from paying taxes for gross income of up to ₹12.75 lakh for each year, more than thrice the amount tax-free with a threshold earlier of ₹7 lakh.
New Tax Slabs and Savings
There is an immense saving to be achieved for all income tax payers from this new structure of tax. Major changes include:
Income below ₹4 lakh
₹4 lakh to ₹8 lakh will be charged with 5% tax
₹8 lakh to ₹12 lakh will attract 12% tax
₹12 lakh to ₹16 lakh will be taxed at 15%
₹16 lakh to ₹20 lakh will be charged at 20% tax
₹20 lakh to ₹24 lakh will be charged with 25% tax
30% tax for income above ₹24 lakh
This shifts the income level to ₹24 lakh instead of ₹15 lakh income bracket wherein the highest 30% tax rate applies. It is a 60% hike from the previous timelines.
Simplification of Return and Immovable Property Return
Additional changes the government has introduced are:
Increased Time Period to File Revised Returns: Now the taxpayer has four years instead of two earlier to file revised returns.
Property Declaration Relief: The value of up to two self-occupied properties can be declared NIL for tax benefits, saving millions of rupees for the taxpayer-homeowners.
Taxpayer Savings
Kinjal Bhuta, Secretary, Bombay Chartered Accountants Society said the changes had some practical value. “If one earns ₹24 lakh in a year, one will save ₹1.10 lakh more than under the present NTR. This comes to approximately ₹9,208 in a month,” Bhuta added.
Old Tax Regime vs. New Tax Regime
As the NTRor New Tax Regime 2025 boasts of having numerous relief features, financial experts issue cautionary advice. A Chartered Accountant Sagar said that even taxpayers who had claimed deductions of over ₹3.75 lakh through bank guarantee products or under sections 80C for investments, 80D for medical insurance premiums, home loan interest, or House Rent Allowance (HRA) may still find the OTR more tax-beneficial.
The Union Budget for 2025-26 is a strategic step that would eventually go into phasing out the old OTR and bring the consumer to the new, more streamlined NTR framework. These reforms would likely energize consumer spending, facilitate economic recovery, and brighten the outlook of the financial situation of taxpayers.
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