The Budget 2025 has introduced a revised new tax regime that allows salaried individuals to save up to ₹1,14,400 in income tax. This saving is calculated based on a standard deduction of ₹75,000. However, you can save even more if you claim a deduction on your employer’s contribution to the National Pension System (NPS).
The government has not changed the tax slabs in the old tax regime. If you choose the old tax regime, you must claim deductions and exemptions of at least ₹8.5 lakh (including a ₹50,000 standard deduction) to match the tax benefits of the new regime.This ₹8.5 lakh is with limits such as ₹1.5 lakh under Sec. 80C or ₹2 lakh for Housing Loan interest.
Gross Taxable Income | Tax Under Old Regime | Tax Under New Regime | Deductions Needed to Match New Regime |
---|---|---|---|
₹12,75,000 | Nil | Nil | ₹7,75,000 |
₹15,00,000 | ₹97,500 | ₹97,500 | ₹5,93,750 |
₹16,00,000 | ₹1,13,100 | ₹1,13,100 | ₹6,18,750 |
₹20,00,000 | ₹1,92,400 | ₹1,92,400 | ₹7,58,333 |
₹24,75,000 | ₹3,12,000 | ₹3,12,000 | ₹8,50,000 |
₹25,00,000 | ₹3,19,800 | ₹3,19,800 | ₹8,50,000 |
The new tax regime increases take-home salary and encourages tax compliance. However, it might also reduce interest in traditional savings schemes since fewer deductions are available. Over time, even though the old regime remains an option, it may lose popularity and fade away naturally.
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