The new financial year will begin from 1 April 2025. With the start of the new financial year, several income tax-related changes will come into effect; this will include new income tax rules, including the new income tax slabs (under the new tax regime) announced by Finance Minister Nirmala Sitharaman in the Union Budget 2025-26.

New Income Tax Slabs

It is important to understand the new income tax slabs, as your employer will send you an email asking you to select between the new and old tax regimes for the new financial year 2025-26. The new income tax slabs under the new tax regime have increased the basic exemption limit from Rs 3 lakh to Rs 4 lakh. This means that individuals with a total income of less than Rs 4 lakh between 1 April 2025 and 31 March 2026 are not required to file income tax returns.

Income tax slabs

Along with the changes in the income tax slabs, the government has also increased the tax exemption under Section 87A. This tax exemption allows taxpayers to pay zero tax if their net taxable income does not exceed a specific income level. From April 1, 2025, an individual taxpayer will pay zero tax if his net taxable income does not exceed Rs 12 lakh. Under Section 87A, an individual will get a tax exemption of Rs 60,000, making the tax payable zero.

Net tax of Rs 7 lakh

A tax exemption of Rs 25,000 is available for a net taxable income of Rs 7 lakh under Section 87A till March 31, 2025. This makes there no tax on income up to Rs 7 lakh. Due to changes in income tax slabs under the new tax regime, a person with a net taxable income of Rs 12 lakh will get tax savings of Rs 83,200 (including cess) from April 1, 2025.

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