In Budget 2025, Finance Minister Nirmala Sitharaman announced that taxpayers with income upto ₹12 lakh do not need to pay any income tax. Aside from this, salaried taxpayers will be entitled to take an additional benefit of no tax by virtue of ₹75,000 standard deduction.
Notably, these changes will come into effect from April 1 2025, which means when you file your tax return in July 2025 (if you are a late filer) or in June (if you are an early filer) then these changes will not apply.
In July 2025, taxpayers will file tax returns for financial year 2024-25 wherein the provisions of Finance Act 2024 will apply.
In Budget 2024 announced on July 23 last year, Ms Sitharaman announced the new tax slab rates and even raised the limit of standard deduction under the new tax regime.
Those changes will naturally be effective as you file your tax return in July 2025. These changes are as follows:
Filing ITR 2025: These changes will apply
1 Standard deduction for salaried employees was raised from ₹50,000 to ₹75,000 in Budget 2024.
2 There is no income tax upto ₹3 lakh. For income between 3-7 lakh. tax liability is 5 per cent.
3. The tax mentioned in (2) is adjustable against the given under section 87A upto ₹25,000.
5. Above ₹7 lakh, salaried taxpayers can avail benefit of upto ₹75,000 standard deduction. In other words, someone with a gross income of ₹7.75 lakh does not need to pay any income tax this year.
6. These slabs (no tax upto ₹3 lakh), rebate (upto ₹25K) and standard deduction ( ₹75K) will apply when you are going with the new tax regime which also happens to be the default regime.
7. In the old tax regime – which you have to opt for – tax slabs are as follows:
2.5 to 5 lakh: 5% above 2.5 lakh
5 lakh to 10 lakh: ₹12.5K + 20% above 5 lakh
Above 10 lakh: 1,12,500 + 30 percent above ₹10 lakh
“For financial year 2024-25, the rebate under new tax regime is given for income up to ₹7,00,000. In other words, for salaried taxpayers, income upto ₹7.75 Lakh will be tax free as a result of standard deduction of ₹75,000,” says CA Pratibha Goyal, a Delhi-based chartered accountant and partner of PD Gupta & Company.
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