Union Budget 2025-26: no income tax up to ₹12 lakh under the new regime
On 1 February 2025, in Parliament in New Delhi, Finance Minister Nirmala Sitharaman announced that no income tax will be payable on normal income up to ₹12 lakh under the new tax regime.
Summary
On 1 February 2025, in Parliament in New Delhi, Finance Minister Nirmala Sitharaman presented the Union Budget 2025-26 and announced that no income tax will be payable on income up to ₹12 lakh (other than special rate income such as capital gains) under the new tax regime. The limit is ₹12.75 lakh for salaried taxpayers because of the ₹75,000 standard deduction. The relief comes from slab-rate cuts plus a larger rebate: earlier, resident individuals with income up to ₹7 lakh paid no tax under the new regime. The revised slabs are nil up to ₹4 lakh, 5% for ₹4-8 lakh, 10% for ₹8-12 lakh, 15% for ₹12-16 lakh, 20% for ₹16-20 lakh, 25% for ₹20-24 lakh and 30% above ₹24 lakh. The Budget also extended the time limit for updated returns from two to four years and raised the TDS limit on interest for senior citizens from ₹50,000 to ₹1 lakh.
Key facts
- Date / place
- 1 Feb 2025, Parliament, New Delhi
- Nil tax up to
- ₹12 lakh (₹12.75 lakh for salaried, with ₹75,000 standard deduction)
- Earlier rebate limit
- ₹7 lakh under the new regime
- New slabs
- 0-4 lakh nil; 4-8: 5%; 8-12: 10%; 12-16: 15%; 16-20: 20%; 20-24: 25%; above 24: 30%
- Updated returns
- Time limit raised from 2 to 4 years
- Senior citizens' TDS on interest
- Limit raised from ₹50,000 to ₹1 lakh
Practice MCQs 5 questions
Under the new tax regime announced in the Union Budget 2025-26 on 1 February 2025, no income tax is payable on normal income up to:
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Correct answer: C — ₹12 lakh
Budget speech and PIB (1 Feb 2025): there will be no income tax payable on income up to ₹12 lakh under the new regime, other than special rate income such as capital gains.
For salaried taxpayers under the new regime, what is the nil-tax income limit after the Union Budget 2025-26, taking the standard deduction into account?
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Correct answer: A — ₹12.75 lakh
PIB (1 Feb 2025): the limit will be ₹12.75 lakh for salaried taxpayers, with a standard deduction of ₹75,000.
In the revised new-regime slabs of the Union Budget 2025-26, what rate applies to the income slab of ₹12-16 lakh?
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Correct answer: D — 15 per cent
Budget speech (para 158): 12-16 lakh rupees is taxed at 15 per cent under the revised new-regime structure.
Consider the following statements about the income-tax changes in the Union Budget 2025-26: 1. Under the new regime, the 30% rate applies to income above ₹24 lakh. 2. The ₹12 lakh nil-tax threshold also covers special rate income such as capital gains. Which of the statements given above is/are correct?
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Correct answer: A — 1 only
Budget speech: the top slab is above 24 lakh rupees at 30 per cent, so statement 1 is correct. The ₹12 lakh limit is for income other than special rate income such as capital gains, so statement 2 is wrong. Answer: 1 only.
The Union Budget 2025-26 extended the time limit for filing updated income-tax returns for any assessment year from two years to:
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Correct answer: B — Four years
PIB Summary (1 Feb 2025): the time limit to file updated returns was increased from two years to four years.