TAX BUDGET 2025 Summary
Indian Tax System: Old vs. New Tax Regime
The Indian tax system offers two options for taxpayers: the old tax regime and the new tax regime. Here's a comparison of the two, keeping in mind the 2025 budget changes:
Old Tax Regime
Tax Slabs:
- Income up to Rs 2,50,000: No tax
- Rs 2,50,001 to Rs 5,00,000: 5%
- Rs 5,00,001 to Rs 10,00,000: 20%
- Above Rs 10,00,000: 30%
Deductions and Exemptions:
Allows for various deductions and exemptions under sections like 80C, 80D, HRA, etc. This can significantly reduce taxable income.
Higher Tax Rates:
Generally has higher tax rates compared to the new regime.
New Tax Regime
Tax Slabs:
- Income up to Rs 4,00,000: No Tax
- Rs 4,00,001 to Rs 8,00,000: 5%
- Rs 8,00,001 to Rs 12,00,000: 10%
- Rs 12,00,001 to Rs 16,00,000: 15%
- Rs 16,00,001 to Rs 20,00,000: 20%
- Rs 20,00,001 to Rs 24,00,000: 25%
- Above Rs 24,00,000: 30%
Lower Tax Rates:
Offers lower tax rates for various income slabs.
Limited Deductions:
Does not allow for many deductions and exemptions available in the old regime.
Comparison
- Tax Rates: The new regime generally has lower tax rates, especially for lower income slabs.
- Deductions: The old regime allows for a wide range of deductions and exemptions, which can significantly reduce taxable income. The new regime offers limited deductions.
- Choice: Taxpayers can choose between the old and new regimes based on their individual financial situation and preferences.
Which Regime to Choose?
- Individuals claiming many deductions: The old regime might be more beneficial for those who utilize various deductions and exemptions.
- Individuals with simpler finances: The new regime might be simpler and more beneficial for those with fewer deductions to claim.
Note: The information provided here is based on the 2025 budget announcements. It's always advisable to consult with a financial advisor or refer to the official income tax department website for the most accurate and up-to-date information.
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