Budget 2025-26: The Biggest Middle-Class Tax Relief in Years
The headline announcement: zero income tax for income up to ā¹12 lakh under the New Regime. With ā¹75,000 standard deduction, this is effectively ā¹12.75 lakh for salaried employees.
The verdict: Most significant personal income tax relief since the introduction of the New Regime in 2020.
Tax Changes Summary
Personal Income Tax (New Regime)
| Change | FY 2024-25 | FY 2025-26 | Impact |
|---|
| Zero tax threshold | Up to ā¹7 lakh | Up to ā¹12 lakh | ā¹5L more income tax-free |
| Standard deduction | ā¹50,000 | ā¹75,000 | ā¹25K more deduction |
| Effective zero-tax limit | ā¹7,50,000 | ā¹12,75,000 | For salaried employees |
TDS Rate Changes ā Effective April 1, 2025
| Section | Description | Old Rate | New Rate |
|---|
| 194A | FD interest (others) | ā¹40K threshold | ā¹50K threshold |
| 194A | FD interest (senior citizens) | ā¹50K threshold | ā¹1L threshold |
| 194H | Commission/brokerage | 5% | 2% |
| 194-O | E-commerce operators | 1% | 0.1% |
Capital Gains Tax (Effective July 23, 2024)
| Asset | STCG (Old) | STCG (New) | LTCG (Old) | LTCG (New) |
|---|
| Listed equity/MF | 15% | 20% | 10% (>ā¹1L) | 12.5% (>ā¹1.25L) |
| Property | Slab | Slab | 20% with indexation | 12.5% no indexation |
Savings Calculator by Income Level
| Annual Income | FY 2024-25 Tax | FY 2025-26 Tax | Tax Saved |
|---|
| ā¹8,00,000 | ā¹54,600 | ā¹0 | ā¹54,600 |
| ā¹10,00,000 | ā¹78,000 | ā¹0 | ā¹78,000 |
| ā¹12,00,000 | ā¹1,17,000 | ā¹0 | ā¹1,17,000 |
| ā¹15,00,000 | ā¹1,95,000 | ā¹1,17,000 | ā¹78,000 |