Revised Income Tax Slabs in Budget 2025: How much tax will new regime taxpayer save on Rs 20 lakh salary under proposed slabs? See detailed analysis
New Tax Regime Revised Slabs in Budget 2025: After Finance Minister Nirmala Sitharaman's revision of new tax regime slabs and announcement of nil income tax till the income of Rs 12 lakh, excluding a standard deduction of Rs 75,000, a taxpayer will save more tax under the proposed tax regime. See how much tax a salaried class person with Rs 20 lakh annual income will save.
New Tax Regime Revised Slabs in Budget 2025: Nirmala Sitharaman gave tax relief to the majority of India's salaried class when she announced that taxpayers with an annual income up to Rs 12 lakh won't pay tax. With a Rs 75,000 addition of standard deduction, the amount for a salaried class person goes up to Rs 12.75 lakh. A large Indian salaried class falls in that salary bracket. However, if your income is even Rs 1 more than Rs 12.75 lakh, you have to pay tax on the entire income and not just on what you are earning over and above that limit. But even with that, taxpayers following the proposed tax slabs will have to pay less tax compared to those following the existing slabs. But how much? To give you an idea of that, we give you the detailed tax analysis of a person earning Rs 20 lakh a year.
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What are the changes in new tax regime?
The Finance Minister announced that taxpayers with an annual income up to Rs 12 lakh in a year won't have to pay tax. Other than that, the taxpayer will get an additional benefit of Rs 75,000 as a standard deduction. But if the salary is above Rs 12.75 lakh, they have to pay tax on the entire amount. However, for a non-salaried person, the standard deduction of Rs 75,000 won't apply and they need to pay tax if their income is more than Rs 12 lakh.
What are revised tax slabs?
Nil tax in the new regime on income up to Rs 0-4 lakh
5% tax in the new regime on income up to Rs 4-8 lakh
10% tax in the new regime on income up to Rs 8-12 lakh
15% tax in the new regime on income up to Rs 12-16 lakh
20% tax in the new regime on income up to Rs 16-20 lakh
25% tax in the new regime on income up to Rs 20-24 lakh
30% tax in the new regime on income above Rs 24 lakh
What are existing slabs?
For income 0-Rs 3 lakh- Nil
For income Rs 3 lakh-Rs 7 lakh- 5%
For income Rs 7 lakh-Rs 10 lakh- 10%
For income Rs 10 lakh-Rs 12 lakh- 15%
For income Rs 12 lakh-Rs 15 lakh- 20%
For income Rs 15 lakh+- 30%
What are we calculating?
We are calculating how much a new tax regime taxpayer with Rs 20 lakh annual income pays in tax and how much they will pay under the proposed slabs. We will first show how much they are paying now (under the existing slabs) and then compare it with how much they will pay under the proposed slabs. The end result will show the amount saved under the proposed tax slabs.
Tax on salary of Rs 20 lakh under existing tax regime
We will break up tax in several parts and see that at every stage how much tax they pay now.
Tax on 0-Rs 3 lakh
There is no tax on this part of income.
Tax on Rs 7 lakh-Rs 10 lakh
On this part, the tax amount for the income is Rs 20,000.
Tax on Rs 10 lakh-Rs 12 lakh
For this part of the salary, the tax is Rs 30,000.
Tax on Rs 12 lakh-Rs 15 lakh
The tax for this part will be Rs 60,000.
The total tax paid on the Rs 20 lakh salary in a year is Rs 1,40,000 under the existing system.
Income Tax on 0-Rs 4 lakh
There will no tax on this part of salary.
Income Tax on Rs 4 lakh-Rs 8 lakh
The tax paid for this part of income is Rs 20,000.
Income Tax on Rs 8 lakh-Rs 12 lakh
The tax paid for this portion of income is Rs 40,000.
Income Tax on Rs 12 lakh-Rs 15 lakh
The tax paid on this income is Rs 45,000.
Income Tax on Rs 15 lakh-Rs 20 lakh
The tax paid on this income is Rs 60,000.
The total tax paid is Rs 1,05,000.
The total tax paid is Rs 1,05,000.
Total tax saved
The tax saved on a Rs 20 lakh salary under proposed slabs will be Rs 35,000.
No change in old tax regime
While there were changes in the new tax regime, there was no change in the old tax regime.