The New Income Tax Bill 2025 introduces significant revisions to income tax thresholds and limits, aiming to simplify the tax structure and provide relief to taxpayers. Here’s a detailed analysis of the key changes:
1. Revised Income Tax Slabs
The new tax regime has restructured the income tax slabs to increase the non-taxable income threshold and adjust tax rates for various income brackets.
- Non-Taxable Income Threshold:
- Previous Threshold: ₹7 lakhRevised Threshold: ₹12 lakh
- Standard Deduction:
- Previous Deduction: ₹50,000Revised Deduction: ₹75,000
- Updated Tax Rates : Income Range (₹)Tax Rate Up to 4,00,000 Nil 4,00,001 to 8,00,000 5% 8,00,001 to 12,00,000 10% 12,00,001 to 16,00,000 15% 16,00,001 to 20,00,000 20% 20,00,001 to 24,00,000 25% Above 24,00,000 30%.These adjustments aim to reduce the tax burden on middle-income groups and simplify the tax structure.
2. Surcharge Rates
The surcharge rates have been revised to provide relief to taxpayers in higher income brackets:
- Income above ₹50 lakh up to ₹1 crore: 10%
- Income above ₹1 crore up to ₹2 crore: 15%
- Income above ₹2 crore up to ₹5 crore: 25%
- Income above ₹5 crore: 37%
However, under the new regime, the maximum surcharge is capped at 25%, providing relief to taxpayers in the highest income brackets.
3. Rebate under Section 87A
The rebate under Section 87A has been enhanced:
- Eligibility: Individuals with taxable income up to ₹7 lakh.
- Rebate Amount: 100% of income tax or ₹25,000, whichever is less.
This effectively means that individuals with income up to ₹7 lakh will not have any tax liability.
4. Deductions and Exemptions
The new tax regime continues to offer certain deductions:
- Standard Deduction: ₹75,000 for salaried individuals.
- Family Pension Deduction: Increased to ₹30,000.
However, many other deductions and exemptions available under the old regime are not applicable in the new regime.
5. Comparison with Old Tax Regime
Taxpayers have the option to choose between the old and new tax regimes. The old regime offers various deductions and exemptions, such as those under Sections 80C, 80D, and housing loan interest, which are not available in the new regime. Taxpayers should evaluate their tax liability under both regimes to determine which is more beneficial.
These revisions in the New Income Tax Bill 2025 are designed to simplify the tax structure, reduce the tax burden on middle-income groups, and encourage compliance. Taxpayers are advised to assess their individual situations to make informed decisions regarding their tax planning.
