[image: image.png] The new income tax slabs proposed under the new tax regime in Budget 2025 will help salaried individuals save a maximum income tax of Rs 1,14,400. The income tax savings are on the premise that an individual is claiming only a standard deduction of Rs 75,000 under the new tax regime. A salaried individual can save more tax if he claims a deduction on his employer’s contribution to the National Pension System (NPS).
Here is an EY analysis on how much additional tax savings a salaried employee will have from proposed new income tax <https://taxconcept.net/income-tax/new-vs-old-regime-new-income-tax-slab-for-fy-2024-25/> slabs under the new tax regime. It is assumed that he/she claims <https://taxconcept.net/gst/role-of-gstr-2b-in-claiming-maximum-gst-input-tax-credit/> a standard deduction of Rs 75,000 under the new tax regime. Gross taxable income Current income tax <https://taxconcept.net/income-tax-2/> payable Proposed income tax payable Income tax saved after Budget 2025 Rs 12,75,000 Rs 83,200 0 Rs 83,200 Rs 15,00,000 Rs 1,30,000 Rs 97,500 Rs 32,500 Rs 16,00,000 Rs 1,53,400 Rs 1,13,100 Rs 40,300 Rs 20,00,000 Rs 2,78,200 Rs 1,92,400 Rs 85,800 Rs 24,75,000 Rs 4,26,400 Rs 3,12,000 Rs 1,14,400 Rs 25,00,000 Rs 4,34,200 Rs 3,19,800 Rs 1,14,400 As per EY analysis, taxpayers opting for the new tax regime in the current FY 2024-25 will save more in the upcoming FY 2025-26 due to changes proposed in the income tax slabs under the new tax regime.Shalini Jain, Tax Partner, People Advisory Services, EY India says, “Budget 2025 has made significant changes to income tax slabs under the new tax regime while keeping the tax slabs unchanged in the old tax regime. This demonstrates that the government wants to encourage wider adoption of the new tax regime to ease the burden on both the taxpayers and the income tax authorities. The proposed changes will provide much needed tax relief to the lower and middle income bracket taxpayers. Now a salaried taxpayer whose net taxable income is Rs 12 lakh will pay NIL tax due to the enhanced tax rebate proposed in the Budget 2025. Even those taxpayers who fall in 30% tax bracket will now save taxes of Rs.1,14,400 (including cess) due to recalibration of the income tax slabs. For FY 2023-24, about 72% of the taxpayers opted for new tax regime. With the proposed changes in Budget 2025, it is expected that even a higher percentage of individual taxpayers will opt for new tax regime going forward.” *Individuals opting for old tax regime* Individuals opting for the old tax regime will now have to claim minimum deductions/exemptions of up to Rs.8.5 lakh (including standard deduction of Rs.50,000) in a financial year. This amount of deduction is necessary so that the individual pays the same amount of tax under the old and proposed new tax regime. Gross taxable income Income tax payable under old tax regime Proposed income tax under new tax regime Deductions to pay same tax in both tax regimes Rs 12,75,000 Nil Nil Rs 7,75,000 Rs 15,00,000 Rs 97,500 Rs 97,500 Rs 5,93,750 Rs 16,00,000 Rs 1,13,100 Rs 1,13,100 Rs 6,18,750 Rs 20,00,000 Rs 1,92,400 Rs 1,92,400 Rs 7,58,333 Rs 24,75,000 Rs 3,12,000 Rs 3,12,000 Rs 8,50,000 Rs 25,00,000 Rs 3,19,800 Rs 3,19,800 Rs 8,50,000 If the salaried taxpayer claims lower deductions than the amounts mentioned above, then he will pay more tax in old tax regime as compared to the new tax regime. In the last budget, an individual taxpayer was required to claim the minimum deduction of Rs 4,83,333 to ensure that the tax payable in both the tax regimes remains the same. This includes standard deduction of Rs 50,000 under the old tax regime. Hitesh Sharma, Partner, Vialto Partners, says, “The proposed amendments are likely to give a significant boost to taxpayers opting for the new tax regime (NTR). With the tax-free income limit now raised to ₹12 lakh (₹12.75 lakh for salaried individuals) and revised slabs reducing overall tax liability, middle-class income group stand to gain the most. In FY 2023-24, 72% of taxpayers had already opted for NTR, up from 66% in the previous year. While this trend is likely to continue, taxpayers who benefit from deductions (such as HRA, home loans and investments) may still prefer the old tax regime. The proposed amendments would increase the spendable income and encourage tax filing compliance; however, it could also possibly contribute to discouraging investments in savings schemes.” Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx K Rajaram IRS 4225 -- You received this message because you are subscribed to the Google Groups "Thatha_Patty" group. To unsubscribe from this group and stop receiving emails from it, send an email to [email protected]. To view this discussion visit https://groups.google.com/d/msgid/thatha_patty/CAL5XZopWROhigr58_4dGqFD9z5Z7W3us7egJN3z0hcm7mrJmdA%40mail.gmail.com.
