New Income Tax Bill: Finance Minister Nirmala Sitharaman will table the New Income Tax Bill in Parliament today. Once it becomes an act, proposed new tax regime slabs will come into effect, which are set to be implemented from April 1, 2025. We have existing new tax slabs and old regime tax slabs. But amid 3 slabs, where will you save the most tax, and how much, if your salary is Rs 8 lakh, Rs 14 lakh, Rs 20 lakh, or Rs 26 lakh?
New Income Tax Bill 2025: Finance Minister Nirmala Sitharaman is set to table the New Finance Bill in Parliament today (February 13, 2025). The bill has the provision of the proposed new tax regime, which she announced in her Budget 2025 speech this month. Once the bill becomes an act, proposed new tax regime slabs are set to come into effect from April 1, 2025. In the proposed tax slabs, non-salaried individuals don’t need to pay any tax on an annual income of Rs 12 lakh. For salaried-class individuals, this limit is Rs 12.75 lakh. However, under the new regime, taxpayers still need to file their income tax as per the existing tax slabs as the proposed slabs will be available for FY202526. Amid such a scenario, in which tax regime will you pay the least tax if you are a salaried class with an annual salary of Rs 8 lakh, Rs 14 lakh, Rs 20 lakh, or Rs 26 lakh? See calculations to get a clear picture.
Existing new tax regime slabs
| Tax Slab for FY 2024-25 | Tax Rate |
| Up to Rs 3 lakh | NIL |
| Rs 3 lakh – Rs 7 lakh | 5% |
| Rs 7 lakh – Rs 10 lakh | 10% |
| Rs 10 lakh – Rs 12 lakh | 15% |
| Rs 12 lakh – Rs 15 lakh | 20% |
| Above Rs 15 lakh | 30% |
Proposed new tax regime slabs
| Income Tax Slabs | Tax Rate |
| Upto Rs. 4,00,000 | NIL |
| Rs. 4,00,001 – Rs. 8,00,000 | 5% |
| Rs. 8,00,001 – Rs. 12,00,000 | 10% |
| Rs. 12,00,001 – Rs. 16,00,000 | 15% |
| Rs. 16,00,001 – Rs. 20,00,000 | 20% |
| Rs. 20,00,001 – Rs. 24,00,000 | 25% |
| Above Rs. 24,00,000 | 30% |
Old new tax regime slabs
There was no change in the old tax slab. They are the same as they were before Sitharaman’s Budget 2025 speech.
| Income Slabs | Below 60 | 60 To 80 Years |
| Up to Rs 2,50,000 | NIL | NIL |
| Rs.2,50,001 – Rs.3,00,000 | 5% | NIL |
| Rs 3,00,001 – Rs 5,00,000 | 5% | 5% |
| Rs 5,00,001 to Rs 10,00,000 | 20% | 20% |
| Rs 10,00,001 and above | 30% | 30% |
Proposed vs Existing New Tax Regime: What are the main changes?
- In the existing new regime, there is nil tax up to Rs 3 lakh income, which will be increased to Rs 4 lakh.
- The 5 per cent tax slab will start from Rs 4 lakh instead of Rs 3 lakh.
- The 10 per cent tax slab will begin from Rs 8 lakh instead of Rs 7 lakh.
- The 15 per cent tax slab will start from Rs 12 lakh instead of Rs 10 lakh.
- The 20 per cent tax slab will begin from 16 lakh instead of Rs 12 lakh.
- A new tax slab of 25 per cent will be introduced, which will start from Rs 20 lakh.
- The 30 per cent tax slab will start from Rs 24 lakh instead of Rs 15 lakh.
How is Rs 12.75 lakh income tax-free?
In the proposed slabs, salaried class individuals will get a Rs 75,000 standard deduction on their income. On the rest of the Rs 12 lakh amount, they will get a tax rebate of Rs 60,000. So, it will become tax-free.
New tax regime deductions
The main attraction for picking the old tax regime was a number of deductions, such as those mentioned under Section 80C of the Income Tax Act, 1961. But the new tax regime also provides deductions such as NPS contribution from the employer, a standard deduction of Rs 75,000, a maximum tax rebate of Rs 60,000, reimbursements such as entertainment, food, family pension income, contributions to the Agniveer scheme, etc.
Marginal relief
The new tax regime also provides marginal relief, where if the income of a non-salaried individual is more than Rs 12 lakh and for a salaried individual, it is more than Rs 12.75 lakh, they need to pay tax only on the income above these limits provided their total tax liability is less than the additional income.
Old vs new tax regime: Tax on Rs 8 lakh income
For our calculation, we are not taking any deduction in either the old or the new tax regime. All taxes are calculated on the basis of the annual salary only.
- Existing new tax regime- Rs 23,400
- Proposed new tax regime- 0
- Old tax regime- Rs 65,000
Old vs new tax regime: Tax on Rs 10 lakh income
- Existing new tax regime- Rs 44,200
- Proposed new tax regime- 0
- Old tax regime- Rs 1,06,600
Old vs new tax regime: Tax on Rs 14 lakh income
- Existing new tax regime- Rs 1,09,200
- Proposed new tax regime- Rs 81,900
- Old tax regime- Rs 2,26,200
Old vs new tax regime: Tax on Rs 17 lakh income
- Existing new tax regime- Rs 1,84,600
- Proposed new tax regime- Rs 1,30,000
- Old tax regime- Rs 3,19,800
Old vs new tax regime: Tax on Rs 20 lakh income
- Existing new tax regime- Rs 2,78,200
- Proposed new tax regime- Rs 1,92,400
- Old tax regime- Rs 4,13,400
Old vs new tax regime: Tax on Rs 23 lakh income
- Existing new tax regime- Rs 3,71,800
- Proposed new tax regime- Rs 2,66,500
- Old tax regime- Rs 5,07,000
Old vs new tax regime: Tax on Rs 26 lakh income
- Existing new tax regime- Rs 4,65,400
- Proposed new tax regime- Rs 3,51,000
- Old tax regime- Rs 6,00,600
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