Yes, it seems that the new tax regime proposed by the Finance Minister offers significant tax relief for individuals earning up to ₹12 lakh annually, effectively making their income tax-free. This would be beneficial for middle-income earners, as they will see a complete reduction in their tax liability compared to the current tax rates.
Income Tax Slab FY 2025-26 – New Regime
| Income range (₹) | Tax rate |
|---|---|
| 0 – 4 lakh | Nil |
| 4 – 8 lakh | 5% |
| 8 – 12 lakh | 10% |
| 12 – 16 lakh | 15% |
| 16 – 20 lakh | 20% |
| 20 – 24 lakh | 25% |
| Above 24 lakh | 30% |
For individuals earning ₹18 lakh, the tax benefit of ₹70,000, or 30% of the tax they would owe under the existing system, shows that there is a progressive advantage based on income. Similarly, someone earning ₹25 lakh will see a reduction of ₹1,10,000, which is 25% of the tax they would owe under the current structure.
Income Tax Slab FY 2025-26 – Calculation and Benefit Analysis
| Income | Tax on slabs (Present) | Tax on slabs (Proposed) | Benefit of Rate/Slab | Rebate | Total benefit | Tax after benefit |
| ₹8 lakh | ₹ 30,000 | ₹ 20,000 | ₹ 10,000 | ₹ 20,000 | ₹ 30,000 | ₹ 0 |
| ₹ 9 lakh | ₹ 40,000 | ₹ 30,000 | ₹ 10,000 | ₹ 30,000 | ₹ 40,000 | ₹ 0 |
| ₹10 lakh | ₹ 50,000 | ₹ 40,000 | ₹ 10,000 | ₹ 40,000 | ₹ 50,000 | ₹ 0 |
| ₹11 lakh | ₹ 65,000 | ₹ 50,000 | ₹ 15,000 | ₹ 50,000 | ₹ 65,000 | ₹ 0 |
| ₹12 lakh | ₹ 80,000 | ₹ 60,000 | ₹ 20,000 | ₹ 60,000 | ₹ 80,000 | ₹ 0 |
| ₹16 lakh | ₹ 1,70,000 | ₹ 1,20,000 | ₹ 50,000 | ₹ 0 | ₹ 50,000 | ₹ 1,20,000 |
| ₹20 lakh | ₹ 2,90,000 | ₹ 2,00,000 | ₹ 90,000 | ₹ 0 | ₹ 90,000 | ₹ 2,00,000 |
| ₹24 lakh | ₹ 4,10,000 | ₹ 3,00,000 | ₹ 1,10,000 | ₹ 0 | ₹ 1,10,000 | ₹ 3,00,000 |
| ₹50 lakh | ₹ 11,90,000 | ₹ 10,80,000 | ₹ 1,10,000 | ₹ 0 | ₹ 1,10,000 | ₹ 10,80,000 |
The new regime is designed to simplify tax computation and encourage more people to shift to it by making it more attractive for individuals with incomes up to ₹12 lakh, especially when special exemptions and deductions are not being claimed.
What do you think about the new regime in terms of its overall effectiveness? Does it seem more appealing than the old system to you?