Income Tax Slab Budget 2025: No tax up to Rs 12 lakh. Indian government introduced a new tax system in 2020
Union Finance Minister Nirmala Sitharaman has presented the budget in Parliament today. The common people have got a big relief from this budget. There was an expectation about changes in tax slabs in this budget, while there was also curiosity about what rules would be brought for tax payers from the old tax regime. All this has finally come to an end. The Finance Minister has made a big announcement regarding income tax in the budget.
There will be no tax up to Rs 12 lakh. The Government of India introduced a new tax system in 2020, which is simpler and easier than the old regime. In the new regime, only NPS is exempted. Whereas, the old regime offers benefits on many things.
The old
tax regime provides various types of exemptions and deductions to save tax. It includes various exemptions and deductions like 80C, 80D, HRA (Housing Relief Allowance), LTC (Living Travel Allowance).
regime:
Tax exemption on investments like PF (Provident Fund), insurance, home loan interest. Long-term investments are encouraged. Exemption on medical expenses for the family.
Disadvantages of the old regime:
The tax process is a bit complicated. You may have to pay more tax if you do not take advantage of deductions.
The new tax regime
has been implemented with fewer steps and simplified tax rates. It does not include any deductions and tax exemptions, but the tax rates are relatively low.
Advantages of the new tax regime:
Straightforward and simple tax structure. Low tax rates, hence beneficial for high income earners. No restrictions on any investment.
Disadvantages of the new tax regime:
No benefit of any deductions. Long-term savings are not encouraged.
Which system to choose?
If a person does not want to invest for tax savings and wants a simplified tax system, then the new tax system is suitable. However, if you think in terms of tax savings and want to take advantage of various deductions, then the old tax system may be more beneficial.