Income Tax Changes 2025: Old vs New Tax Regime Explained by Nirmala Sitharaman

Chennai: In the budget presented today, there are no changes to the old income tax system. Finance Minister Nirmala Sitharaman announced that individuals under the new income tax regime will not have to pay tax up to ₹12 lakh. Based on this, one can evaluate which income tax regime would be more suitable for them. For individuals with significant investments and an income of more than ₹1 lakh per month, the old system may be a better choice instead of the new tax regime. 

For an income of ₹2.5 lakh per year, there will be no tax, but for income between ₹2.5 lakh and ₹5 lakh, a 5% tax will apply. For income between ₹5 lakh and ₹10 lakh, a 20% tax will apply, and for income above ₹10 lakh, a 30% tax will apply. Tax benefits through exemptions such as 80C and 80D can reduce the tax liability. Those earning up to ₹7 lakh can avail more tax exemptions using these provisions. No changes were made to this tax regime compared to the previous one.

New System: This system is suitable for those who do not have large investments and whose income is ₹12 lakh per year. 

Under the new tax regime, for individuals with annual income below ₹12 lakh, no tax will be applicable. Here are the income tax slabs:
- ₹0-4 lakh: No tax
- ₹4-8 lakh: 5% tax
- ₹8-12 lakh: 10% tax
- ₹12-16 lakh: 15% tax
- ₹16-20 lakh: 20% tax
- ₹20-24 lakh: 25% tax
- ₹24 lakh and above: 30% tax

In this new regime, tax exemptions like 80C and 80D cannot be applied, so individuals will have to pay taxes as per the given slabs.