Union Budget 2025-26 provided much-needed relief to taxpayers with Finance Minister Nirmala Sitharaman proposing new slabs and exempting tax on income up to ₹12 lakh.

The new structure slashes taxes on the middle class, leaving more money in their hands. Therefore, if you have an annual salary of ₹20 lakh, you will be able to save ₹90,000 under the new income tax slabs.

Similarly, a taxpayer in the new regime with an income of ₹12 lakh will get a benefit of ₹80,000 in tax — 100% of tax payable as per existing rates.

An individual making ₹16 lakh will be eligible to save ₹50,000 under the proposed tax reforms.

A person having an income of ₹18 lakh will get a benefit of ₹70,000 in tax (30% of tax payable as per existing rates). A person with an income of ₹25 lakh gets a benefit of ₹1.10 lakh (25% of his tax payable as per existing rates). Individuals earning ₹50 lakh will also save ₹1.10 lakh.

The revised income tax slabs under the new tax regime offer full tax exemption on income between ₹1 lakh and ₹4 lakh, while there is a 5% income tax liability for the ₹4-8 lakh bracket. Earnings between ₹8 lakh and ₹12 lakh will attract a tax of 10%. There is a 15% income tax rate for the ₹12-16 lakh slab. Under the income bracket of ₹16-20 lakh and ₹20-24 lakh, the tax payable is 20% and 25%, respectively. Those in the highest income tax bracket of above ₹24 lakh per annum will pay 30% tax.

As a result of these proposals, revenue of about ₹1 lakh crore in direct taxes and ₹2,600 crore in indirect taxes will be foregone, Finance Minister Nirmala Sitharaman said while presenting her Budget.

Sitharaman also announced a New Income Tax Bill which will be introduced next week. The new Bill will be "simple" for taxpayers and reduce litigation, said the finance minister.

Resident individuals with a total income of up to ₹7 lakh do not pay any tax due to a rebate under the existing new tax regime. “It is proposed to increase the rebate for the resident individual under the new regime so that they do not pay tax if their total income is up to ₹12 lakh. Marginal relief as provided earlier under the new tax regime is also applicable for income marginally higher than ₹12 lakh,” reads the Budget document.

new slab

Earning ₹20 lakh? You can save ₹90,000 under new income tax slabs; here's how