Finance Minister Nirmala Sitharaman has given great relief to salary class taxpayers in Union Budget 2025. Now no income tax will have to be paid on the annual income of up to Rs 13.05 lakh. Earlier this limit was Rs 12 lakh, but it has increased by Rs 13.05 lakh after adding standard deduction and marginal relief.
If your salary is up to Rs 13.05 lakh, then you will not have to pay any tax now. Come, let’s understand in detail how the new tax structure will work and how you will have tax saving.
Salary up to Rs 13.05 lakh – now completely tax free!
The government has given this relief in tax by combining standard deduction and marginal relief.
How to make tax-free limit up to Rs 13.05 lakh?
- Salary up to Rs 12 lakh – now completely tax free.
- On adding standard deduction of Rs 75,000 – tax free up to Rs 12.75 lakh.
- Tax free up to Rs 13.05 lakh on mixing marginal relief of Rs 30,000.
This means: If your annual salary is 13.05 lakh rupees or less, then you will not have to pay any tax.
Tax Savings: Learn 12 lakh, 15 lakh, 18 lakh, 20 lakh and how much tax has reduced on salary
After the budget 2025, the tax has decreased in every income bracket under the New Tax Regime. See below how much tax will be saved now.
| Salary (annual) | Old tax (₹) | New tax (₹) | Savings (₹) |
|---|---|---|---|
| 12 lakh rupees | ₹ 80,000 | ₹ 0 | ₹ 80,000 |
| 13.05 lakh rupees | ₹ 80,000 | ₹ 0 | ₹ 80,000 |
| 16 lakh rupees | ₹ 1,70,000 | ₹ 1,20,000 | ₹ 50,000 |
| 18 lakh rupees | ₹ 2,30,000 | ₹ 1,60,000 | ₹ 70,000 |
| 20 lakh rupees | ₹ 2,90,000 | ₹ 2,00,000 | ₹ 90,000 |
| 24 lakh rupees | ₹ 4,10,000 | ₹ 3,00,000 | ₹ 1,10,000 |
| 50 lakh rupees | ₹ 11,90,000 | ₹ 10,80,000 | ₹ 1,10,000 |
Conclusion: Now tax has been reduced in every salary slab, which will give a big relief to middle-class taxpayers.
New Tax Slab in New Tax Regim (fY 2025-26)
The government did not make any major change in the new tax slab, but made the income up to Rs 12 lakh tax free. See the new tax rate below.
| Income tax slab (₹) | Income tax rate (%) |
|---|---|
| 0 – 4,00,000 | Nil (No tax) |
| 4,00,001 – 8,00,000 | 5% |
| 8,00,001 – 12,00,000 | 10% |
| 12,00,001 – 16,00,000 | 15% |
| 16,00,001 – 20,00,000 | 20% |
| 20,00,001 – 24,00,000 | 25% |
| More than 24,00,001 | 30% |
Now income up to Rs 12 lakh is completely tax free, which will benefit millions of salary people.
What is marginal relief and how does it work?
The objective of marginal relief is that if a person has a slightly higher income tax-free limit, he will not have to pay tax on full income, but only the additional amount will be taxed.
Example:
- If someone has a salary of Rs 13.05 lakh, it has been completely taxed by including standard deduction (Rs 75,000) and marginal relief (Rs 30,000).
Only those people whose income is up to Rs 13.05 lakh.
