Union Budget 2025:Brief Analysis of Key Direct Tax Amendments Proposed in Finance Act, 2025
tax regime
1. Changes in Tax Rates:
No changes have been prescribed with respect to the tax rates and slab limit of the Individuals/HUF under the old tax regime.
Tax rates and slab limits for the Individuals/HUF under the new tax regime (section 115BAC of the IT Act) have been revised as under:
Existing Tax Slabs
Proposed Tax Slabs
Total income (INR)
Rate of Tax
Total Income (INR)
Rate of Tax
Up to 3,00,000
Nil
Up to 4,00,000
Nil
3,00,001 to 7,00,000
5%
4,00,001 to 8,00,000
5%
7,00,001 to 10,00,000
10%
8,00,001 to 12,00,000
10%
10,00,001 to 12,00,000
15%
12,00,001 to 16,00,000
15%
10,00,001 to 12,00,000
20%
16,00,001 to 20,00,00
20%
Above 15,00,000
30%
20,00,001 to 24,00,000
25%
Above 24,00,000
30%
2. Increase in the Rebate under section 87A of the IT Act:
The total income for rebate under section 87A of the IT Act has been proposed to be enhanced from INR 7,00,000 to INR 12,00,000. Consequently, rebate limit under new regime of income tax for individuals is proposed to be increased from INR 25,000 to an aggregate amount of INR 60,000. This will effectively result in nil taxation for individual tax payers having total income up to INR 12,00,000.
It has been also proposed that no rebate undersection 87A of the IT Act shall be allowed against the income computed under special rates.
This amendment will take effect from 1stApril 2025.