The Union Budget 2025, presented on February 1, 2025, introduced several changes that directly affect individual taxpayers, businesses, and investors. In this article, we break down the most important changes in plain language — without the jargon.
New Income Tax Slabs (New Regime)
The most significant change is the revision of income tax slabs under the new regime, which is now the default regime for all taxpayers:
| Income Range | Old Rate | New Rate (2025) |
|---|---|---|
| Up to ₹3 lakh | Nil | Nil |
| ₹3 – ₹7 lakh | 5% | 5% |
| ₹7 – ₹10 lakh | 10% | 10% |
| ₹10 – ₹12 lakh | 15% | 15% |
| ₹12 – ₹15 lakh | 20% | 20% |
| Above ₹15 lakh | 30% | 30% |
Important: The rebate under Section 87A has been enhanced — taxpayers with income up to ₹12 lakh (₹12.75 lakh for salaried with standard deduction) will pay zero tax under the new regime.
Key Deductions and Exemptions
Standard Deduction Increased
The standard deduction for salaried employees and pensioners has been increased from ₹50,000 to ₹75,000 under the new tax regime. This directly reduces your taxable income before slabs are applied.
Section 80C Remains Unchanged
The ₹1.5 lakh limit under Section 80C — covering PPF, ELSS, life insurance premiums, and home loan principal — remains unchanged under the old regime. If you have significant 80C investments, the old regime may still be beneficial. Consult your CA before switching.
Changes for Businesses
- Presumptive taxation limit raised — The turnover limit for professionals opting for presumptive taxation under Section 44ADA has been increased to ₹75 lakh.
- TDS threshold changes — Several TDS thresholds have been revised upward, reducing compliance burden for small payers.
- Startup tax holiday extended — The eligibility period for startup tax exemptions under Section 80-IAC has been extended to companies incorporated before April 1, 2027.
What Should You Do Now?
- Review your regime choice — With slabs remaining the same but rebate enhanced, many salaried individuals will benefit from the new regime in FY2025-26.
- Recalculate your TDS — Inform your employer of your regime choice for the current financial year to ensure correct TDS deduction.
- Reassess your investments — If you were investing solely for 80C benefit, evaluate whether continuing those investments makes sense under the new regime.
- Consult before switching — The decision between old and new regime depends on your income composition, deductions, and investments. One size does not fit all.
At R. Mahesh & Associates, we help individuals and businesses navigate budget changes and optimise their tax position. If you'd like a personalised review, we're happy to help.
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