Budget 2025-26: The Biggest Middle-Class Tax Relief in Years
The headline announcement: zero income tax for income up to ₹12 lakh under the New Regime. With ₹75,000 standard deduction, this is effectively ₹12.75 lakh for salaried employees.
The verdict: Most significant personal income tax relief since the introduction of the New Regime in 2020.
Tax Changes Summary
Personal Income Tax (New Regime)
| Change | FY 2024-25 | FY 2025-26 | Impact |
|---|
| Zero tax threshold | Up to ₹7 lakh | Up to ₹12 lakh | ₹5L more income tax-free |
| Standard deduction | ₹50,000 | ₹75,000 | ₹25K more deduction |
| Effective zero-tax limit | ₹7,50,000 | ₹12,75,000 | For salaried employees |
TDS Rate Changes — Effective April 1, 2025
| Section | Description | Old Rate | New Rate |
|---|
| 194A | FD interest (others) | ₹40K threshold | ₹50K threshold |
| 194A | FD interest (senior citizens) | ₹50K threshold | ₹1L threshold |
| 194H | Commission/brokerage | 5% | 2% |
| 194-O | E-commerce operators | 1% | 0.1% |
Capital Gains Tax (Effective July 23, 2024)
| Asset | STCG (Old) | STCG (New) | LTCG (Old) | LTCG (New) |
|---|
| Listed equity/MF | 15% | 20% | 10% (>₹1L) | 12.5% (>₹1.25L) |
| Property | Slab | Slab | 20% with indexation | 12.5% no indexation |
Savings Calculator by Income Level
| Annual Income | FY 2024-25 Tax | FY 2025-26 Tax | Tax Saved |
|---|
| ₹8,00,000 | ₹54,600 | ₹0 | ₹54,600 |
| ₹10,00,000 | ₹78,000 | ₹0 | ₹78,000 |
| ₹12,00,000 | ₹1,17,000 | ₹0 | ₹1,17,000 |
| ₹15,00,000 | ₹1,95,000 | ₹1,17,000 | ₹78,000 |