NEW TAX REGIME 2025 INDIA

 

In the Union Budget for the fiscal year 2025-26, presented on February 1, 2025, the Indian government introduced significant reforms to the personal income tax structure, aiming to stimulate economic growth by enhancing disposable incomes and encouraging consumer spending. Finance Minister Nirmala Sitharaman announced a substantial increase in the tax exemption threshold under the new tax regime, raising it from ₹700,000 to ₹1.28 million annually. This adjustment ensures that individuals earning up to ₹1.28 million ($14,800) are exempt from paying any income tax, thereby increasing their disposable income and fostering higher consumption levels. 

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To further incentivize the salaried class and pensioners, the standard deduction was increased from ₹50,000 to ₹75,000. This move is expected to provide additional tax relief to approximately four crore salaried individuals and pensioners, allowing them to retain more of their earnings. 

PIB.GOV.IN

The revised tax slabs under the new regime are as follows:

Income up to ₹300,000: Nil

₹300,001 to ₹700,000: 5%

₹700,001 to ₹1,000,000: 10%

₹1,000,001 to ₹1,200,000: 15%

₹1,200,001 to ₹1,500,000: 20%

Above ₹1,500,000: 30%

These adjustments are designed to reduce the tax burden on the middle class, thereby encouraging increased spending and investment. 

TIMESOFINDIA.INDIATIMES.COM

In addition to personal income tax reforms, the budget introduced measures to support various sectors of the economy. A notable initiative is the launch of a high-yield crop program targeting 17 million farmers, aimed at enhancing agricultural productivity and ensuring food security. The government also plans to formalize gig economy workers, improving their access to healthcare and welfare initiatives, thereby providing a safety net for this growing segment of the workforce. 

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The budget also places a strong emphasis on infrastructure development, with significant investments planned to modernize transportation networks, energy systems, and urban facilities. These investments are expected to create jobs, stimulate economic activity, and improve the overall quality of life for citizens. 

FT.COM

The government's fiscal strategy includes a commitment to reducing the fiscal deficit to 4.4% of GDP, reflecting a balance between stimulating growth and maintaining fiscal discipline. To finance the planned expenditures, the government plans to borrow ₹14.82 trillion, indicating a proactive approach to funding development initiatives while keeping debt levels within manageable limits. 

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These comprehensive measures reflect the government's dedication to fostering economic growth, enhancing the standard of living for its citizens, and positioning India for a robust recovery in the post-pandemic era.