There have been many significant changes in the rules of Income Tax in the year 2025. These changes are not only in tax slabs, but also the freedom to choose the tax regime. Elections between Old Tax Regime and New Tax Regime have now become even more important, as both can be beneficial in their own way. Budget 2025 has made several provisions to provide special relief to Middle-Class Taxpayers.
The biggest impact of these changes will be that Salaried Individuals will now get the benefit of Standard Deduction, which will reduce their tax Liability. In addition, the Presumptive Taxation Scheme has also been changed which can be beneficial for small businesses. In this article, we will understand all these changes in detail and also see how they will have an impact on your pocket.
Income tax regime overview
To understand the changes in the rules of Income Tax Regime, it is important to know which major changes have taken place and how they will affect you. The table below has a brief description of these changes:
| Speciality | Description |
| Tax-free limit | In New Tax Regime, the income tax -free limit has been increased to ₹ 12 lakh. |
| Standard deduction | There is a standard deduction of ₹ 75,000 for people with salary. |
| Tax slabs | New tax regime new tax slabs have been implemented in the new tax regime that provide low tax rates. |
| Old vs new regime | Taxpayers can choose from Old Tax Regime or New Tax Regime. |
| Presumptive taxation | Changes have been made in the Presumptive Taxation Scheme for small businesses. |
| Unified tax year | Income tax bill 2025 Unified Tax Year has been launched. |
| Simplification of Laws | Old and irrelevant provisions have been removed to simplify tax laws. |
Difference between old and new tax system
The main difference between old tax regime and new tax regime is that the old system consists of many deductions and exemptions, which help taxpayers to reduce their tax liability. On the other hand, new tax regime reduces tax rates but the number of deductions is very low. This system is known for low compliace and simple tax process.
Increase in tax -free limit
Budget 2025 has increased Tax-Free Limit to ₹ 12 lakhs, which will specially benefit taxpayers of low and middle class. Apart from this, a standard deduction of ₹ 75,000 has also been given for salaryed individuals, which reduces their tax liability even further. This change will be especially beneficial for the middle class as it will save more money in their pockets.
Changes in tax rates
Tax rates have also been revised in New Tax Regime. Now income is tax free up to ₹ 12 lakhs, and then various tax slabs are applied. The table below has tax rates under New Tax Regime:
| Income limit (₹) | Tax rate (%) |
| 0 – 4,00,000 | 0% |
| 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% |
| 24,00,001 and more | 30% |
Freedom to choose tax system
Now taxpayers have the freedom to choose from Old Tax Regime and New Tax Regime. This election depends on their personal economic status and requirements. If you have many deductions, Old Tax Regime can be beneficial, while if you want less compliance and simple tax process, the new tax regime can be a better option.
Change in Present Taxation Scheme
Changes have also been made in the Presumptive Taxation Scheme. Under this scheme, small businesses have to pay a certain percentage of their income as tax, so that they do not need to keep more accounts. This change will be particularly beneficial for small and medium -sized businesses.
Integrated tax year starts
Income tax bill 2025 Unified Tax Year has been launched. This provision will be especially beneficial for new businesses and professionals, as this will make it easier for them to join the tax system.
Simplification of tax laws
Many old and irrelevant provisions have been removed to simplify tax laws. This change will make the tax process even more simple and understandable for taxpayers.
Details of major changes
Here is the details of some major changes that will affect your pocket:
- Increase in tax -free limit: Income tax -free limit has been increased to ₹ 12 lakh.
- Standard deduction: standard deduction of ₹ 75,000 for persons with salary.
- Changes in tax rates: New tax slabs have been implemented.
- Freedom to choose the tax system: Taxpayers can choose from the old or new tax system.
- Changes in the Present Taxation Scheme: Changes have been made in the Present Taxation Scheme for small businesses.
conclusion
It is clear from all these changes that the rules of Income Tax 2025 will be particularly beneficial for the middle class. The simplicity of the new tax regime and the low compliace is making it attractive to many taxpayers, while the Old Tax Regime is better for those who have many deductions.
Disclaimer: This article is for general information and should not be taken as any specific financial advice. It would be appropriate to consult a professional tax advisor for a personal tax status.
