Comparison between Tax on income of ₹12,00,000 in FY 2024-25 (AY 2025-26) and FY 2025-26 (AY 2026-27) for individual taxpayers
Summary : Under Union Budget 2024, there were six tax slabs under New Regime giving a tax-free slab of ₹3,00,000 for individuals in comparison to Union Budget 2025, giving a tax-free slab rate of ₹4,00,000 to the individuals. Highest tax slab being 30% above income of ₹15,00,000 in Budget 2024 as compared to 30% above income of ₹24,00,000 in recent Budget 2025.
Introduction : The Tax Slabs between Budget 2024 and Budget 2025 changed significantly, giving huge tax relief to the individuals. Not only tax slabs but changes in Section 87A of Income Tax Act,1961 with a rebate of ₹60,000 for individuals with income upto ₹12,00,000 as compared to earlier rebate of ₹12,500 with income upto ₹7,50,000.
Comparison in Tax Slabs in FY 2024-25 and FY 2025-26 :
| Income for FY 2024-25 | Income Tax Rates | Income for FY 2025-26 | Income Tax Rates |
| Income up to ₹3,00,000 | 0% | Income upto ₹4,00,000 | 0% |
| ₹3,00,000 – ₹ 7,00,000 | 5% on income above ₹3,00,000 | ₹4,00,000 – ₹8,00,000 | 5% on income above ₹4,00,000 |
| ₹7,00,000 – ₹10,00,000 | ₹20,000 + 10% on income above ₹7,00,000 | ₹8,00,000 – ₹12,00,000 | ₹20,000 + 10% on income above ₹8,00,000 |
| ₹10,00,000 – ₹12,00,000 | ₹50,000+ 15% on income above ₹10,00,000 | ₹12,00,000 – ₹16,00,000 | ₹60,000 + 15% on income above ₹12,00,000 |
| ₹12,00,000 – ₹15,00,000 | ₹80,000+20% on income above ₹12,00,000 | ₹16,00,000 – ₹20,00,000 | ₹1,20,000 + 20% on income above ₹16,00,000 |
| ₹20,00,000 – ₹24,00,000 | ₹2,00,000 + 25% on income above ₹20,00,000 | ||
| Above ₹15,00,000 | ₹1,40,000+ 30% on income above ₹15,00,000 | Above ₹24,00,000 | ₹3,00,000 + 30% on income above ₹24,00,000 |
*Surcharge and education cess of 4% will be applicable in addition to the slab rates.
Tax Calculation and Difference in Tax on income of ₹12,00,000 in FY 2024-25 (AY 25-26) and FY 2025-26 (AY 26-27)
| Income for FY 2024-25 | Tax based on Slabs | Income for FY 2025-26 | Tax based on Slabs |
| Income up to ₹3,00,000 | NIL | Income upto ₹4,00,000 | NIL |
| ₹3,00,000 – ₹ 7,00,000 | 5% of ₹4,00,000 = ₹20,000 | ₹4,00,000 – ₹8,00,000 | 5% of ₹4,00,000 = ₹20,000 |
| ₹7,00,000 – ₹10,00,000 | ₹20,000 + (10% of ₹ 3,00,000) = ₹50,000 | ₹8,00,000 – ₹12,00,000 | ₹20,000 + (10% of ₹4,00,000) = ₹60000 |
| ₹10,00,000 – ₹12,00,000 | ₹50,000 + (15% of ₹2,00,000) = ₹ 80,000 | ||
| Gross Tax | ₹80,000 | Gross Tax | ₹60,000 |
| Rebate under Sec 87A | NIL | Rebate under Sec 87A | ₹60,000 |
| Net Tax | ₹80,000 | Net Tax | NIL |
| Education Cess @ 4% | ₹3,200 | Education Cess @ 4% | NIL |
| Total Tax Payable | ₹83,200 | Total Tax Payable | NIL |
Conclusion : Where Union Budget 2024 taxes individual ₹83,200 for income of ₹12,00,000 as compared to NIL tax for the same amount of income in Budget 2025. Budget 2025 came with great benefits for the middle class individuals.
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