New Tax Regime rules 2025: Read and make your doubt clear about the new Tax Regime

Union Finance Minister Nirmala Sitharaman unveiled her eighth consecutive Union Budget on Saturday (February 1). The income tax rebates she announced are the biggest talking point as of now.

Schemes for the MSME sector, women, farmers, the education sector, for boosting exports, etc. have also been announced.

Erase your confusion of new tax regime 2025;

What is ‘New Regime’?

Ans. The new regime provides for concessional tax rates and liberal slabs. However, no deductions are allowed in the new regime (other than those specified, e.g., 80JJAA, 80M, standard deduction).

 

2. What were the tax slabs in the earlier new regime?

Ans. The Finance (No.2) Act, 2024 had the following slabs in the new tax regime for individuals, Hindu Undivided Families (HUFs), associations of persons (other than cooperative societies), bodies of individuals, and artificial juridical persons under Section 2(31)(vii).

3. What are the new slabs in the proposed new regime introduced by Finance Bill, 2025?
Ans. The new slabs proposed under Section 115BAC (1A) are as follows:

4. What is the tax benefit for different categories of taxpayers (₹0-24 lakh)?

5. What is the maximum total income for which tax liability for individual taxpayers is NIL?
Ans. The maximum total income for which tax liability is NIL in the proposed new tax regime is ₹12 lakh.

6. How can an individual claim the benefit of NIL tax liability?
Ans. The benefit is available only under the new tax regime, which is now the default regime. To avail of the rebate, taxpayers only need to file their income tax return (ITR); no additional steps are required.

7. Who benefits from the new tax regime?

Ans. The new tax regime applies to individuals, Hindu Undivided Families (HUFs), associations of persons, and artificial juridical persons. All eligible taxpayers in these categories stand to benefit from the revised slabs.

 

8. What was the earlier limit of income for NIL tax payment?

Ans. Previously, the NIL tax limit was ₹7 lakh. With the new increase to ₹12 lakh, nearly one crore taxpayers who earlier paid between ₹20,000 to ₹80,000 in tax will now pay zero tax.

 

9. How much tax relief is available due to these changes?

Ans. The government estimates that the tax relief will leave ₹1 lakh crore in the hands of taxpayers due to the changes in slabs, rates, and rebates.

 

10. What is marginal relief, and how does it work?

Ans. Marginal relief ensures that taxpayers earning slightly above ₹12 lakh do not end up paying more tax than their excess income over ₹12 lakh.

 

 

16. What is the total income till which marginal relief is available?

Ans. ₹12,75,000.

 

17. Is rebate available on special income like capital gains or lotteries?

Ans. No. Rebate is not available on capital gains, lotteries, or incomes taxed at special rates

18. What is the difference between rebate and marginal relief?
Ans. Rebate: Tax deduction available for income up to ₹12 lakh.
Marginal relief: Ensures taxpayers slightly above ₹12 lakh don’t pay excessive tax.

19. How is marginal relief computed?
Ans. It is calculated by ensuring that taxpayers earning slightly above ₹12 lakh pay tax only on the additional amount rather than facing higher slabs.

Example for ₹12,10,000 income:

Without relief: ₹61,500 tax
With relief: ₹10,000 tax (only on ₹10,000 excess over ₹12 lakh)

20. What is the maximum rebate available?
Ans. ₹60,000 (for ₹12 lakh income, otherwise taxable under the new slabs).

21. Will special incomes like lottery winnings get the rebate benefit?
Ans. No, rebate applies only to slab-based income, not special tax rates.