A major change introduced in the Finance Bill 2025 is restructuring the New Income Tax regime to provide more take-home to salaried employees and encourage them to spend or invest further. The change indicates the government's intention to cease the complicated taxation process and ensure that the government's income reaches its treasury on time.
Bible says, "Give to everyone what you owe them: If you owe taxes, pay taxes; if revenue, then revenue; if respect, then respect; if honour, then honour." (Romans 13 :7). The Bible requests all the eligible to pay their dues without any hesitation, as everyone be subject to the governing authorities, for there is no authority except that which God has established, and it is expected one in authority is God's servant for your good.
While they are expected to pay their dues to the government as giving to the God, taxation is considered as a matter of smartness for the taxpayers. Former Finance Minister Late Mr.Arun Jaitley said "Indians were generally conservative and God-fearing, but they do not see tax evasion as a moral problem. Most Indians, see tax evasion as a mark of smartness."
Now, the Government has done the necessary to address this smartness, Introducing the New Tax Regime, and deducting the dues at the source without offering any other options for the salaried employees. This is made clearer with the latest budget, forcing each and everyone to choose the new regime, or the smartness will not work anymore. The Old regime becomes old and not attractive unless you spend more on rent and housing loan repayments with its maximum limits.
This is an awesome rebate to the taxpayers from any finance minister in the recent past. The current budget gives more to pockets of people who opted for the new regime:
Annual tax saving up to Rs.83,200/- or no tax if your annual income is less than Rs.12.75 lacs, and a maximum of Rs.1.14 lacs where the gross salary is Rs.24.75 lacs. (Without considering the surcharge impacts).
Taxation changes that impact the salaried employees
- No changes in the tax slabs of Old Regime.
- The revised tax structure under the New Tax Regime as follows:
|
Income Slabs (New Regime) |
Rate of Tax |
|
INR 0 - 400,000/- |
NIL |
|
INR 400,000 - 800,000 |
5% |
|
INR 800,000 - 12,00,000 Lakhs |
10% |
|
INR 12,00,000 - 16,00,000 Lakhs |
15% |
|
INR 16,00,000 - 20,00,000 Lakhs |
20% |
|
INR 20,00,000 - 24,00,000 Lakhs |
25% |
|
Above INR 24,00,000 and above |
30% |
Additional tax relief measures affect the investors.
- TDS threshold on interest earned by senior citizens from INR 50,000 to INR 100,000, for other resident individuals the limit is increased to INR 50,000 from the current INR 40,000.
Salient features of the Tax calculator
- Useful for the salaried employees of the government and private sector.
- Comparison of the tax savings between the FY 2024-25 and FY 2025-26, based on the 2024-25 salary and tax saving details.
- Calculate taxes, rebates/relief, and deductions for all types of income including agriculture income, to arrive at the annual tax liability.
- Marginal relief on the Income tax and surcharge, where income crosses the prescribed limits. Eg. a Person having taxable salary is 12,00,100/- has to pay a tax of Rs.100/- only.
- Automated HRA exemption/Sec 80GG deduction calculation based on the salary and rent payments.
- Validation on Chapter VI A deduction limits, Housing loan interest set off, best tax regime suggestion for the taxpayers, highlights of tax changes when the taxable income crosses 50 Lakh/1 Crore and so on.
Have a great tax year ahead.
The author can also be reached at bennythadathil@gmail.com
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