Budget 2025: Income Tax Rate On Rs 15 Lakh Salary Likely To Be Cut, Says Report; Check New & Old Tax Rates

Budget 2025: Once again Indian taxpayers are rooting for relief in terms of income tax rates levied on salaries per annum in the upcoming budget 2025. The PM Modi led government has come to power for second term in India, and Finance Minister Nirmala Sitharaman is all set to present her seventh Union Budget for FY25-26 on February 1, 2025. As per a report, the government is likely to cut tax rate on income slab of Rs 15 lakh.

Two government sources told Reuter, that India is mulling cutting income tax for individuals making up to Rs 15 lakh per annum in February's budget, which is expected to provide relief to middle-class salaried individuals and drive consumption as the economy slows.

The report further stated that tens of millions of taxpayers, especially city dwellers are likely to be key beneficiaries of the probable tax cut.

On December 26th, the Finance Ministry through its X handler said that Union Minister for Finance & Corporate Affairs, Nirmala Sitharaman chaired the fourth Pre-Budget Consultation with the stakeholders and experts from export, trade and industry sectors in connection with the upcoming Union Budget 2025-26.

During the meeting, Union Minister of State for Finance Pankaj Chaudhary, Finance Secretary and Secretary of DIPAM, and Secretaries of the Department of Economic Affairs, Department of Commerce and Industry, and Chief Economic Adviser to the Government of India were also presented.

Minister of State For Finance tweeted saying, "Participated in the Pre-Budget Consultation meeting for the Union Budget 2025-26, chaired by Hon'ble Minister of Finance, Smt. Nirmala Sitharaman Ji," adding, "The discussions focused on key challenges and opportunities in the Trade and Services sectors to ensure their strengthening in the upcoming budget."

Currently, in India, there are two regimes of income tax slabs for FY24-25 (assessment year 2025-26).

New Tax Regime:

Salary up to Rs 3 lakh: Zero

Salary From Rs 3 lakh to Rs 7 lakh: 5% Tax Rate

Salary From Rs 7 Lakh To Rs 10 Lakh: 10% Tax Rate

Salary From Rs 10 Lakh To Rs 12 Lakh: 15% Tax Rate

Salary From Rs 12 Lakh To Rs 15 Lakh: 20% Tax Rate

Above Rs 15 Lakh: 30% Tax Rate.

Old Tax Regime:

Up To Rs 2.5 Lakh Salary: Zero Rates

From Rs 2,50,001 To Rs 5,00,000 Salary: 5% Tax Rate

From Rs 5,00,001 To Rs 10,00,000 Salary: 20% Tax Rate

From Rs 10,00,001 And Above Salary: 30% Tax Rate

In the Union Budget 2024, FM made two announcements. Firstly, the standard deduction for salaried employees is proposed to be increased from Rs 50,000/- to Rs 75,000/-. Similarly, the deduction on family pension for pensioners is proposed to be enhanced from Rs 15,000/- to Rs 25,000/-. The move was announced to provide relief to about four crore salaried individuals and pensioners.

In its year-ender 2024 report, FinMin released that refunds amounting to about Rs 3.08 lakh crore issued between 1st April, 2024 and 27th November, 2024 which is about 46.31% higher than refunds during the same period in preceding year. Also, 8.50 crore ITRS filed till November 11, 2024, which is 7.32% higher than ITRs filed for the corresponding period of the preceding year.

Also, in its Monthly Economic Review for November 2024 which released on December 26, 2024, FM said, looking into FY26, newer uncertainties have emerged. Global trade growth is looking more uncertain than before. Elevated stock markets continue to pose a big risk. The strength of the US dollar and a rethink on the path of policy rates in the United States have put emerging market currencies under pressure. In turn, that will make monetary policymakers in these countries think more deeply about the path of policy rates. Recent exchange rate movements may have lowered their degrees of freedom. In sum, sustaining growth will require a deeper commitment from all economic stakeholders to growth.