The Union Budget brought significant changes to income tax slabs, deductions, and capital gains. Here's a simplified breakdown for individuals and businesses.
The Union Budget 2025-26, presented by the Finance Minister, introduced sweeping changes to the personal income tax framework. For the first time in years, the New Tax Regime received a significant structural overhaul that makes it more attractive than ever for salaried individuals and small business owners.
New Tax Regime: Revised Slabs for FY 2025-26
The revised slabs under the New Tax Regime now offer zero tax up to ₹3 lakh, and the enhanced rebate under Section 87A means individuals with income up to ₹7 lakh pay no tax at all. Here is the revised slab structure:
- Up to ₹3,00,000 — Nil
- ₹3,00,001 to ₹7,00,000 — 5% (with full rebate u/s 87A if total income ≤ ₹7L)
- ₹7,00,001 to ₹10,00,000 — 10%
- ₹10,00,001 to ₹12,00,000 — 15%
- ₹12,00,001 to ₹15,00,000 — 20%
- Above ₹15,00,000 — 30%
💡 Pro Tip
Standard Deduction raised to ₹75,000 for salaried individuals under the New Regime. This effectively extends the zero-tax threshold to ₹7.75 lakh for salaried employees.
Capital Gains: Major Restructuring
Budget 2025 completed the rationalisation of capital gains taxation that began in 2024. The holding period definitions and tax rates have been simplified:
- Listed equity & equity mutual funds: STCG (holding < 1 year) — 20%, LTCG (> 1 year) — 12.5% with ₹1.25L exemption
- Unlisted shares: STCG — slab rates, LTCG (> 2 years) — 12.5% without indexation
- Real estate (residential): LTCG (> 2 years) — 12.5% without indexation OR 20% with indexation — taxpayer's choice
- Debt mutual funds: Taxed at slab rates irrespective of holding period
⚠️ Important
The removal of indexation for most asset classes means your effective tax outgo on long-term property sales may be higher or lower depending on the holding period and appreciation. Always get a professional calculation before filing.
TDS on Rent: Revised Threshold
The TDS threshold on rent paid to resident landlords has been raised from ₹2.40 lakh per annum to ₹6 lakh per annum. This significantly reduces the TDS compliance burden for the majority of residential tenants.
What Should You Do Now?
- Compare your tax liability under Old vs New Regime with the new slabs
- If you have significant investments under 80C, 80D, or HRA, recalculate before switching regimes
- Review your capital gains portfolio — consider rebalancing before March 31
- Update your Form 12BB declarations with your employer immediately
"The Budget has made the New Regime the default and more attractive option for most taxpayers. However, a blanket switch is not advisable without a personalised tax comparison."
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Kumar Kishan
FCA, Managing Partner
Kumar Kishan & Associates is a full-service CA firm based in Jaipur, serving 500+ clients across India and internationally. Our team specialises in direct and indirect taxation, corporate compliance, and financial advisory.
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