New Income Tax Bill 2025: All FAQs on tax slabs, old vs new regime, and more answered | Mint

Amid the new Income Tax Bill 2025, we answer several FAQs on tax slabs, the old vs. new regime, the new income tax rules, exemption limits, and more.

What is the new income tax rule?

The new Income-Tax (I-T) Bill, announced by Finance Minister Nirmala Sitharaman during her Budget speech on February 1, is likely to be tabled in the Lok Sabha on Thursday, as per reports.

The New Income Tax Bill will span over 622 pages and aims to replace the 60-year-old Income Tax Act of 1961. Once passed, the proposed legislation will be called the Income Tax Act, 2025, and is expected to take effect in April 2026.

It was approved by the Union Cabinet on February 7. After it was passed by the Lok Sabha, the bill will be sent to the Parliament’s Standing Committee on Finance for further discussions.

What is the difference between old and new tax regime?

According to the official income tax website, the tax slabs and rates are different in old and new tax regimes. Various deductions and exemptions are allowed in the old tax regime. The new regime offers lower rates of taxes but permits limited deductions and exemptions.

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

What is the new tax regime in 2024?

Both old and new tax regimes are available to taxpayers in 2024. The option to choose between two regimes may vary from person to person. It is advisable to do a comparative evaluation and analysis under both regimes and then choose as per requirement.

What is new update in income tax?

Individuals earning up to ₹12 lakh annually will not have to pay any income tax under consideringthe new tax regime as Finance Minister Nirmala Sitharaman on Saturday gave relief to middle class by raising exemption limit and rejigging slabs.

For salaried employees, this nil tax limit will be ₹12.75 lakh per annum, after taking into account a standard deduction of ₹75,000.

The tax slabs are as follows:

• 0 – ₹4 lakh — tax is 0 per cent
• ₹4-8 lakh — tax is 5 per cent
• ₹8-12 lakh — tax is 10 per cent
• ₹12-16 lakh — tax is 15 per cent
• ₹16—20 lakh — tax is 20 per cent
• ₹20-24 lakh — tax is 25 per cent
• than ₹24 lakh — tax is 30 per cent

What is the new income tax bill?

The new Income-Tax (I-T) Bill, announced by Finance Minister Nirmala Sitharaman during her Budget speech on February 1, is is “crisper and simplified.”

It has replaced the term ‘previous year’ from the 60-year-old Income Tax Act, 1961, with ‘tax year’ and done away with the concept of ‘assessment year’.

Once the New Income Tax Bill is passed in the Parliament, it will be referred to the Parliamentary Standing Committee on Finance, which will start the consultation process.

Is ₹7 lakh income tax free?

In the proposed new tax regime, the maximum total income, for which tax liability for individual taxpayers is NIL, is ₹12 lakh.

Earlier, the limit of income for nil tax payment was ₹7 lakh. By increasing this limit to ₹12 lakh around one crore assesses, who were earlier required to pay tax varying from ₹20,000 to ₹80,000, will be now paying nil tax.

Further, a standard deduction of Rs. 75,000 is available to a tax payer in the new regime. Therefore, a salaried tax payer will not be required to pay any tax when his income before standard deduction is less than or equal to ₹12,75,000.