Budget 2025-26: More disposable income in taxpayer’s hands

03 Feb 2025

Budget 2025-26: More disposable income in taxpayer’s hands
Image source: Photo by Nirmala Sitharaman, licensed under CC BY-ND, via flickr.com
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Presenting the Union Budget for the financial year 2025-26 in Parliament today, finance minister Nirmala Sitaraman proposed an increase in standard deduction for personal income tax to Rs75,000 from existing Rs50,000 for those opting for the new tax regime. 

Similarly, standard deduction on family pension for pensioners is proposed to be enhanced to Rs25,000 from Rs15,000 at present.

This will provide relief to about 40 million salaried individuals and pensioners.

The budget also proposed a revision in the tax rate structure that would reduce the tax burden for the common man and leave more disposable income in their hands.

The proposed income tax rate structure

Tax Slab Rate proposed

Rs0-3 lakh - Nil

Rs3-7 lakh - 5 per cent

Rs7-10 lakh - 10 per cent

Rs10-12 lakh - 15 per cent

Rs12-15 lakh - 20 per cent

Above Rs15 lakh - 30 per cent

Under the proposed tax rates, a salaried employee in the new tax regime can save up to Rs17,500 in income tax.

These proposals will result in a revenue loss of about Rs8,000 crore for the exchequer. With Rs29,000 crore loss on account of changes in indirect tax rates. However, with fresh mobilisation of Rs30,000 crore the net loss of revenue will be Rs7,000 crore, Sitaraman said.

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