Here’s How the New Tax Regime Will Impact Your Monthly Tax Savings!

Curious about the changes in India’s new tax regime in India? It shows how much tax you will save monthly based on different annual incomes. The incomes considered are ₹15 lakh, ₹25 lakh, ₹35 lakh, and ₹45 lakh.

Previous New Tax Slab Rates

In the old new tax regime, income up to ₹3 lakh had no tax. After a rebate, income up to ₹7 lakh per year was also tax-free. The tax slab rate started from those earning above ₹7,00,001 at a 10% rate. Subsequently,

Current New Tax Regime Slabs

Finance Minister Nirmala Sitharaman proposed the current new tax regime in February 2025. Under this, the tax-free limit increased to ₹4 lakh. Subsequently,

Other Key Changes That Impact Your Tax Savings

Another big change is that the tax-free income limit has increased to ₹12,00,000. For salaried individuals, this limit has become ₹12,75,000.

Salaried individuals get a standard deduction under Section 87A and get an extra tax break of ₹75,000.

If someone earns ₹12 lakh, their tax before rebate would be ₹60,000. However, under Section 87A, they get a maximum tax rebate of ₹60,000. This makes their income of ₹12 lakh tax-free.

The new tax regime offers another important benefit. If a taxpayer’s income is slightly above the tax-free limit, they don’t pay tax on the entire income. For example, if someone earns ₹12,05,000, they don’t pay tax on the whole amount. Their total tax will be ₹5,000 plus 4% (education and health cess) of the ₹5,000.

Calculation of Tax Savings

Tax Savings at ₹15 Lakh Income

• Old New Tax Regime (FY24-25): ₹1,30,000

• Current New Tax Regime (FY25-26): ₹97,500

• Yearly Saving: ₹32,500

• Monthly Saving: ₹2,708.33

Tax Savings at ₹25 Lakh Income

• Old New Tax Regime (FY24-25): ₹4,34,200

• Current New Tax Regime (FY25-26): ₹3,19,800

• Yearly Saving: ₹1,14,400

• Monthly Saving: ₹9,533.33

Tax Savings at ₹35 Lakh Income

• Old New Tax Regime (FY24-25): ₹7,46,200

• Current New Tax Regime (FY25-26): ₹6,31,800

• Yearly Saving: ₹1,14,400

• Monthly Saving: ₹9,533.33

Tax Savings at ₹45 Lakh Income

• Old New Tax Regime (FY24-25): ₹10,58,200

• Current New Tax Regime (FY25-26): ₹9,43,800

• Yearly Saving: ₹1,14,400

• Monthly Saving: ₹9,533.33

Conclusion

The revised new tax regime in India, effective from FY25-26, brings significant changes in tax slabs and tax-free income limits. While some income groups will see substantial monthly savings, others might experience less benefit compared to the previous new tax regime. Taxpayers should review these changes to understand their tax liabilities better.

Read more on: SBI Revises ATM Charges: What It Means for You

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in the securities market are subject to market risks. Read all the related documents carefully before investing.