New Tax Regime Calculator, Union Budget 2025-2026

Union Budget 2025-26:
Major Tax Reforms Benefiting the Middle Class

The Union Budget 2025-26 has brought significant tax reliefs aimed at increasing disposable income and simplifying tax compliance. The Finance Minister announced a new tax regime that raises the tax rebate threshold, making income up to ₹12,00,000 tax-free. For salaried individuals, the introduction of a ₹75,000 standard deduction further increases the tax-free income limit to ₹12,75,000. This is expected to provide a major financial boost to the middle class and encourage more people to shift to the new tax regime.

Revised Income Tax Slabs (New Regime)

This significant increase from the previous tax-free threshold of ₹7,00,000 to ₹12,00,000 is expected to enhance spending power and simplify tax filing for many individuals.

There is no change in old Tax Regime.

Changes in Capital Gains Tax:

The budget also introduced revised capital gains tax rates, impacting both long-term and short-term investments:

• Long-Term Capital Gains (LTCG) Tax: Increased from 10% to 12.5% for gains exceeding ₹1,25,000 in a financial year. This change applies to transfers made on or after July 23, 2024.

• Short-Term Capital Gains (STCG) Tax: Increased from 15% to 20% for assets held for less than one year.

While these adjustments may increase tax outflows for investors, they are intended to boost government revenue and align tax policies with global standards.

Senior Citizens Get a Major Relief

In a major announcement, the TDS limit on interest income for senior citizens has been doubled from ₹50,000 to ₹1,00,000. This will ensure that senior citizens can earn more interest income without tax deduction at source (TDS), thereby increasing their financial security.

Potential Impact on Tax Compliance and Investments

The increased tax rebate threshold and revised tax slabs will undoubtedly lead to higher spendable income and improved tax compliance. More individuals will find it beneficial to file taxes under the new regime rather than the old one. However, some experts believe that these reforms might discourage investments in long-term savings schemes like PPF, EPF, and other tax-saving instruments since the new regime does not offer tax deductions on these investments.

Reduction in Customs Tariff on Jewellery and Platinum Findings

The customs tariff on jewellery and its parts has been reduced from 25% to 20%, effective February 2, 2025. Additionally, the customs tariff on Platinum Findings has been significantly lowered from 25% to 5%. These reductions are expected to benefit the jewellery industry and consumers by making these products more affordable.