Income tax basic exemption limit hiked by Rs 1 lakh in new tax regime in Budget 2025: Check new tax exemption limit

The income tax basic exemption limit has been hiked to Rs 4 lakh from Rs 3 lakh under the new tax regime in Union Budget 2025-26.

The basic exemption limit under the new tax regime was last hiked in the Budget 2023-from Rs 2.5 lakh to Rs 3 lakh; and under the old tax regime, it was last hiked in the Budget 2014-from Rs 2 lakh to Rs 2.5 lakh.

A hike in the income tax basic exemption limit means all taxpayers will pay lower taxes. Further, the income tax return (ITR) filing will become necessary only if gross taxable income exceeds the newly announced exemption limit, except in specified cases.


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Current income tax laws on basic exemption limit

The income tax exemption limit for an individual is determined by the income tax regime selected for a particular financial year. If a taxpayer opts for the new tax regime in a financial year, an income tax exemption limit of Rs 3 lakh is applicable, irrespective of the age of the taxpayer.

If a taxpayer opts for the old tax regime in a financial year, then the income tax basic exemption limit will depend on the age of the individual. For instance, if the individual's age is below 60 years, income up to Rs 2.5 lakh in a financial year will be exempt from tax under the old regime.

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On the other hand, if the taxpayer's age is 60 years or more but below 80 years, then he/she will be considered a senior citizen, and income up to Rs 3 lakh will be exempt from tax.

If the taxpayer's age is 80 years or more, then he/she will be considered a super-senior citizen, and income up to Rs 5 lakh will be exempt from tax in a financial year.

ITR filing is mandatory if basic exemption limit is below in these cases

Remember, the new tax regime is the default tax regime. Hence, the basic exemption limit of Rs 3 lakh will be applicable for all taxpayers.

According to income tax laws, income tax return filing is mandatory in certain cases even if the gross taxable income is below the basic exemption limit. These are:
a) If the electricity bill paid in a financial year is more than Rs 1 lakh in a financial year
b) Expenditure of foreign travel of Rs 2 lakh or more in a financial year on him/herself or any other person
c) If there is income from foreign assets
d) If the TDS or TCS is Rs 25,000 or more in a financial year; for senior citizens, the limit is Rs 50,000 or more
e) Taxpayer having professional income of Rs 10 lakh or more
f) Depositing Rs 50 lakh or more in savings accounts or Rs 1 crore or more in current accounts.