New Tax Regime 2025: Features, standard deduction, and key benefits explained

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).

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

Yes, 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 where his income before standard deduction is less than or equal to Rs.12,75,000. However, salaried taxpayers should remember that if the total contribution made to NPS, EPF and superannuation fund by an employer exceeds Rs.7.5 lakh in a financial year, then the excess contribution will be taxable in the hands of an employee. Further, interest or any return earned on the excess contribution will be taxable as well.

The new tax regime allows an individual to claim a deduction on NPS contributions made by an employer. This deduction is available under Section 80CCD (2) of the Income Tax Act. The current income tax rules allow an individual to claim a deduction of up to 14% of the salary as a deduction. Salary here means basic salary plus dearness allowance.

Approximately Rs. 1 lakh crore will be made available in the hands of the taxpayers by virtue of changes in slab, rates and rebate.

The maximum rebate available is Rs.60,000 which is there for a taxpayer having income of Rs.12 lacs on which tax is payable as per the new slabs.