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Budget Insights

New Tax Slabs: How Much Will Taxpayers Save

Sajhyadri C Posted on July 08, 2025

One of the highly awaited aspects of the Union Budget 2023-24 was that of a possible revision in personal income tax rates. The Finance Minister did match up to the expectations and offered further concessions on the tax rates applicable to the new tax regime.

Do keep in mind that if you are filing taxes under the now optional old tax regime, the newly announced tax benefits will not apply.

To give you a handle on how much you save under the new income tax slabs, here is a snapshot of the essential announcements along with some tax calculations.

Revisions in Income Tax as per the Union Budget 2023

Additional Rebate for New Tax Regime

The Union Budget 2023 sought to make the new tax regime the default option for taxpayers going forward. Before the announcement of the budget, taxpayers under the old and new regimes did not pay any income tax if their incomes did not exceed ₹5 Lakhs.

Now, you enjoy an additional rebate if you file taxes under the new regime. The rebate limit has been raised to ₹7 Lakhs in the new tax regime. This means that if your income is up to ₹7 Lakhs, you will not need to pay any amount in taxes.

New Revised Income Tax Slabs for FY 23-24

Another benefit for resident individuals paying taxes according to the new regime is the reduction of the number of income tax slabs. The Finance Minister also raised the basic exemption limit to ₹3 Lakhs from ₹2.5 Lakhs.

This is what the new income tax slabs look like for the new regime. Please note that this applies to FY 23-24 or AY 24-25.

Income slab	Tax rate
₹0 - ₹3 Lakhs	0%
₹3,00,001–₹6 Lakhs	5%
₹6,00,001–₹9 Lakhs	10%
₹9,00,001–₹12 Lakhs	15%
₹12,00,001–₹15 Lakhs	20%
Above ₹15 Lakhs	30%

For the sake of comparison, below are the previous tax slabs attached to the new regime. These were applicable for FY 22-23 or AY 23-24.

Income slab	Tax rate
₹0 - ₹2.5 Lakhs	0%
₹2,50,001–₹5 Lakhs	5%
₹5,00,001–₹7.5 Lakhs	10%
₹7,50,001–₹10 Lakhs	15%
₹10,00,001–₹12.5 Lakhs	20%
₹12,50,001–₹15 Lakhs	25%
Above ₹15 Lakhs	30%

Standard Deduction Extended to New Tax Regime

Earlier, you could avail of a standard deduction of ₹50,000 only under the old tax regime. Now, this deduction applies to the new tax regime as well. This also includes the deduction from family pension up to ₹15,000.

Savings Under the New Regime with New Tax Slabs

Below are some tax calculations to help you put things into perspective based on various amounts of annual income.

Annual Income of ₹7 Lakhs

Say you earn ₹7 Lakhs a year. Here’s what your taxes will look like based on the two regimes.

New regime (Post-budget 2023)

Owing to the enhancement in the rebate limit, you pay ₹0 as taxes if you file taxes under the new tax regime for FY 23–24 or AY 24–25.

New Regime (Pre-budget 2023)

Taxable Income	Taxed At	Tax Payable
₹0–2.5 Lakhs	0%	₹0
₹2,50,001–5 Lakhs	5%	₹12,500
₹5,00,001–7 Lakhs	10%	₹20,000
	Total	₹32,500
	+4% cess	₹33,800

Your total savings are therefore ₹33,800 – ₹0 = ₹33,800. This enables you to invest for your future or increase your purchasing power in the present.

Annual Income of ₹10 Lakhs

Say you earn ₹10 Lakhs a year. Here’s what your taxes will amount to as per the two tax regimes.

New regime (Post-budget 2023)

First, consider the standard deduction of ₹50,000.

With this, your taxable income amounts to ₹9,50,000.

This is how you would be taxed under the new slabs of the new regime as per the Budget 2023 announcement.

Taxable Income	Taxed At	Tax Payable
₹0–3 Lakhs	0%	₹0
₹3,00,001–₹6 Lakhs	5%	₹15,000
₹6,00,001–₹9 Lakhs	10%	₹30,000
₹9,00,001–₹9,50,000	15%	₹7,500
	Total	₹52,500
	+4% cess	₹54,600

New regime (Pre-budget 2023)

Taxable Income	Taxed At	Tax Payable
₹0–2.5 Lakhs	0%	₹0
₹2,50,001–₹5 Lakhs	5%	₹12,500
₹5,00,001–₹7.5 Lakhs	10%	₹25,000
₹7,50,001–₹10 Lakhs	15%	₹37,500
	Total	₹75,000
	+4% cess	₹78,000

Your total savings are therefore ₹78,000 – ₹54,600 = ₹23,400. This is a 30% reduction in your taxes, which amounts to a sizable sum.

Annual Income of ₹20 Lakhs

Say you earn ₹20 Lakhs a year. Here’s what your taxes will come to when calculated as per the two regimes.

New Regime (Post-budget 2023)

First, consider the standard deduction of ₹50,000.

With this, your taxable income amounts to ₹19,50,000.

This is how you will be taxed under the new slabs of the new regime.

Taxable Income	Taxed At	Tax Payable
₹0–3 Lakhs	0%	₹0
₹3,00,001–6 Lakhs	5%	₹15,000
₹6,00,001–9 Lakhs	10%	₹30,000
₹9,00,001–₹12 Lakhs	15%	₹45,000
₹12,00,001–₹15 Lakhs	20%	₹60,000
₹15,00,001–₹19,50,000	30%	₹1,35,000
	Total	₹2,85,000
	+4% cess	₹2,96,400

New Regime (Pre-budget 2023)

Taxable Income	Taxed At	Tax Payable
₹0–2.5 Lakhs	0%	₹0
₹2,50,001–₹5 Lakhs	5%	₹12,500
₹5,00,001–₹7.5 Lakhs	10%	₹25,000
₹7,50,001–₹10 Lakhs	15%	₹37,500
₹10,00,001–₹12.5 Lakhs	20%	₹50,000
₹12,50,001–₹15 Lakhs	25%	₹62,500
₹15,00,001–₹20,00,000 Lakhs	30%	₹1,50,000
	Total	₹3,37,500
	+4% cess	₹3,51,000

Your total savings are therefore ₹3,51,000 – ₹2,96,400 = ₹54,600. This 15.5% reduction in your taxes helps you divert the funds to other pressing obligations.

Considering how these tax reforms work themselves out in actual calculations, it is fair to say that you will pay less tax. Of course, this is if you choose the new regime. However, picking between the old and new tax regimes is something that is up for debate.

Experts advise that if you are able to exhaust the deductions of the old regime to the fullest, you will be better off there and will save more on tax. Yet, the new tax regime is simpler and with the new tax reforms, lightens your tax burden.

So, make an informed choice that best suits your finances.

Hi! I’m Sajhyadri C

Blogger

Always ready to dive into new ideas and topics, Sajhyadri is a storyteller from Kolkata, the City of Joy. He enjoys weaving narratives that make finance feel less intimidating and more inspiring. As a financial content writer, he uses the power of the pen to craft insightful blogs, compelling video scripts, and marketing copies that catch the eye. Off duty, he’s either checking out the latest web series, listing out new eateries, or debating whether his favourite football team will finally have a better season!