How Much New Tax Regime Increase Your Original Income? Know Total Calculation After Exemption upto Rs. 12 Lakhs:

The central government of India has made a major amendment to the budget. As per the made changes, the income upto Rs. 12 lakh is tax-free under the new tax regime. People who have chosen the new tax regime will discover an increase in their In-Hand salary today. Let us understand with the help of an example. Here is a man named Suraj, and his salary comes on the 1st day of each month. Hence, today is May 01, 2025, and he is awaiting his salary. His salary is credited into his account every month. This time, Suraj will receive his salary with an increased amount without an appraisal. This will not happen to Suraj only. In India, there are lakhs of people who will receive their April salary with an increment. Here, Suraj is also aware of how much increment will be made to his salary this month. Initially, Suraj's yearly income is 12 lakh and previous year, he opted for the New Tax Regime. However, as the financial year has changed, now Suraj will receive an increased salary, as this year the government has introduced a big relief in income tax. As per the made amendments, individuals earning income upto 12 lakhs are not required to pay any sort of tax on it. The limit has now increased with the beginning of the new financial year 2025-26. Earlier, this limit was upto Rs 7 lakh under the New Tax Regime. Which has not increased to Rs. 12 lakhs. Now let's understand how much increment will be made to Suraj's salary. As per Suraj, his salary is Rs. 1 lakh per month. The previous year, as per the tax rules, Suraj was required to pay Rs. 71500 income tax yearly on his salary under the New Tax Regime. That means Suraj was required to pay a total of Rs. 5958 as income tax per month. Which was reduced from this salary in March 2025. However, now he will be asked to pay the decreased amount in comparison to earlier. In Budget 2025, the central government has raised the amount of tax rebate under section 87A to Rs 60,000. According to the new tax regime 2025, individuals with income upto 12 lakhs are required to pay a total of Rs. 52,500. Under Section 87A, a tax rebate of Rs. 52,500 is available, so no tax needs to be paid. Because of this, Suraj’s salary will increase by Rs. 5,958 on May 1, almost like getting a raise. On the other hand, the old tax regime is not very useful now. If Suraj chooses it, he will have to pay Rs. 1,63,800 in annual income tax, even though he can claim deductions. But to get those deductions, he would need to invest a large amount. In the new tax regime, he won’t have to pay any tax on the same income. No Tax on Income Up to Rs. 12.75 Lakh in New Tax Regime from April 2025 From April 1, 2025, the new tax regime has made it easier for salaried people by increasing the no-tax limit. Now, if your annual income is up to Rs. 12.75 lakh, you don’t have to pay any income tax. This is because of a higher rebate under Section 87A and a standard deduction of Rs. 75,000. Earlier, there was no tax on income up to Rs. 7 lakh. But now, this limit has been raised to Rs. 12 lakh. For example, someone earning Rs. 12.75 lakh per year will now save all the tax they paid last year, thanks to the changes. In Suraj's case, this update means he’ll take home Rs. 5,958 more on May 1, just like getting a raise. If he sticks with the old tax regime, he would still have to pay Rs. 1,63,800 in tax and invest a large amount to get deductions. But with the new regime, no such investment is needed to avoid tax. This change is a big benefit, especially for the middle class.