01/02/2025
Frequently Asked Questions (FAQs) on Budget 2025 & Taxation for Salaried Employees
1. What is the new tax rebate limit as per Budget 2025?
As per Budget 2025, the income tax rebate limit has been increased to ₹12,00,000. This means if your annual income is up to ₹12 lakhs, you won’t have to pay any income tax.
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2. I earn ₹20 lakhs annually. How will my tax be calculated now?
For a CTC of ₹20 lakhs:
First ₹12 lakhs: Tax-free
Remaining ₹8 lakhs: Tax calculated as per slab rates, not a flat rate.
For example:
5% tax on ₹3,00,000 (₹12L–15L)
10% tax on ₹5,00,000 (₹15L–20L)
3. Is the tax applied flat 20% on income above ₹12 lakhs?
No, tax is not applied as a flat 20%. It is calculated based on income slabs with progressive tax rates starting from 5% to 20%, depending on your taxable income.
4. I pay ₹30,000 rent per month. How will this affect my tax?
You can claim HRA (House Rent Allowance) exemption. The exemption is calculated based on:
Actual HRA received
50% of basic salary (metro city) or 40% (non-metro)
Rent paid minus 10% of basic salary
In your case, this could reduce your taxable income significantly, lowering your tax liability.
5. How much tax will I pay on a ₹20 lakh CTC if I pay ₹30,000 rent monthly?
After accounting for HRA exemption and standard deduction:
Taxable Income: Approx. ₹12,65,000
Estimated Tax Payable: Around ₹16,660 annually (including cess)
6. What is the new standard deduction as per Budget 2025?
The standard deduction has been increased to ₹75,000 (earlier ₹50,000), which helps reduce taxable income for salaried individuals.
7. What if I live in my own house? Can I still claim HRA?
No, HRA exemption is only applicable if you pay rent. If you live in your own house, you cannot claim HRA, but you can explore deductions like home loan interest under Section 24(b).
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8. What are the new HRA rules as per Budget 2025?
The budget has increased the HRA deduction limits, especially for people living in metro cities due to the rising cost of rent. The specific limits depend on your basic salary and rent paid.
9. Can I claim both HRA and home loan interest deductions?
Yes, you can claim both if:
You own a house in one city (with a home loan)
You live in another city for work and pay rent
In this case, you can claim HRA exemption and home loan interest deduction simultaneously.
10. How can I reduce my taxable income further?
Besides HRA and the standard deduction, you can claim:
Section 80C: Investments in PPF, ELSS, LIC, etc. (up to ₹1.5 lakh)
Section 80D: Health insurance premiums
Home Loan Interest: Under Section 24(b)
NPS Contributions: Under Section 80CCD(1B)
11. Is there any change in the income tax slabs for 2025?
Yes, the slabs have been revised to reduce the tax burden on the middle class.
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