April 1: These employees get salary hike from next month

April 1: In a boon for salaried individuals, the government announced significant income tax exemptions in the Union Budget 2025-26, which will come into effect from April 1, 2025. These employees get salary hike from next month.

As part of this, starting April 1, your annual salary will become tax-free up to Rs 12 lakh and if you earn more than that, you will get a corresponding tax deduction due to the revised slabs. As a result, your salary is set to increase from April 1.

Here’s everything you need to know:

These employees will get salary from April 1: 

The Union Budget 2025-26 has increased the tax-free income limit to Rs 12 lakh for FY26 through concessions under Section 87A of the Income Tax Act, 1961. Currently, it stands at Rs 7 lakh for the ongoing financial year 2024-25.

Therefore, those earning more than Rs 7 lakh will get higher salaries from April 1 due to lower TDS (tax deducted at source), as they are the primary beneficiaries of the income tax cut for the financial year 2025-26. Importantly, this income tax exemption is only available to those who opt for the new tax regime for FY26.

However, those earning less than Rs 7 lakh are exempt from income tax and there will be no impact on their salary. Also, those who earn special rate income, such as capital gains from the stock market, will not be able to take advantage of that income.

The biggest beneficiaries of this income tax change, which will come into effect from April 1, 2025, will be mainly salaried employees. Finance Minister Nirmala Sitharaman, in her 2025-26 budget speech, said, “Under the new regime, no income tax will be payable on income up to Rs 12 lakh (i.e. an average income of Rs 1 lakh per month excluding special rate income such as capital gains).”

Due to the standard deduction of Rs 75,000, this limit will be Rs 12.75 lakh for salaried taxpayers.

How Much Will Your Salary Increase From April 1?

Those earning up to Rs 12 lakh currently do not have to pay any income tax from Rs 7 lakh. In addition, there is a standard deduction of Rs 75,000. This means that there will be no income tax on income up to Rs 12.75 lakh in the financial year 2025-26.

So, if you belong to the 7 lakh and 12 lakh income group, the salary in your hand will increase by up to Rs 6,600 per month, depending on the pay level, which will get a maximum pay increase of Rs 12.75 lakh.

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For those earning above Rs 12 lakh, the revised tax slabs offer significant benefits:

Rs 12 lakh: Rs 80,000 tax benefit (0% effective tax rate)

Rs 16 lakh: Rs 50,000 tax benefit (7.5% effective tax rate)

Rs 18 lakh: Rs 70,000 tax benefit (8.8% effective tax rate)

Rs 20 lakh: Rs 90,000 tax benefit (10% effective tax rate)

Rs 25 lakh: Rs 1,10,000 tax benefit (13.2% effective tax rate)

Rs 50 lakh: Rs 1,10,000 tax benefit (21.6% effective tax rate)

Marginal Relief For Those Earning ‘Marginally Above Rs 12 Lakh’

According to the CBDT, under the new regime under Section 115 BAC (1A), minimum relief is available to resident individuals with “income exceeding Rs 12 lakh”. For example, for a person with an income of Rs. 12,10,000 (excluding standard deduction), if there is no minimum relief, the tax will be Rs. 61,500 (5 percent of Rs. 4 lakh + 10 percent of Rs. 4 lakh and 15 percent of Rs. 10,000).

“However, due to the minimum compensation, the amount of tax actually payable is Rs 10,000.”Income Tax Slabs For FY26: New Vs Old Regime

Under the new regime, the income tax slabs announced in the latest Union Budget 2025-26:

Income up to Rs 4,00,000: Nil

Income from Rs 4,00,001 to Rs 8,00,000: 5%

Income from Rs 8,00,001 to Rs 12,00,000: 10%

Income from Rs 12,00,001 to Rs 16,00,000: 15%

Income from Rs 16,00,001 to Rs 20,00,000: 20%

Income from Rs 20,00,000 to Rs 24,00,000: 25%

Income above Rs 24,00,000: 30%.

Importantly, those earning up to Rs 12.75 lakh per annum (including standard deduction of Rs 75,000) will have to pay zero tax during FY25-26.

Under the old regime, income tax rates continue to remain the same:

Income up to Rs 2,50,000: Nil

Income from Rs 2,50,001 to Rs 5,00,000: 5%

Income from Rs 5,00,001 to Rs 10,00,000: 20%

Income above Rs 10,00,000: 30%

The basic exemption limit for senior citizens aged 60-80 years is Rs 3,00,000, while for super senior citizens (above 80 years of age) it is Rs 5,00,000.

The Old Tax Regime allows deductions under various sections, such as:

Section 80C: Up to Rs 1,50,000 for investments like PPF, ELSS, and LIC premiums.

Section 80D: Health insurance premiums.

Section 24(b): Interest on home loan up to Rs 2,00,000.

Other exemptions like HRA and LTA.

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