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Savings Account

Union Budget 2025: How it impacts your savings, taxes, and investments

04 Feb 2025 by Team FinFIRST

The Union Budget 2025, presented by Finance Minister Nirmala Sitharaman, proposes several key changes that directly impact individual taxpayers, savings, and investments. With revised tax slabs, fiscal policy adjustments, and new incentives for investment, this budget plays a crucial role in shaping financial decisions for individuals and businesses alike. Here’s a breakdown of how the budget affects your savings and investment strategies.

Income Tax Updates: More Savings for Taxpayers

The biggest highlight for individual taxpayers in Budget 2025 is the revision in income tax slabs proposed under the new tax regime. The tax exemption limit has been raised, ensuring higher disposable income and more savings. A higher standard deduction for salaried employees, will further boost your take-home pay.

 

Here’s a look at the new proposed structure for New Regime u/s 115BAC effective for FY 2025-26:

Old structure

New structure

Income bracket

Tax rate

Income bracket

Tax rate

₹0 to ₹3,00,000

Nil

₹0 to ₹4,00,000

Nil

₹3,00,0001 to ₹7,00,000

5%

₹4,00,001 to ₹8,00,000

5%

₹7,00,001 to ₹10,00,000

10%

₹8,00,0001 to ₹12,00,000

10%

₹10,00,001 to ₹12,00,000

15%

₹12,00,001 to ₹16,00,000

15%

₹12,00,0001 to ₹15,00,000

20%

₹16,00,001 to ₹20,00,000

20%

Above ₹15,00,000

30%

₹20,00,001 to ₹24,00,000

25%

 

 

Above ₹24,00,000

30%

 

For those earning up to ₹12 lakh annually, the rebate under Section 87A has been enhanced to INR 60,000, meaning they will effectively pay zero tax. Additionally, the highest tax rate of 30% will now apply only for incomes above ₹24 lakh, up from the previous threshold of ₹15 lakh.

Income

Tax on slabs and rates

Benefit of

Rebate benefit

Total benefit

Tax after benefit

Present

Proposed

Rate/Slab

Full rebate up to ₹12 lakh

 

 

Up to ₹8 lakh

30,000

20,000

10,000

20,000

30,000

0

₹9 lakh

40,000

30,000

10,000

30,000

40,000

0

₹10 lakh

50,000

40,000

10,000

40,000

50,000

0

₹11 lakh

65,000

50,000

15,000

50,000

65,000

0

₹12 lakh

80,000

60,000

20,000

60,000

80,000

0

₹16 lakh

1,70,000

1,20,000

50,000

0

50,000

1,20,000

₹20 lakh

2,90,000

2,00,000

90,000

0

90,000

2,00,000

₹24 lakh

4,10,000

3,00,000

1,10,000

0

1,10,000

3,00,000

₹50 lakh

11,90,000

10,80,000

1,10,000

0

1,10,000

10,80,000

 

These changes mean more disposable income for middle-class taxpayers, allowing them to increase their savings in instruments such as PPF, NPS, mutual funds, or fixed deposits.

Fiscal Deficit and Its Impact on Investments

The government has set the fiscal deficit target at 4.4% of GDP for FY26, down from 4.8% in FY25. A lower deficit generally signals a more disciplined economic approach, which can help control inflation and stabilize interest rates.

For investors, this means:

Potentially lower borrowing costs for loans and home purchases
Stability in bond yields and fixed-income investments
A positive sentiment in equity markets if fiscal prudence is maintained

Maximise Your Personal Savings with IDFC FIRST Bank

With the Union Budget 2025 bringing revised tax slabs and enhanced exemptions, taxpayers now have more opportunities to optimize their savings and investments. One of the smartest ways to maximize tax benefits is by strategically planning your investments and insurance under various sections of the Income Tax Act. This is where IDFC FIRST Bank’s Savings Accounts and Relationship Banking services can play a pivotal role.

The first step in effective financial planning is choosing the right savings account to park your idle funds while earning competitive interest. IDFC FIRST Bank Savings Accounts provide:

  • High interest rates to grow your money faster
  • Monthly interest credits for compounding your earnings
  • Zero-fee banking on all Savings Account services such as IMPS, NEFT, RTGS, ATM transactions, and more
  • Seamless digital banking for convenient fund management using the IDFC FIRST Mobile Banking app

By using an IDFC FIRST Bank Savings Account as the foundation of your financial strategy, you can allocate funds towards tax-saving investments like:

  • Equity-Linked Savings Schemes (ELSS) under Section 80C – Benefit from market-linked returns while claiming up to ₹1.5 lakh in deductions.
  • Tax-Saving Fixed Deposits (5-year lock-in) – Earn stable returns while enjoying tax savings. IDFC FIRST Bank lets you open a Fixed Deposit with only a few clicks on its mobile banking app. Furthermore, enjoy attractive interest rates up to 7.90 % p.a. and flexible tenures and pay-out modes. Senior citizens earn more interest, up to 8.40% p.a.

Relationship Banking for Personalized Financial Guidance

Planning investments and insurance can be overwhelming, especially with changing tax laws. IDFC FIRST Bank’s Relationship Banking services offer personalized financial solutions tailored to your needs with a dedicated Relationship Banker, helping you:

  • Identify set up goal-based investments tailored to your income bracket and risk appetite
  • Plan for long-term wealth accumulation by integrating insurance, mutual funds, and fixed deposits with your savings
  • Enjoy exclusive privileges such as preferential rates on loans, doorstep banking, and lifestyle benefits

Whether you’re a salaried professional or a high-net-worth individual (HNI), having a dedicated relationship manager ensures that you stay updated on tax-efficient financial strategies.

Tax Optimization Through Insurance and Wealth Protection

Life and health insurance play a key role in tax planning, and IDFC FIRST Bank makes it easy to integrate insurance with your savings and investments. Here’s how:

  • Life Insurance – Premiums paid for life insurance qualify for deductions under Section 80C (up to ₹1.5 lakh annually)
  • Health Insurance – Under Section 80D, individuals can claim:

1. Up to ₹25,000 for self, spouse, and children.

2. Additional ₹50,000 for senior citizen parents.

Securing an insurance plan through IDFC FIRST Bank ensures financial safety for your family while optimizing tax savings.

Final Thoughts

The Union Budget 2025 aims to balance economic growth with financial stability. By optimizing your tax planning and aligning investments with new incentives, you can make the most of these changes.

Additionally, by leveraging IDFC FIRST Bank’s high-interest savings accounts, relationship banking expertise, and digital convenience, you can maximize your tax deductions while ensuring smart investments and wealth protection. Whether it’s choosing the right tax-saving instruments, securing your future with insurance, or managing liquidity efficiently, IDFC FIRST Bank provides the tools and guidance you need to optimize your financial journey. Start your financial journey with us today!

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.