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