Till yesterday Manoj was not able to believe that he would get such a huge benefit from ‘U-Tax’. But now when Manoj checked his bank account, he found out that his salary had increased by ₹ 5,958 in April as compared to March. This was nothing less than a dream.
Without any appraisal, this salary increase has come directly due to ‘U-Tax’. Manoj, who has been waiting for this change for the last year, is now estimating annual savings of about ₹ 71,500, all this has been possible due to a visionary decision of the government.
Till yesterday Manoj was not able to believe that his salary will actually increase so much due to ‘U-Tax’. But now the reality is in front of him, in March his salary used to be deducted by about ₹ 5,958, which is now coming in full. This is the powerful effect of ‘U-Tax’.
U-Tax’ ‘Dhamaka
People whose annual salary is more than ₹ 7.75 lakh will get tremendous benefits from this change in the ‘U-Tax’ regime. Whether your salary is ₹ 10 lakh, ₹ 15 lakh, ₹ 20 lakh or ₹ 25 lakh. Under ‘U-Tax’, people earning ₹ 15 lakh salary will now have to pay income tax of ₹ 1,05,000! Whereas in the financial year 2024-25, in the ‘U-Tax’ system, an income tax of about ₹ 1,45,600 was levied on an income of ₹ 15 lakh, which will directly save ₹ 40,600.
Now, income tax on an income of ₹ 20 lahks is around ₹ 2,05,000, whereas last year a tax of ₹ 2,96,400 had to be paid on a salary of ₹ 20 lahks, that is, those earning ₹ 20 lakh annually will save about ₹ 91,400. At the same time, those whose annual income is ₹ 25 lakh will now have to pay income tax of ₹ 3,30,000, whereas in the previous financial year income tax of about ₹ 4,52,400 had to be paid. This is a revolutionary change in ‘U-Tax’ which will give huge relief to the people of the high-income group.
Know how much you will benefit
Let us tell you that the government has given a big relief to the taxpayers in this year’s budget. Now there will be no income tax on income up to ₹ 12 lakh. Whereas, till the financial year 2024-25, income up to ₹ 7 lakh was tax-free under the ‘U-Tax’ system. Which has been increased to ₹ 12 lakh from the financial year 2025-26. Apart from this, the salaried class will also get the benefit of a standard deduction of ₹ 75 thousand. That is, those whose annual salary income is ₹ 12.75 lakh will no longer have to pay any income tax. Let us tell you, in Budget 2025, the government has increased the amount of tax rebate under section 87A to ₹ 60,000.
According to the U-Tax system (2025), the tax liability on an income of ₹ 12 lakh is ₹ 52,500. But if a tax rebate of ₹ 52,500 is also available under section 87A, then no tax is levied. Not only this, the ‘U-Tax’ system has come into effect from April 1, 2025, and now people whose salary is up to ₹ 12.75 lakh do not have to worry about income tax. Whereas last year, people whose salary was more than ₹ 7.75 lakh, and had opted for the ‘U-Tax’ system, had to pay income tax. But now you will get the full salary, and the income tax deduction which was being done till March 2025 will now stop. This is a historic decision for the common man.
The government’s emphasis on the U-Tax system
Actually, for the last few years, the Modi government has been emphasizing the ‘U-Tax’ system, due to which now more than 90% of the people have adopted the ‘U-Tax’ system. In this year’s budget, the government has increased the amount of tax rebate under section 87A to ₹ 60,000, due to which now no income tax will have to be paid on annual income up to ₹ 12 lakh. Let us tell you, in most institutions, salary comes on the last day of the month or the first date! In such a situation, in some organizations, the salary would have come yesterday, and in some, it will come today and they will get an increased salary as compared to March. Due to the new tax regime, the salary which was earlier being deducted as income tax will no longer be deducted.
This exemption will be available to those whose annual income is up to ₹ 12.75 lakh. This means that the financial year 2025-26 has started from April 1, 2025, and the ‘U-Tax’ regime will be the default option. However, the old tax regime will still exist. According to CBDT, with the change in the ‘U-Tax’ system, now 90 to 97 percent of taxpayers can join this new tax system. This ‘U-Tax’ system is proving to be a boon for the common man.