Budget 2025 Keeps the Big Shifts from Last Year—Here’s What Sticks
There were no dramatic slab overhauls in Budget 2025, but the tax changes introduced in 2024, and now applicable for FY 2025–26, continue to reshape how salaried employees, investors, property owners, and gold buyers are taxed.
Long-term capital gains (LTCG) tax remains uniform at 12.5% across most assets, with indexation largely removed, while short-term capital gains (STCG) on equities stand at 20%. Salary earners can still choose between the old and new tax regimes, while gold and debt investments now face higher effective taxation than before. With these rules now locked in, portfolio and tax planning before March 31 matters more than ever.
New vs Old Tax Regime: Which Fits Your Salary Bracket?
The old tax regime continues to favour deductions such as 80C, 80D, and HRA, while the new regime offers lower slab rates with minimal deductions, making it suitable for those who do not fully utilise tax breaks.
Under the new regime, slabs remain unchanged:
₹0–3L (0%), ₹3–7L (5%), ₹7–10L (10%), ₹10–12L (15%), ₹12–15L (20%), and above ₹15L (30%).
For example, an ₹8L post-PF income may still benefit under the old regime using ELSS or other deductions, while someone earning ₹20L with few deductions may save more under the new regime. The new regime remains the default unless taxpayers actively opt for the old one. Using the income tax department’s calculator by January can help avoid last-minute surprises.
Capital Gains Crackdown: 12.5% Hits Stocks, MFs, Gold, and Property
From July 2024 onwards, a uniform 12.5% LTCG tax applies across most asset classes. Equity investments continue to enjoy a ₹1.25 lakh annual exemption, but debt mutual funds, gold ETFs, and real estate no longer benefit from indexation.
Short-term gains on equities are taxed at 20%, while short-term gains on debt and gold remain taxed at slab rates. Equity-oriented mutual funds (65% or more equity stocks) follow equity taxation rules; others are taxed at slab rates regardless of holding period.
For instance, a ₹2L long-term gain from an equity mutual fund attracts tax on ₹75,000 after exemption, resulting in a ₹9,375 tax post-exemption. For middle-income investors in the ₹10–15L bracket, managing gains around exemption thresholds around the ₹1.25L exemption becomes more relevant; over ₹20L, diversify to gold/REITs for balance.
Salary Earners: Standard Deduction Stays ₹75k, NPS Tweaks Minor
The ₹75,000 standard deduction for salaried taxpayers remains unchanged. Employer contributions to NPS continue to offer tax benefits under both regimes, with only minor tweaks. The family pension deduction stays capped at ₹25,000.
There are no major salary-side shocks, but those opting for the old regime can still optimise taxes using 80C instruments such as ELSS or PPF up to ₹1.5L. Salaried individuals may benefit most by maximising employer NPS contributions before making additional self-contributions.
For example: If ₹12L salary: new regime nets ₹1.1L tax post-deduction; old with max 80C drops to ₹90k.
Gold Buyers: Slab Tax Traps Physical and Digital Alike
Gold taxation has been simplified but is less favourable than before. Physical gold, gold ETFs, and digital gold are taxed at slab rates in the short term and 12.5% LTCG if held long enough. Sovereign Gold Bonds remain an exception, with interest taxed as income but capital gains exempt at maturity.
Dhanteras rush? ₹50,000 gain at 30% slab = ₹15,000 tax. If ₹15L income: limit gold exposure at 5-10% of portfolio, with SGBs preferred for their added interest component; under ₹10L earner, hold physical LT for lower effective rate.
Mutual Funds and Real Estate: No Indexation Means Faster Tax Bites
Debt mutual funds now face slab-rate taxation in most cases, while older holdings are taxed at a flat 12.5% without indexation. Property sales attract the same 12.5% LTCG rate after two years, but without indexation benefits, increasing taxable gains.
REITs continue to follow equity-style taxation rules. Investors selling property may still explore exemptions through 54EC bonds, provided reinvestment timelines are met.
If ₹10L income: load equity MFs for ₹1.25L exemption; ₹25L+ earner, shift 30% to debt for slab offset via losses. Property sale? Reinvest in 54EC bonds within 6 months.
If You Earn X, Here’s How These Rules Typically Play Out
- ₹5-10L: New regime + ₹1.5L ELSS SIPs (80C if old); 70% equity MFs for exemption play.
- ₹10-20L: Mix regimes yearly; cap LTCG under ₹1.25L, add NPS for extra shield.
- ₹20L+: Debt/gold for slab diversification; prepay loans to cut taxable income.
Run your numbers using tools like ClearTax—small adjustments now can translate into meaningful savings by 2026. Have you reviewed your tax regime choice yet? Share your income band in the comments.
For questions, collaborations, or deeper guidance, write to us at info@nomisma.club.
Disclaimer: This article is for educational purposes and not financial advice.
