Budget 2025: Latest Tax Rates And Holding Periods For All Assets
Updated: 05-02-2025 at 3:32 PM
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During the Union Budget presentation on February 1st Finance Minister Nirmala Sitharaman made substantial changes to the income tax system but left the rules regarding long-term and short-term capital gains unchanged. Salaried people now benefit from reduced taxation since standard deduction with incomes below ₹12.75 lakh will result in no taxable amount. Unit Linked Insurance Plans (ULIPs) and other capital assets face new taxation rules that mark a major priority area.
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Revised Income Tax Slabs For FY 2025-26
The government recently implemented comprehensive income tax slab changes to provide benefits to middle-class taxpayers. The framework contains the following updated arrangement:
| Income Slab | Tax Rate |
|---|---|
| Up to ₹4 lakh | Nil |
| ₹4 lakh - ₹8 lakh | 5% |
| ₹8 lakh - ₹12 lakh | 10% |
| ₹12 lakh - ₹16 lakh | 15% |
| ₹16 lakh - ₹20 lakh | 20% |
| ₹20 lakh - ₹24 lakh | 25% |
| Above ₹24 lakh | 30% |
Key Highlights:
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Earning ₹12 lakh per year makes a person qualify entirely for income tax exemptions.
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The standard deduction of ₹75,000 expands the total tax-free income beyond ₹12.75 lakh.
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Taxpayers now have increased disposable income due to the new structure which will drive up domestic consumption levels.
Read More: Budget 2025: Senior Citizens to Get Tax Exemption
Tax Treatment Of Capital Gains: No Changes In Holding Periods
The government kept holding period regulations for capital assets constant even though they updated income tax policies. The government retained the existing rules for defining capital gains taxes between Long-Term Capital Gains (LTCG) and Short-Term Capital Gains (STCG).
| Asset Type | Holding Period for LTCG | LTCG Tax Rate | STCG Tax Rate |
|---|---|---|---|
| Listed Equity Shares & Mutual Funds | 12 months | 12.5% (above ₹1.25 lakh) | 20% (with STT paid) |
| Tax-Free Bonds & Listed Debentures | 12 months | 12.5% (no indexation) | Slab rates |
| Debt Mutual Funds (Acquired before 1st April 2023) | 36 months | 12.5% (no indexation) | Slab rates |
| Debt Mutual Funds (Acquired on or after 1st April 2023) | Any duration | Slab rates (no indexation) | Slab rates |
| Unlisted Shares | 24 months | 12.5% (no indexation) | Slab rates |
| Unlisted Bonds & Debentures | 24 months | Slab rates (no indexation) | Slab rates |
| Immovable Property (Acquired before 23rd July 2024) | 24 months | 20% (with indexation) or 12.5% (without indexation) | Slab rates |
| Immovable Property (Acquired on or after 23rd July 2024) | 24 months | 12.5% (no indexation) | Slab rates |
Read More: Difference Between GST Compensation Cess And Income Tax Cess?
Key Capital Gains Tax Reforms In Budget 2025
The Budget brought forth several tax reforms which affect unique financial instruments but leave the holding periods unaffected.
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The taxation of ULIPs exceeds ₹2.5 lakh in annual premiums and now requires a 12.5% LTCG levy beginning April 1st 2026.
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Tax laws consider mutual funds and listed equity shares as such they receive LTCG tax exemption of up to ₹1.25 lakh in addition to STCG taxation at 20% with a requirement for STT fees.
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From April 1st 2023 onward debt mutual fund purchases will receive no indexation benefits thus requiring taxation at the applicant's slab rates.
Past Budget Reforms: How Have They Shaped Taxation?
The government modified tax policies for capital gains multiple times in recent years. Throughout history, the government made these reforms of tax policies.
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In Budget 2023 the government took away the indexation system from debt mutual funds making taxpayers pay more taxes on their profits.
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In Budget 2021 the Indian government abolished tax exemptions for ULIPs with significant values like regular equity investments.
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The government brought back the 10% documentation tax on trading securities in Budget 2018 but raised it to 12.5% in Budget 2025.
Read More: Are Legal Heirs Responsible For Paying The Deceased’s Tax Dues?
Conclusion: Budget 2025’s Tax Reforms Offer Relief But Keep Key Asset Taxation Unchanged
Budget 2025 brings tax breaks to taxpayers while leaving established asset taxation structures in place. Through Union Budget 2025 tax rules middle-class citizens benefit from new income tax levels and improved tax-free money limits. The existing rules and taxes for capital gains do not change in the upcoming budget year. The government made a major change with a 12.5% LTCG tax on high-premium ULIP products that directly affect people with high wealth. With financial stability in place, investors need to assess their investments to save the most money in taxes.
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