The most trending tax-related topics in India for 2025 are the new income tax slabs under the default tax regime and the GST 2.0 reforms, both of which are significantly reshaping the financial landscape for individuals and businesses. These reforms aim to simplify taxation, reduce compliance burdens, and provide substantial relief to the common man, MSMEs, and the middle class.

New Income Tax Regime: Relief for Middle-Class Earners

The Union Budget 2025 introduced a revised tax structure under the new tax regime, which is now the default option for taxpayers. This reform expands tax slabs and increases the rebate under Section 87A, resulting in zero tax liability for individuals earning up to ₹12 lakh annually. The updated slabs are structured progressively to ease the burden on middle-income groups:

Income Bracket (₹)

Tax Rate

Up to 4 lakh

0%

4–8 lakh

5%

8–12 lakh

10%

12–16 lakh

15%

16–20 lakh

20%

20–24 lakh

25%

Above 24 lakh

30%

This restructuring means taxpayers earning ₹12 lakh or less pay no income tax due to the enhanced rebate of ₹60,000, a significant increase from the previous ₹25,000. The old tax regime remains optional, allowing individuals to opt out if they benefit more from deductions like those under Sections 80C and 80D. Additionally, TDS thresholds have been raised—for instance, rent payments below ₹6 lakh annually are now exempt from TDS—reducing compliance for small landlords and freelancers. The deadline for filing updated returns has also been extended to four years, promoting voluntary disclosure and reducing penalties.

GST 2.0: A Two-Slab Revolution

Effective from September 22, 2025, the GST Council implemented "GST 2.0," a landmark reform that simplifies the tax structure into two primary slabs: 5% for essentials and 18% for most goods and services, eliminating the 12% and 28% brackets. A new 40% "demerit" rate applies to luxury and sin goods like cigarettes and aerated drinks. This overhaul aims to correct inverted duty structures, reduce prices, and boost domestic consumption.

Essential items such as health and life insurance premiums, UHT milk, paneer, and khakra are now fully exempt from GST, directly lowering household expenses. Consumer durables like air conditioners, televisions, and small automobiles have seen their tax rate drop from 28% to 18%, making them more affordable. Similarly, construction materials like cement are now taxed at 18%, benefiting the real estate and infrastructure sectors.

Impact on MSMEs and the Common Man

The GST 2.0 reforms are particularly beneficial for MSMEs and small businesses, which face reduced compliance complexity and lower input costs. Faster refund mechanisms for exporters—now processed within seven days—improve cash flow, while a simplified registration process allows low-risk businesses to get registered in just three days. The abolition of TCS on goods sold above ₹50 lakh further eases the burden on small traders.

For the common man, these changes translate into immediate savings on daily essentials, healthcare, and durable goods. The reduction in GST on items like soaps, toothpaste, and medicines, combined with income tax relief, increases disposable income and purchasing power. Farmers and students also benefit from lower costs on agricultural equipment and educational services.

In summary, the 2025 tax reforms represent a strategic shift toward inclusive growth, simplified compliance, and economic stimulation, positioning India for stronger domestic demand and improved business competitiveness.