Budget 2025: An Overview of Key Taxes paid

31 Jan 2025 , 09:55 AM

As the Indian economy prepares for its upcoming Union Budget 2025, it is vital to understand various taxes that are applicable to consumers in India. To name a few, Income Tax, Capital Gains Tax, Goods & Services Tax, and Securities Transaction Tax, the tax structure is designed in a way to shape the financial landscape for individuals and businesses.

To continue with this discussion, here is a broad overview of all the taxes that are applicable to an Indian consumer:

1. Income-Tax: The most important tax, which is imposed on individuals under two different regimes, based entirely on pre-set government slabs. The two slabs are:

• New Tax Regime: Under this, income up to ₹3 Lakh is exempt from tax. For income above ₹5 Lakh, the tax rates increase progressively from 5% (for income above ₹3 Lakh to ₹6 Lakh) to 30% (for income above ₹15 Lakh).
• Old Regime: Income up to ₹2.5 Lakh is exempt. Tax rates are 5% for ₹2.5-5 Lakh, 20% for ₹5-10 Lakh, and 30% for ₹10 Lakh or more. However, a ₹12,500 rebate is offered for persons earning up to ₹5 Lakhs.

2. Capital Gains Tax (CGT): It is applicable to profits derived from sales of capital assets. The said gain is divided into short-term and long-term based on the period of asset holding, such as:

• Short-term Capital Gains (STCG): A 15% flat tax rate is applicable on securities/assets held for less than 1 year.
• Long-term Capital Gains (LTCG): Profits over ₹1 Lakh from equities held for a year are subject to 10% tax.  

3. Securities Transaction Tax (STT): The said tax is levied on stock exchange transactions:

• Equity Delivery: 0.1% on both buy and sell.
• Equity Intraday: 0.025% on the sell side.
• Equity Futures: 0.01% on the sell side.
• Equity Options: 0.017% on the sell side (premium).
• Mutual Fund Units (Equity-oriented): 0.001% on the sell side.

4. Goods and Services Tax (GST): GST is an indirect tax on goods and services, with primary rates of 0%, 5%, 12%, 18%, and 28%. Lower rates apply to specified sectors and composition taxpayers, who pay GST at 1.5%, 5%, or 6%, respectively. Additionally, the rates for Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) are 2% and 1%, respectively.

Other taxes include Excise Duty, Customs Duty, Professional Tax, etc. 

The extensive tax system focuses on balancing revenue generation with consumer affordability, making India’s tax landscape dynamic and complex.

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