In the most anticipated announcement this Union Budget 2025, Finance Minister Nirmala Sitharaman announced there would be no income tax for incomes up to ₹12 lakhs. She termed it as commitment and trust on the middle class. Effectively, under the new tax regime considering the erstwhile standard deduction of ₹75,000, income of up to ₹12.75 would have no income tax liability.
Also read: Union Budget 2025 updates
“I am now happy to announce that there will be no income tax payable up to income of ₹12 lakh [i.e. average income of ₹1 lakh per month other than special rate income such as capital gains] under the new regime,” the Finance Minister said.
The move comes in after prevalent consensus in the industry and populace at large about increasing aggregate consumption in the economy. “The new tax structure will substantially reduce the taxes of middle-class and leave more money in the hands of the middle class and boost consumption.”
Enumerating revisions in tax slabs, the Finance Minister informed that incomes up to ₹4 lakhs would not be taxed, ₹4 to 8 lakhs would host 5% taxation rate, ₹12-16 lakh 10%, ₹12-16 lakh 15%, ₹16-20 lakh 20%, ₹20-24 lakh 25% and incomes above ₹24 lakh 30%.
Also read: Nirmala Sitharaman’s full speech
A tax payer in the new regime with an income of ₹12 lakh will get a benefit of ₹80,000 in tax; a person having income of ₹18 lakh will get a benefit of ₹70,000 in tax; a person with an income of ₹25 lakh gets a benefit of ₹1.10 lakh, Ms. Sitharaman added.
The Rajya Sabha MP presented her eighth consecutive Budget on Saturday (February 1, 2025) — taking her closer to the record ten budgets presented by former Prime Minister Morarji Desai during his lifetime.
