Union Budget 2025: Major Tax Relief Announced
Finance Minister Nirmala Sitharaman, in her Union Budget 2025 speech, announced a major relief for taxpayers. Under the new tax regime for Assessment Year (AY) 2025-26, no income tax will be payable on income up to Rs 12 lakh. This move is expected to provide significant financial relief to the middle class.
No Income Tax Till Rs 12 Lakh – New Tax Slabs Explained
The new income tax regime introduces revised slabs that simplify the tax structure. Here’s how the new tax system works:
- Income up to Rs 4 lakh – No tax (0%)
- Income from Rs 4 lakh to Rs 8 lakh – 5% tax
- Income from Rs 8 lakh to Rs 12 lakh – 10% tax
- Income from Rs 12 lakh to Rs 16 lakh – 15% tax
- Income from Rs 16 lakh to Rs 20 lakh – 20% tax
- Income from Rs 20 lakh to Rs 24 lakh – 25% tax
- Income above Rs 24 lakh – 30% tax
Additionally, factoring in the standard deduction, the tax-free income limit effectively extends to Rs 12.7 lakh. This means salaried individuals will benefit even more.
| Income Range (Rs in Lakh) | Tax Rate (%) |
|---|---|
| Rs 0 – Rs 4 lakh | NIL |
| Rs 4 lakh – Rs 8 lakh | 5% |
| Rs 8 lakh – Rs 12 lakh | 10% |
| Rs 12 lakh – Rs 16 lakh | 15% |
| Rs 16 lakh – Rs 20 lakh | 20% |
| Rs 20 lakh – Rs 24 lakh | 25% |
| Above Rs 24 lakh | 30% |
Income Tax Budget 2025: Additional Tax Benefits
The government has introduced further tax benefits to reduce the financial burden on taxpayers. Here are the key highlights:
- Individuals earning up to Rs 25 lakh can avail of a tax benefit of up to Rs 1.1 lakh.
- Taxpayers can claim deductions under various sections of the Income Tax Act:
- Rs 1.5 lakh deduction under Section 80CCC
- Rs 1.5 lakh exemption for home loan interest payments
Why No Tax Till 12 Lakh? Government’s Perspective
Sitaraman the finance minister stated these changes target middle-class household support as a means to enhance economic expansion. Higher household spending and savings together with investments represent the main goals of the modified slabs. The minister detailed various advantages which emerged from the new organizational plan.
- People who make Rs 12 lakh annually would eliminate their entire tax responsibility because of these reforms.
- People who earn Rs 18 lakh as their income will obtain a tax reduction worth Rs 70,000 amounting to 30% of their original taxable amount.
- Taxpayers who earn Rs 25 lakh each will save Rs 1.1 lakh resulting in decreased taxes by 25%.
Revenue Impact of the New Income Tax Regime
The new taxation system delivers benefits to taxpayers but will cause the government to lose Rs 1 lakh crore in direct taxes combined with Rs 2,600 crore in indirect taxes. The government expects middle-class consumers who gained more purchasing power through this reform to drive national economic expansion and offset revenue shortfalls.
How This New Tax Regime Benefits You
- Higher disposable income: Taxpayers People will have access to increased money for investment and spending because the income tax requires no payment until earnings reach Rs 12 lakh.
- Simplified tax structure: The redesigned tax structure enables taxpayers to file returns easier and simplifies tax system complexity.
- Middle-class relief: The new tax structure delivers its main advantages to middle-class professions and salary workers.
Conclusion
According to the Income Tax Budget 2025 no tax applies to incomes up to Rs 12 lakh with lower taxes available for higher income brackets. The tax reform aims to make financial life better by freeing funds while generating increased savings which leads to overall economic enhancement. All citizens should assess the revised tax brackets in order to use them for amplifying their financial returns.