no income tax budget 2025 middle class

No Tax on Rs. 12 Lakh Income in Budget 2025-26 With Slabs

Income Tax

The Union Budget 2025-26, presented by Finance Minister Smt. Nirmala Sitharaman, has brought significant relief to taxpayers, especially the middle class, with a series of reforms aimed at reducing the tax burden and boosting household consumption and investment. One of the most notable announcements is the introduction of a new tax regime that exempts individuals with an annual income of up to Rs. 12 lakh from paying any income tax. For salaried taxpayers, this limit is further extended to Rs. 12.75 lakh, thanks to a standard deduction of Rs. 75,000.

Top GST updates in Budget 2025

Key Highlights of the New Tax Regime:

  1. No Income Tax on Income Up to Rs. 12 Lakh:
    Under the new tax regime, individuals with an annual income of up to Rs. 12 lakh will not be required to pay any income tax. This is a significant increase from previous limits and is expected to provide substantial relief to the middle class.
  2. Higher Limit for Salaried Taxpayers:
    Salaried individuals will benefit from an even higher threshold of Rs. 12.75 lakh, owing to a standard deduction of Rs. 75,000. This move is aimed at reducing the tax burden on salaried employees, who often have limited avenues for tax savings.
  3. Revised Tax Slabs and Rates:
    The Finance Minister proposed a revised tax rate structure under the new regime, which is as follows:
  • 0-4 lakh rupees: Nil
  • 4-8 lakh rupees: 5%
  • 8-12 lakh rupees: 10%
  • 12-16 lakh rupees: 15%
  • 16-20 lakh rupees: 20%
  • 20-24 lakh rupees: 25%
  • Above 24 lakh rupees: 30% These revised slabs are designed to ensure that the tax burden is progressively reduced for middle-income earners, leaving more disposable income in their hands.
  1. Tax Rebates and Benefits:
    In addition to the slab rate reductions, the new regime also provides tax rebates that ensure no tax is payable for individuals with income up to Rs. 12 lakh. The table below illustrates the total tax benefit at different income levels:
tax rebate chart new regime

Impact on the Middle Class:

The new tax regime is expected to have a profound impact on the middle class, as it will leave more money in the hands of taxpayers, thereby boosting household consumption, savings, and investment. By reducing the tax burden, the government aims to stimulate economic growth and improve the standard of living for millions of Indians.

Simplification of Tax Laws:

In addition to the tax rate changes, the Finance Minister also announced the introduction of a new income-tax bill that will simplify the tax code, making it easier for taxpayers to understand and comply with. The new bill is expected to reduce litigation and provide greater tax certainty, further enhancing the ease of doing business in India.

Conclusion:

The Union Budget 2025-26 marks a significant step forward in the government’s efforts to provide tax relief to the middle class and simplify the tax system. By increasing the tax exemption limit and revising the tax slabs, the government has demonstrated its commitment to reducing the tax burden on individuals and fostering economic growth. These reforms are expected to have a positive impact on household consumption, savings, and investment, ultimately contributing to the vision of a Viksit Bharat (Developed India).

As the Finance Minister aptly quoted from The Thirukkural, “Just as living beings live expecting rains, Citizens live expecting good governance.” The tax proposals in this budget reflect the government’s responsiveness to the needs of its citizens and its commitment to achieving good governance for the people and the economy.

What are your thoughts on the new tax regime? Share your views in the comments below!


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