In a significant move to alleviate the tax burden on the middle class, Union Finance Minister Nirmala Sitharaman, in her Budget 2025 speech, announced that individuals earning up to Rs 12 lakh annually will no longer be required to pay income tax under the new tax regime. This tax relief extends to Rs 12.75 lakh for salaried taxpayers, thanks to a standard deduction of Rs 75,000.
The new income tax slabs, aimed at bolstering household consumption and boosting savings and investments, have been revised to provide substantial reductions in tax liabilities. The updated structure includes:
Rs 0 to 4 lakh: Nil
Rs 4 lakh to 8 lakh: 5%
Rs 8 lakh to 12 lakh: 10%
Rs 12 lakh to 16 lakh: 15%
Rs 16 lakh to 20 lakh: 20%
Rs 20 lakh to 24 lakh: 25%
Above Rs 24 lakh: 30%
This move is set to benefit millions of taxpayers, especially those in the middle-income bracket, who will experience a lighter tax burden. For example, a taxpayer with an income of Rs 12 lakh will see a complete reduction in tax liability, while someone earning Rs 18 lakh will get a tax relief of Rs 70,000, which is a 30% reduction from current tax rates.
The Finance Minister emphasized that the revisions were designed to stimulate domestic consumption, increase disposable income, and encourage savings and investment, which are critical to the country’s economic growth. In addition to the tax relief, the government plans to introduce a new direct tax code next week to simplify the tax compliance process, making it more user-friendly for individual taxpayers.
This budget is being hailed as a game-changer for the middle class, with many celebrating the reduction in tax burden and expressing optimism for its positive impact on the economy. The announcement has already created a wave of excitement on social media, where citizens are sharing their appreciation for the new tax regime.
