In Budget 2025, Finance Minister Nirmala Sitharaman announced a significant relief for middle-class taxpayers by raising the income tax exemption limit to Rs 12 lakh, ensuring no taxes will be payable on earnings up to this amount.
The government has not only revised the income tax brackets but also increased the tax rebate under Section 87A. This means individuals with a taxable income of Rs 12 lakh or less will be exempt from paying any taxes starting from the financial year 2025-26, pending parliamentary approval.
Sitharaman highlighted that the middle class plays a crucial role in the economy, and in recognition of their contributions, the government has consistently reduced tax burdens over time. This new change marks a major step in easing financial pressures.
The updated tax slabs under the new regime are as follows:
- Up to Rs 4 lakh: No tax
- Rs 4 lakh to Rs 8 lakh: 5%
- Rs 8 lakh to Rs 12 lakh: 10%
- Rs 12 lakh to Rs 16 lakh: 15%
- Rs 16 lakh to Rs 20 lakh: 20%
- Rs 20 lakh to Rs 24 lakh: 25%
- Above Rs 24 lakh: 30%
Experts like Adhil Shetty, CEO of Bankbazaar.com, and Sandeep Chilana, Managing Partner of CCLaw, have praised this move, stating it will provide substantial relief, boost disposable income, and encourage spending, driving overall economic growth.
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