Income taxpayers had high hopes for Finance Minister Nirmala Sitharaman’s eighth consecutive Budget, which was delivered on February 1, 2025. The FM proposes personal income tax reforms with a special focus on the middle class. The FM said that the new income tax bill will have half of the present laws, and will be simple for taxpayers and tax administrators to reduce litigations.
No income tax payable up to income of Rs 12 lakh has been proposed by the FM.
Right after 2014, the ‘Nil tax’ slab was raised to Rs 2.5 lakh, which was further raised to Rs 5 lakh in 2019 and to Rs 7 lakh in 2023. This is reflective of our Government’s trust on the middle-class tax payers, FM said.
FM announced that there will be no income tax payable upto income of Rs 12 lakh (i.e. average income of Rs 1 lakh per month other than special rate income such as capital gains) under the new regime. This limit will be Rs 12.75 lakh for salaried tax payers, due to standard deduction of Rs 75,000.
India will focus on boosting middle-class spending power, encouraging inclusive development and boosting private investment to strengthen growth, Finance Minister Nirmala Sitharaman said on Saturday, announcing the annual budget.
Measures to assist the poor, youth, farmers and women will also be included in the budget for 2025-26, said Sitharaman, highlighting plans for “transformative reforms in taxation”.
In the new tax regime, FM proposes to revise tax rate structure as follows:
