No Income Tax Up To Rs 12 Lakh

In a major relief for the middle class, finance minister Nirmala Sitharaman in the Budget 2025 announced on Saturday said there would be no income tax payable for those earning up to Rs 12 lakh.

Also, effectively those earning up to Rs 13 lakh will now be able to save income tax as over and above the Rs 12 lakh income limit, there is a standard deduction of Rs 75,000 and a marginal relief of around Rs 30,000.

In an announcement accompanied by loud cheers and enthusiastic thumping of desks by BJP MPs, led by Prime Minister Narendra Modi, she also announced revisions to the tax slabs (again, applicable to the new regime only).

The tax slabs in the new regime will be as follows:

• Zero to Rs 4,00,000: No Tax
• Rs 4,00,000 to Rs 8,00,000: 5%
• Rs 8,00,0001 to Rs 12,00,000: 10%
• Rs 12,00,001 to Rs 16 lakh: 15%
• Rs 16,00,001 to Rs 20 lakh: 20%
• Rs 20,00,001 to Rs 24 lakh — 25%
• Above Rs 24 lakh: 30%

In other tax-related announcements, Sitharaman also said TDS, or tax deduction at source, rates will be rationalised, and the limit for a tax deduction for senior citizens will be doubled to Rs 1 lakh. Further, she also proposed doubling the deadline to file updated returns to four years.

To taxpayers up to Rs 12 lakh of normal income (other than special rate income such as capital gains) tax rebate is being provided in addition to the benefit due to slab rate reduction in such a manner that there is no tax payable by them. The total tax benefit of slab rate changes and rebates at different income levels can be illustrated with examples.

A taxpayer in the new regime with an income of Rs 12 lakh will get a benefit of `80,000 in tax (which is 100% of tax payable as per existing rates). A person having an income of Rs 18 lakh will get a benefit of Rs 70,000 in tax (30% of tax payable as per existing rates).

Those with an income of Rs 25 lakh will get a benefit of Rs 1.1 lakh (25% of his tax payable as per existing rates). Tax exemption will result in Rs 1 lakh crore in direct taxes and Rs 2,600 crore of indirect tax to be foregone.

Before presenting the Budget in the Lok Sabha, Sitharaman called on President Droupadi Murmu. As per established tradition, the finance minister met the President at the Rashtrapati Bhavan before heading to Parliament. President Murmu offered ‘dahi-chini’ (curd-sugar), considered auspicious, to Sitharaman before she left for Parliament to present the Union Budget.

Before the actual presentation in Parliament, the Cabinet headed by Prime Minister Narendra Modi approved the Budget for fiscal 2025-26 (April 2025 to March 2026).

Sitharaman today made history as she presented a record eighth consecutive budget, which comes in the backdrop of a slowdown in the economy and demand for tax cuts for the middle class. This will take Sitharaman closer to the record of 10 budgets that were presented by former Prime Minister Morarji Desai over different time periods.