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NO INCOME TAX up to Rs.12 lakhs
Introduction
Budget 2025 Highlights. In a significant announcement, Union Finance Minister Nirmala Sitharaman revealed on Saturday that individuals earning up to an annual income of 12 lakh will pay no income tax under the new tax system.
This declaration was made by the finance minister during her Budget speech in the Lok Sabha. Nirmala Sitharaman stated that the tax brackets and rates are being revised to provide advantages to all taxpayers.
“The revised structure is intended to significantly lower taxes for the middle class, putting more money in their pockets and enhancing household consumption, savings, and investment,” the finance minister said in Parliament.
Currently, taxpayers have the option to select between two tax frameworks: the old tax regime, which permits exemptions for housing rentals and insurance, and the new tax regime, launched in 2020, which features slightly reduced rates but does not allow significant exemptions.
Salaried taxpayers can choose either system when filing their returns; however, for individuals earning income from business or profession, the new regime will be the default option starting from FY 2023-24.
New Income Tax Slabs for 2025
The revised tax structure under the new regime is as follows:
- Up to ₹4 lakh : No tax
- ₹4 lakh to ₹8 lakh : 5%
- ₹8 lakh to ₹12 lakh : 10%
- ₹12 lakh to ₹16 lakh :15%
- ₹16 lakh to ₹20 lakh : 20%
- ₹20 lakh to ₹24 lakh : 25%
- Above ₹24 lakh : 30%
For salaried employees, the exemption extends to ₹12.75 lakh, considering the ₹75,000 standard deduction. This restructuring is designed to reduce the tax burden on the middle class, thereby increasing disposable income and stimulating consumption.
Impact of This Major Tax Reform
1. Increased Disposable Income
With no tax liability up to ₹12 lakh, individuals will have more money in hand, leading to improved financial stability.
2. Boost to Consumption & Economy
Higher disposable income is expected to increase spending on goods and services, which can help drive economic growth.
3. Incentive for Savings & Investments
With reduced tax obligations, individuals may invest more in financial instruments, promoting long-term wealth creation.
Government’s perspective
The government recognizes the middle class as an essential part of the economy. By reducing their tax load, the goal is to create a stronger economic landscape through increased consumer spending and investment.
Conclusion
The notable tax reforms in the Union Budget 2025 aim to strengthen the middle class, boost economic activity, and enhance the financial health of the population. The Union Budget 2025 has delivered a game-changing tax reform that benefits millions of taxpayers. With no income tax up to ₹12 lakh, this policy will provide financial relief, enhance spending capacity, and contribute to India’s economic momentum. Click here to visit official site .
NO INCOME TAX up to Rs.12 lakhs NO INCOME TAX up to Rs.12 lakhs NO INCOME TAX up to Rs.12 lakhs NO INCOME TAX up to Rs.12 lakhs
Who will benefit from the new tax exemption?
Individuals earning up to ₹12 lakh annually will not have to pay any income tax under the new regime. Salaried employees will get an additional benefit of ₹75,000 as a standard deduction, making their exemption limit ₹12.75 lakh.
Is this exemption applicable under the old tax regime?
No, the revised tax slabs apply only to the new tax regime. Those opting for the old regime will continue with the existing slab rates and deductions.
Do I need to file an income tax return (ITR) if my income is below ₹12 lakh?
Yes, even if you are not liable to pay tax, it is advisable to file an ITR to maintain a clean financial record and avail benefits such as loan approvals.
Will businesses also get tax exemptions under this rule?
No, this exemption applies only to individual taxpayers. Businesses and corporate entities will follow separate tax regulations.