In the Union Budget 2025, Finance Minister Nirmala Sitharaman announced significant changes to the income tax structure under the new tax regime, providing substantial relief to middle-class taxpayers. Notably, the income threshold exempt from taxation has been raised to₹12 lakh, with an additional standard deduction of₹75,000. This means individuals earning up to ₹12.75 lakh annually will not be liable to pay any income tax.
The revised tax slabs under the new regime are as follows:
- Income up to ₹4 lakh: Nil
- ₹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%
These adjustments aim to increase disposable income for a significant portion of the population, thereby stimulating consumption and economic growth. The government’s initiative is estimated to benefit 25-30 million taxpayers, saving them about ₹1 lakh annually, which may encourage higher discretionary spending on items like vehicles and consumer products.
It’s important to note that these changes apply to the new tax regime, which offers lower tax rates with fewer exemptions and deductions compared to the old regime. Taxpayers should assess their individual financial situations to determine which regime is more beneficial for them.
Overall, the 2025 budget’s tax reforms are designed to provide substantial relief to the middle class, enhance disposable incomes, and boost economic activity through increased consumer spending.
