Enormous lift to the middle class: No tax on income up to Rs 12 lakh under the new system, says FM

Budget 2025 likewise rejigged tax pieces and rates under the new assessment system and expanded the fundamental exception limit from Rs 3 lakh to Rs 4 lakh. In any case, true to form, old tax system sections and rates will stay unaltered.

Finance minister Nirmala Sitharaman on February 1 gave individual pay citizens motivation to cheer by raising the income tax deduction limit from Rs 7 lakh to Rs 12 lakh.

The refund is accessible to inhabitant Indian citizens. Basically, salaried citizens with pay of up to Rs 12.75 lakh won’t need to pay any duty presently, on account of the standard allowance.

The minister likewise proposed to rejig chunks under the new system, remembering increment for the essential exception breaking point to Rs 4 lakh, in a major savings lift to the middle class. Not at all like duty discount, a climb in fundamental exception limit helps even those in the higher levels of pay.

Here are the new tax brackets:

Rs 0-Rs 4,00,000 – Nil

Rs 4,00,001-8,00,000 – 5%

Rs 8,00,001-12,00,000 – 10%

Rs 12,00,001-16,00,000 – 15%

Rs 16,00,001-20,00,000 – 20%

Rs 20,00,001 to Rs 24,000,000 – 25%

More than Rs 24 lakh – 30%

“I am now happy to announce that there will be no income tax payable up to income of ` 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 ` 75,000,” Sitharaman said in her Budget speech. Put simply, the rebate (Rs 60,000 per the February 1 proposals) will not be allowed on special rate incomes such as capital gains.

Sitharaman said that those with an income of Rs 12 lakh will now save Rs 80,000 (100 percent of tax they were paying so far), while those earning Rs 18 lakh will get a benefit of Rs 70,000 (30 percent of the tax payable as per existing rates). Those earning Rs 25 lakh will make tax-savings of Rs 1.1 lakh (25 percent of their current tax outgo).

She additionally declared the public authority’s choice to table the new income tax bill in the parliament one week from now which looks to improve on the standards and language for taxpayers and administrators, possibly diminishing questions.