Budget 2025 Highlights: No Income Tax on Incomes Up to ₹12 Lakh

Finance Minister Nirmala Sitharaman made the much-awaited announcement that under the new tax regime in Budget 2025, anyone earning up to ₹12 lakh annually would not be required to pay income tax. The middle class will benefit tremendously from this historic ruling, which eliminates all tax obligations for people making up to ₹12.75 lakh after accounting for the former standard deduction of ₹75,000.

According to Sitharaman, this change demonstrates the government’s steadfast support for the middle class, which aims to raise disposable income and boost economic growth through higher consumption.

The Finance Minister announced a new set of tax slabs in addition to the tax exemption for incomes up to ₹12 lakh:

Earnings up to 4 lakh rupees: ₹4 lakh to ₹8 lakh is exempt: 5% tax on amounts between ₹12 lakh and ₹16 lakh: 10% tax on between ₹16 lakh and ₹20 lakh: 20% tax
Between 20 and 24 lakh rupees: 25% tax
Earnings over ₹24 lakh: 30% tax

Taxpayers in the middle class gain a great deal from this reform. For instance, a person earning ₹12 lakh per year will now save ₹80,000 in taxes, a person earning ₹18 lakh will receive ₹70,000 in relief, and a person earning ₹25 lakh will gain ₹1.10 lakh.

This is the eighth budget presentation by Sitharaman, and it brings her closer to the record of ten budgets presented by former Prime Minister Morarji Desai.

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