Union Finance Minister Nirmala Sitharaman, in her Budget 2025 speech, announced new tax proposals ensuring that individuals with a salaried income of up to Rs 12 lakh per year will not be liable to pay income tax.
She explained that taxpayers earning up to Rs 12 lakh from regular income sources, excluding special rate incomes like capital gains, will receive a tax rebate, effectively eliminating their tax liability.
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“I am pleased to announce that individuals earning up to Rs 12 lakh will not have to pay any income tax,” she stated in the Lok Sabha.
“So average income of 1 lakh per month, other than the special rate income from capital gains, under the new regime, this limit will be 12.75 lakhs for salaried taxpayers due to the standard deduction of 75,000 rupees,” she said.
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New Income Tax slabs
FM announced the new slab which she said will reduce the tax burden of taxpayers, leaving more money in their hands and boosting household consumption.
New slabs are as follows :
Rs 0 to 4 lakh – NIL
Rs 4 to 8 lakh – 5%
Rs 8 to 12 lakh – 10%
Rs 12 – 16 lakh – 15%
Rs 16 – 20 lakh – 20%
Rs 20 – 24 lakh – 25%
Rs 24 lakh plus – 30%.
“To taxpayers up to 12 lakhs of normal income, other than special rate incomes 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,” she said.
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Finance Minister illustrated with some examples as follows :
A tax payer, in the new regime, with an income of 12 lakh rupees, will get a benefit of 80,000 rupees in tax which is 100% of tax payable as per the existing rates.
A person having income of 18 lakh rupees will get a benefit of 70,000 rupees in tax which is 30% of tax payable as per existing rates.
A person with an income of Rs 25 lakhs will get a benefit of Rs 1.10 lakh rupees that is 25% of his tax payable as per the existing rates.
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