There will be no income tax payable up to Rs 12 lakh – i.e., up to Rs 12.75 lakh including standard deductions – under the new regime, Union Finance Minister Nirmala Sitharaman said Saturday as she read out the Union Budget 2025.
In an announcement accompanied by loud cheers and enthusiastic thumping of desks by BJP MPs, led by Prime Minister Narendra Modi, she also announced revisions to the tax slabs (again, applicable to the new regime only).
Under the revised slabs, tax on income up to Rs 4 lakh is nil.
Between Rs 4 and Rs 8 lakh the tax will be five per cent.
Between Rs 8 and Rs 12 lakh it will be 10 per cent.
Between Rs 12 lakh and Rs 16 lakh it will be 15 per cent.
Between Rs 16 lakh and Rs 20 lakh it will be 20 per cent.
Between Rs 20 lakh and Rs 24 lakh it will be 25 per cent.
Above Rs 24 lakh it will be 30 per cent.
All of this, Sitharaman said, will “substantially reduce tax burden on middle class and leave more money in their hands”. It will also boost household consumption, savings, and investment, she said.
In other tax-related announcements, Sitharaman also said TDS, or tax deduction at source, rates will be rationalised, and the limit for tax deduction for senior citizens will be doubled to Rs 1 lakh.
Further, she also proposed doubling the deadline to file updated returns to four years.