Budget 2025: No tax on income up to Rs 12 lakh under new regime

 This is likely to boost disposable income, which could lead to increased consumer spending and potentially stimulate economic growth. The rejigged slabs could also make the tax system more progressive and fairer for a larger portion of the population.

 For salaried employees, the effective nil tax limit going up to Rs 12.75 lakh, after standard deduction of Rs 75,000, further enhances the relief they receive. This will allow many salaried individuals to retain more of their earnings, potentially improving their financial security. It’s also a step toward addressing the rising cost of living, especially for the middle class, Sitharaman said.

 "I am now happy to announce that there will be no income tax payable up to income of Rs 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," the finance minister said in her Budget speech.

 As per the rejig, for those earning more than Rs 12 lakh per annum, there will be nil tax for income up to Rs 4 lakh, 5 per cent for income between Rs 4 and 8 lakh, 10 per cent for Rs 8-12 lakh, 15 per cent for Rs 12-16 lakh.

 A 20 per cent income tax will be levied on income between Rs 16 and 20 lakh, 25 per cent on Rs 20-24 lakh and 30 per cent above Rs 24 lakh per annum.

 A tax payer in the new regime with an income of Rs 12 lakh will get a benefit of Rs 80,000 in taxes. A person with an income of Rs 18 lakh per annum will receive a tax benefit of Rs 70,000, while a person with an income of Rs 25 lakh gets a benefit of Rs 1.10 lakh.