InformativeNewsTrending

Budget 2025: No Tax On Income Up To Rs 12 Lakh, New Tax Slabs, And More; Key Highlights

Budget 2025: Big Tax Relief And Financial Reforms For A Stronger Economy!

Budget 2025 Key Highlights
1.78KViews

The Indian government announced a substantial tax reform in budget 2025 to help reduce the financial weight on middle-class earners who number in the millions. A key advancement in the tax system reform includes the proposal that offers total tax exemption to earners whose income does not exceed ₹12 lakh.

 

Budget For The Middle Class

Nirmala Sitharaman Budget 2023
via

For years, the middle class has been the backbone of the Indian Economy. This time we were expecting something for the middle class. So finally after years of waiting Government gave it through and under the new tax exemption, the middle class who make up to ₹12 lakh annually will experience decreased financial pressure. People who earn money at a maximum level of ₹12 lakh now enjoy relief from the need to handle tax return submissions and complex exemption rules.

What happens when the average person has more disposable income? They spend it! This could give a much-needed boost to sectors like retail, real estate, and consumer goods. So, it’s not just a win for individuals but could also help grow the economy.

 

Latest Income Tax Slabs FY 2025-26 Under New Tax Regime

Income Tax Slab Income Tax Rate
0-4 Lakh NIL
4-8 Lakh 5%
8-12 Lakh 10%
12-16 Lakh 15%
16-20 Lakh 20%
20-24 Lakh 25%
Above 24 Lakh 30%

The proposed modifications applicable from assessment year 2026-27 specify that income tax determination rates under new clause (iii) of sub-section (1A) of section 115BAC will calculate payments for total income of individuals, Hindu Undivided Families (HUFs), Associations of Persons (AOPs), Body of Individuals (BOIs) and artificial juridical persons shown in subclause (vii) of clause (31) of section 2 yet excluding co-operative societies.

 

Budget 2025 Key Takeaways

Nirmala Sitharaman
via

FM Nirmala Sitharaman presented several essential points during her Budget 2025 speech which include the following information:

1. The government expects to maintain fiscal deficit levels of 4.4% for FY26 after projecting a 4.8% deficit for the upcoming year FY25.

2. The Jan Vishwas Bill 2.0 will be presented to parliament for passage before decriminalizing more than 100 provisions. Investment-friendly State index will commence operations in Budget 2025.

3. The government plans to eliminate 7 tariff rates on top of those eliminated in the previous budget 2025. The new procedure will keep only eight tariff rates after making its adjustments.

4. FM dedicated ₹1.5 lakh crore to give states 50-year interest-free loans which will support their capital expenditure programs and infrastructure development.

5. The Finance Minister declared full exemption of basic customs duty for 36 life-saving drugs and medicines.

6. The government plans to simplify Tax Deducted at Source (TDS) procedures through fewer deduction rates combined with expanded thresholds thus making it beneficial for taxpayers.

7. 36 Life-Saving Drugs were added to the Basic Customs Duty exemption list by FM.

She announced a plan for the government to develop 50 key tourism sites with state partnerships as part of a national tourism expansion strategy that aims to promote medical tourism and medical treatment for international patients.

 

What About The Old Tax Regime?

The Budget 2025 document specifies that the new slabs are for those opting for the New Tax Regime, in line with the Centre’s push for this new regime that aims to simplify personal tax by doing away with the complications of exemptions. Finance Minister Nirmala Sitharaman or the Budget 2025 document does not mention the old tax regime, meaning slabs in the old regime remain unchanged.

 

Should You Switch From Old To New Tax Regime?

Your selection between the new tax regime and the old tax regime depends on how much tax you can save by claiming available exemptions under the old tax system. Your total amount of income tax depends on your ₹16 lakh earnings after you subtract ₹4 lakh of permitted exemptions. Your income tax obligation amounts to ₹1,72,500 under the old system whereas it will be only ₹120,500 under the new scheme.

Divya Baweja, Partner, Deloitte India, To decide whether to opt for the old regime or the new regime, one would need to see that if a taxpayer were to follow the old regime, what kind of deductions or exemptions he/she should be looking at to claim benefit akin to the new regime. That comparison factor would be based on the specific individual scenario. Basis the same, one would need to evaluate the regime which is more beneficial With the widening of the slabs in the new regime, the taxpayer would need to have higher deductions or exemptions to equate the tax under the new regime.”

Follow Us: Facebook | Instagram | X |

Youtube | Pinterest | Google News |

Entertales is on YouTube; click here to subscribe for the latest videos and updates.

Prateesha Singh
the authorPrateesha Singh
Content Writer
I’m a passionate writer and a graduate with a natural talent for storytelling. I find joy in both reading and writing. My commitment to social work enriches my literary journey. My journey is driven by a desire to make a difference through words and action.