No Income Tax On Annual Income Up To Rs 12 Lakh Under New Tax Regime

NEW DELHI: The new Income Tax exemption limit to be Rs 12.75 lakh for salaried tax payers, with standard deduction of Rs 75,000.

The Union budget for 2025-26 brings across-the-board changes in income tax slabs and rates to the benefit of all tax-payers.

Tax slab rate reduction and rebate to result in substantial tax relief to middle class, thereby boosting household consumption expenditure and investmemt.

Reaffirming Government’s commitment to the philosophy of “trust first, scrutinize later”, the Union Budget 2025-26 has reposed faith in the Middle class and continued the trend of giving relief in tax burden to the common tax–payer.

Presenting the Budget in the Parliament today, Union Minister for Finance and Corporate Affairs, Nirmala Sitharaman proposed an across-the-board change in tax slabs and rates to benefit all tax-payers.

She also announced on Saturday an across-the-board change in the tax slabs as she proposed new Income Tax Bill to be introduced next week which will be clear and direct in text with close to half of the present law.

In her 75-minute budget address, she said: "There will be no income tax payable upto 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.

This limit will be Rs.12.75 lakh for salaried tax payers, due to standard deduction of Rs. 75,000.”  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 added.

"The new structure will substantially reduce the taxes of the middle class and leave more money in their hands, boosting household consumption, savings and investment”.

In the new tax regime, the Finance Minister proposed to revise tax rate structure as follows:

Direct Taxes

• New Income Tax Bill to be introduced in Parliament soon.

• No change in the old tax regime.

• Revised slab rates under the new regime (u/s 115BAC):

  • ₹0-4 Lakhs – 0% (Nil)

  • ₹4-8 Lakhs – 5%

  • ₹8-12 Lakhs – 10%

  • ₹12-16 Lakhs – 15%

  • ₹16-20 Lakhs – 20%

  • ₹20-24 Lakhs – 25%

  • Above ₹24 Lakhs – 30%

• Tax relief: No income tax payable if annual income is up to ₹12 Lakh (excluding capital gains and special rate income).

• Simplification: The new Income Tax Bill aims to be easy to understand.

Rationalization of TDS (Tax Deducted at Source) & TCS (Tax Collected at Source)

• TDS on senior citizens' interest income raised from ₹50,000 to ₹1,00,000.

• TDS on rent threshold limit increased from ₹2,40,000 to ₹6,00,000.

• TCS on overseas remittances for education removed under the Liberalized Remittance Scheme (LRS).

• TCS threshold for foreign remittances increased from ₹7,00,000 to ₹10,00,000.

 Other Tax Updates

• Updated return filing time extended from 2 years to 4 years.

• Registration period for small charitable trusts extended from 5 years to 10 years.

• Two self-occupied properties can be declared tax-free without conditions.

• Reassessment window: Can reopen assessments within 3-5 years if escaped income is ₹50 lakh or more.

• Tax exemption on withdrawals from the National Savings Scheme (NSS) after 29th August 2024.

General Announcements

• PM SVANidhi Scheme Revamped:

  • Street vendors to get higher bank loans.

  • UPI-linked credit cards with a ₹30,000 limit.

• Startup Guarantee Doubled from ₹10 crore to ₹20 crore.

• MSME investment & turnover limits increased:

  • Investment limit 2.5 times higher.

  • Turnover limit 2 times higher.

• Kisan Credit Card limit raised to ₹5 Lakhs to boost farmer credit access.

While underlining Taxation Reforms as one of key reforms to realize the vision of Viksit Bharat, Sitharaman stated that the new income-tax bill will carry forward the spirit of ‘Nyaya’. The new regime will be simple to understand for taxpayers and tax administration, leading to tax certainty and reduced litigation, she informed.

Quoting Verse 542 from The Thirukkural, the Finance Minister stated, “Just as living beings live expecting rains, Citizens live expecting good governance.” Reforms are a means to achieve good governance for the people and economy.

Providing good governance primarily involves being responsive. The tax proposals detail just how the Government under the guidance of Prime Minister Narendra Modi has taken steps to understand and address the needs voiced by our citizens, Sitharaman added.

PM Congratulates Finance Minister For People's Budget

In highlighting on Saturday Prime Minister marked the Union Budget as an important milestone in the journey of India’s development. He remarked that this budget reflects the aspirations of 140 crore Indians and fulfills the dreams of every citizen. He highlighted that several sectors were opened up for the youth, and the common citizen will drive the mission of Viksit Bharat (Developed India).

The Prime Minister emphasized that this budget is a force multiplier which would increase the savings, investment, consumption, and growth. He congratulated the Union Minister for Finance and Corporate Affairs Nirmala Sitharaman and her team for this ‘People’s Budget’.

Prime Minister remarked that typically, the focus of the budget is on how to fill the Government's treasury. However, he said this budget focused on how to fill the pockets of the citizens, increase their savings, and make them partners in the country's development. He emphasized that this budget lays the foundation for these goals.

He said Viksit Bharat Budget 2025-26 will empower the agriculture sector and give boost to rural economy and greatly benefits the middle class o the country. He said the budget has Viksit Bharat Budget 2025-26 will empower the agriculture sector and give boost to rural economy.

Prime Minister remarked that typically, the focus of the budget is on how to fill the Government's treasury. However, he said this budget focused on how to fill the pockets of the citizens, increase their savings, and make them partners in the country's development. He emphasized that this budget lays the foundation for these goals.

“Significant steps have been taken towards reforms in this budget”, said Modi and highlighted the historic decision to promote the private sector in nuclear energy. He added that civil nuclear energy will ensure a significant contribution to the country's development in the future. He emphasized that all employment sectors were given priority in the budget.

Pointing out two major reforms that will bring significant changes in the coming time, Shri Modi said that  granting infrastructure status to shipbuilding will boost the construction of large ships in India, accelerating the Atmanirbhar Bharat Abhiyaan and including hotels at 50 tourist destinations under the infrastructure category will significantly boost tourism, providing new energy to the hospitality sector, which is the largest employment sector.

The Prime Minister stated that the country was progressing with the mantra of "Vikas bhi, Virasat bhi" (Development and Heritage). He mentioned that significant steps were taken in this budget to preserve one crore manuscripts through the launch of the Gyan Bharatam Mission. Additionally, a National Digital Repository inspired by Indian knowledge traditions will be created.

Pointing that the budget places special emphasis on creating a vibrant and competitive investment environment in the states, Shri Modi  highlighted the announcement to double the credit guarantee for MSMEs and startups. He mentioned the introduction of a scheme to provide loans up to ₹2 crore without guarantee for SC, ST, and women first- time entrepreneurs.

He emphasized the significant announcement for gig workers, with their registration on the e-Shram portal for the first time, enabling them to access healthcare and other social security schemes. The Prime Minister stated that this reflects the Government's commitment to the dignity of labor. He highlighted that regulatory and financial reforms, such as Jan Vishwas 2.0, will strengthen the commitment to minimum government and trust-based governance.

Concluding his address, the Prime Minister remarked that this budget not only addresses the current needs of the country but also helps in preparing for the future. He highlighted the initiatives for startups, including the Deep Tech Fund, Geospatial Mission, and Nuclear Energy Mission. He extended his congratulations to all citizens for this historic budget.