01 February,2025 01:01 PM IST | New Delhi | mid-day online correspondent
Pic/ PTI
Finance Minister Nirmala Sitharaman has announced significant tax relief in Budget 2025, raising the nil tax slab from â¹7 lakh to â¹12 lakh under the new tax regime. This move aims to provide major relief to middle class taxpayers by increasing disposable income and encouraging savings.
For salaried employees, this nil tax limit will be Rs 12.75 lakh per annum, after taking into account a standard deduction of Rs 75,000. Higher exemptions and rejigs have been effected under the new income tax regime.
"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. "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," Sitharaman said in her Budget speech.
New income tax slabs under the new regime:
â¹0 - â¹4 lakh: 0% (No tax)
â¹4 - â¹8 lakh: 5%
â¹8 - â¹12 lakh: 10%
â¹12 - â¹16 lakh: 15%
â¹16 - â¹20 lakh: 20%
â¹20 - â¹24 lakh: 25%
Above â¹24 lakh: 30%
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Additionally, senior citizens will benefit from higher tax deductions. The deduction limit on interest income has been doubled from â¹50,000 to â¹1 lakh, easing the financial burden on retirees.
With these revised slabs, individuals earning up to â¹12 lakh per year will not be required to pay any income tax. The government expects these changes to improve financial security, boost consumer spending, and support economic growth.
Sitharaman laid out a blueprint for next generation reforms including raising FDI limit in insurance sector, simplification of tax laws, cutting duties on intermediaries while providing enhanced fiscal support for welfare measures. This she did while sticking to the fiscal consolidation roadmap that projected the fiscal deficit to come down to 4.4 per cent of the GDP in the financial year 2025-26. For the current financial year fiscal deficit has been pegged at 4.8 per cent of GDP.
To bridge the fiscal deficit gap, the government is set to raise resources from the market to the tune of Rs 11.54 lakh crore on a net basis for the next fiscal year.
