Budget 2025: Finance Minister Nirmala Sitharaman announced a major relief for taxpayers by making income up to ₹12 lakh tax-free, an increase from ₹7 lakh. With a standard deduction of ₹75,000 for salaried individuals, income up to ₹12.75 lakh becomes tax-free. This change, however, excludes capital gains, which are taxed separately. The goal is to increase household consumption, savings, and investment by leaving more money in people’s hands. This move will boost the economy, especially benefiting the middle class, which forms a vital part of India’s growth.
Income Tax Budget 2025: Key Highlights of the New Tax Regime
Income Tax Budget 2025: The most significant announcement in Budget 2025 is the new tax regime, where individuals earning up to ₹12 lakh can enjoy a tax-free income. The income tax budget 2025 introduces a rebate for those earning this amount, making their overall tax liability zero. Additionally, the income tax slabs for AY 2025-26 have been revamped to provide better tax relief. The Finance Minister confirmed that this measure will not impact the revenue from the old tax regime. The new tax structure aims to alleviate financial stress and encourage increased consumption, helping economic recovery.
No Tax Up to ₹12.75 Lakh: A Major Relief
Income Tax Budget 2025: One of the highlights of Budget 2025 is the no tax up to ₹12.75 lakh announcement, offering considerable relief to the salaried middle class. With the new income tax slab for AY 2025-26, people earning up to ₹12.75 lakh will not be taxed. The tax-free limit includes a standard deduction of ₹75,000 for salaried individuals. Finance Minister Sitharaman mentioned that this will help boost household savings, investment, and spending, contributing positively to the economy. This substantial tax relief is a step toward making the tax system more taxpayer-friendly and reducing the burden on the common man.
Impact of the New Income Tax Slab 2025 on the Middle Class
The new income tax slab 2025 will bring considerable relief to taxpayers, especially those in the ₹25 lakh income bracket. Under the previous tax regime of 2024, those earning ₹25 lakh paid ₹4.57 lakh in taxes, but with the changes in Budget 2025, their tax liability will reduce to ₹3.43 lakh. This translates to a saving of ₹1.14 lakh annually, or about ₹9,500 per month. This reduction in taxes will increase disposable income, benefiting the middle class significantly and further driving consumer spending, which will have a ripple effect on the economy.
Income Tax Budget 2025: A Boost to Economic Growth
The introduction of the new tax regime 2025 in Budget 2025 is expected to stimulate economic growth. By leaving more money in taxpayers’ hands, there will likely be an increase in household consumption. With higher disposable income, people are expected to spend more, which will lead to increased demand for goods and services. Adhil Shetty, CEO of Bankbazaar.com, highlighted that these measures will reaffirm confidence in the economy and encourage growth. As more people spend and invest, it will drive economic recovery, benefiting businesses and boosting the overall economic climate.
Budget 2025 Highlights: What to Expect Going Forward
The Budget 2025 highlights indicate that the government is committed to improving the financial well-being of middle-class taxpayers. With the implementation of new tax slab 2025, taxpayers will retain more money, leading to higher spending and investment. The income tax budget 2025 aims to reduce the tax burden on middle-class earners, providing them with more disposable income. By encouraging increased consumption and savings, these tax reforms are expected to boost the economy. The government’s efforts to simplify the tax system will create a favorable environment for growth and recovery in the coming years.