No Income Tax Up to ₹12 Lakh: In a landmark move announced during the Union Budget 2025, Finance Minister Nirmala Sitharaman revealed that individuals with an annual income of up to ₹12 lakh “No Income Tax Up to ₹12 Lakh: Major Relief for Middle Class in Budget 2025” will no longer be required to pay income tax. This significant relief is expected to benefit millions of middle-class taxpayers, who have long faced the burden of high taxes. The government’s decision is seen as a direct response to the financial struggles of the middle class and is poised to bring substantial economic relief.
No Income Tax Up to ₹12 Lakh – Income Tax Budget 2025
Finance Minister Nirmala Sitharaman introduced several changes in the tax structure that aim to ease the tax burden for millions of taxpayers. One of the most significant changes is the tax exemption for individuals earning up to ₹12 lakh annually under the new tax regime. This means no income tax will be levied on such individuals, helping many in the middle-income group.
According to Nirmala Sitharaman, “Government proposes nil tax on income up to ₹12 lakh per annum under the New Tax Regime.” She also highlighted that those earning ₹12 lakh will benefit from ₹80,000 due to tax relief. This move is seen as a step towards providing more disposable income to middle-class families and stimulating the economy.
A Major Relief to the Middle Class – No Income Tax Up to ₹12 Lakh
Budget 2025: The middle class has always been an essential pillar of the country’s economy, and their contribution has been acknowledged through various initiatives in past budgets. In Budget 2025, the government focused on further easing their financial load. In her speech, Sitharaman emphasized, “The middle class provides strengths to the economy. In recognition of their contribution, we have periodically reduced the tax burdens. I am now happy to announce that there will be no income tax up to an income of ₹12 lakh.”
This announcement is expected to directly benefit millions of taxpayers who have long faced a high tax burden. It is especially significant in the context of the rising cost of living and the economic challenges faced by many households.
Income Tax Slabs Budget 2025
Along with the No tax up to ₹12 lakh, the government has also revised income tax slabs under the new tax regime to make them more taxpayer-friendly. Here are the updated tax slabs for the financial year 2025.
- Income up to ₹4 lakh – Nil
- Between ₹4 lakh and ₹8 lakh – 5% tax
- Between ₹8 lakh and ₹12 lakh – 10% tax
- Between ₹12 lakh and ₹16 lakh – 15% tax
- Between ₹16 lakh and ₹20 lakh – 20% tax
- Between ₹20 lakh and ₹24 lakh – 25% tax
- Above ₹24 lakh – 30% tax
This revised structure ensures that taxpayers will pay lower taxes in the initial income ranges, further reducing their overall liability. The new system introduces a progressive tax structure, where the higher the income, the higher the tax rate, with a gradual increase in rates.
No Tax Up to ₹12.75 Lakh for Salaried Individuals
No tax up to Rs 12.75 lakh: Another major relief is that salaried individuals will get an additional benefit under the new tax regime. The new system applies a nil tax slab for annual income up to ₹12 lakh, and for salaried employees, this threshold is extended to ₹12.75 lakh due to a standard deduction of ₹75,000.
This change means that salaried individuals earning up to ₹12.75 lakh will also enjoy tax-free income, significantly improving their financial situation. By providing this additional benefit, the government aims to ensure that middle-class salaried workers, who contribute greatly to the nation’s economy, are not overburdened with taxes.
Additional Tax Rebate for Taxpayers Under ₹12 Lakh
No tax up to Rs 12.75 lakh: In addition to the revised tax slabs, Finance Minister Sitharaman also announced a tax rebate for taxpayers earning up to ₹12 lakh. The government will provide a tax rebate to these individuals, so they will not have to pay any tax. This rebate applies to regular income, excluding special rate income such as capital gains.
The finance minister emphasized that this measure would ensure that taxpayers in the ₹12 lakh income range will not have to pay any taxes, making it a crucial part of the Income Tax Budget 2025. This is expected to bring significant relief to salaried individuals and others in this income bracket.
Impact on Taxpayers and Economy
The changes in Income Tax Budget 2025 are expected to have a positive impact on taxpayers across various income groups. By reducing the tax burden for those earning below ₹12 lakh, the government is aiming to provide greater financial freedom to the middle class. This will likely stimulate spending and contribute to economic growth.
Additionally, by revising the income tax slabs, the government is offering more equitable tax distribution, which will benefit taxpayers in lower and middle-income groups. These changes reflect the government’s focus on providing relief to those who are most affected by high taxes.
Conclusion: Budget 2025 Brings Hope for the Middle Class
Budget 2025’s provisions regarding income tax are a much-needed relief for the middle class. The announcement of no tax up to ₹12 lakh will provide substantial financial freedom to millions of individuals across the country. With lower tax slabs, higher deductions for salaried individuals, and additional rebates, the Income Tax Budget 2025 is seen as a historic move that will benefit taxpayers and boost the economy. As the country heads towards elections, these measures are likely to be welcomed by the public and set the tone for future policy reforms.