No Income Tax on Incomes Up to ₹12 Lakh: Nirmala Sitharaman Announces
In the most eagerly awaited announcement of this budget, Finance Minister Nirmala Sitharaman revealed that incomes up to ₹12 lakh would be exempt from income tax. She described this as a reflection of the government’s commitment and trust in the middle class. Under the new tax regime, factoring in the previous standard deduction of ₹75,000, an income of up to ₹12.75 lakh would have no tax liability.
The move comes in after prevalent consensus in the industry and populace at large about increasing aggregate consumption in the economy. “The new tax structure will substantially reduce the taxes of middle-class and leave more money in the hands of the middle class and boost consumption”.
The finance minister outlined the changes in tax slabs, stating that incomes up to ₹4 lakh would be exempt from tax, those between ₹4 lakh and ₹8 lakh would be taxed at 10%, incomes from ₹12 lakh to ₹16 lakh at 10%, ₹16 lakh to ₹20 lakh at 20%, ₹20 lakh to ₹24 lakh at 25%, and incomes above ₹24 lakh at 30%.
A tax payer in the new regime with an income of ₹12 lakh will get a benefit of ₹80,000 in tax. A person having income of ₹18 lakh will get a benefit of ₹70,000 in tax. A person with an income of ₹25 lakh gets a benefit of ₹1.10 lakh.
The Rajya Sabha MP is set to present her eighth budget on Saturday, February 1, 2025, bringing her closer to the record of ten budgets presented by former Prime Minister Morarji Desai during his lifetime.