During the presentation of the Union Budget 2025, Finance Minister Nirmala Sitharaman announced that a new income tax bill—a direct tax code designed to streamline compliance for individual taxpayers—will be introduced next week. Additionally, In a significant move aimed at easing the tax burden on individual taxpayers, Finance Minister announced a revised set of tax slabs and rates under the new tax regime. The changes are expected to make income up to ₹12 lakh completely tax-free, providing substantial relief to the middle class.
Under The New Tax structure, The following Rates Will Apply:
- Income up to ₹4 lakh: Nil
- ₹4 lakh to ₹8 lakh: 5%
- ₹8 lakh to ₹12 lakh: 10%
- ₹12 lakh to ₹16 lakh: 15%
- ₹16 lakh to ₹20 lakh: 20%
- ₹20 lakh to ₹24 lakh: 25%
- Above ₹24 lakh: 30%
The new tax slabs mark a significant shift across the board, ensuring that all taxpayers benefit from reduced rates. One of the most notable changes is the creation of a ‘Nil tax’ slab up to ₹12 lakh of income. Additionally, salaried taxpayers will enjoy an increased tax exemption limit of ₹12.75 lakh due to a standard deduction of ₹75,000.
- The government’s goal with these changes is to substantially reduce the tax liabilities for middle-income earners, leaving them with more disposable income. By lowering tax rates and increasing exemptions, the new structure is expected to boost household consumption, increase savings, and stimulate investment, providing a major push to the economy.
- This revamp of the tax system signals a clear intention to ease the financial pressure on India’s middle class, which has long been the backbone of the country’s consumer economy. The Finance Minister’s move to simplify and make the tax structure more inclusive is being hailed as a progressive step toward a more taxpayer-friendly environment.
