New Delhi, February 1, 2025: The Union Budget 2025, presented by Finance Minister Nirmala Sitharaman, brought significant relief to taxpayers, especially the middle class. In a major announcement, the government has raised the income tax exemption limit to Rs 12 lakh, marking one of the most substantial concessions in recent years.
Income Tax Slabs Revised: Key Takeaways
As part of its push to empower the middle class, youth, and women, the Modi government has revamped the tax slabs. The new structure is as follows:
- No tax on income up to Rs 12 lakh
- 10% tax on income between Rs 12 lakh and Rs 16 lakh
- 15% tax on income between Rs 16 lakh and Rs 20 lakh
- 25% tax on income between Rs 20 lakh and Rs 24 lakh
- 30% tax on income above Rs 24 lakh
This revision ensures significant tax savings for salaried individuals and business owners, offering much-needed relief in an inflationary environment.
Standard Deduction & Senior Citizen Benefits Enhanced
Along with the tax exemption hike, the standard deduction has been increased from Rs 50,000 to Rs 75,000, further reducing the taxable income for salaried individuals.
In a major benefit for senior citizens, the income tax exemption limit has been raised from Rs 50,000 to Rs 1 lakh, while TDS exemption has been increased from Rs 2.40 lakh to Rs 6 lakh. This is expected to provide financial ease to retirees who rely on interest income and pensions.
New Income Tax Bill Coming Soon
Finance Minister Nirmala Sitharaman also announced that a new income tax bill will be introduced next week to further simplify the taxation process. The bill is expected to streamline tax regulations, making compliance easier for taxpayers.
Old vs New Tax Regime: What Has Changed?
Previously, taxpayers had the option to choose between the old tax regime and the new tax regime, each with its own set of slabs and exemptions. Under the earlier system:
- The old regime exempted income up to Rs 2.5 lakh, after which tax was applied at 5% (Rs 2.5 lakh – Rs 5 lakh), 20% (Rs 5 lakh – Rs 10 lakh), and 30% (above Rs 10 lakh).
- The new regime provided a higher exemption of Rs 3 lakh but had different slab rates, with 5% tax for Rs 3 lakh – Rs 7 lakh, 10% for Rs 7 lakh – Rs 10 lakh, 15% for Rs 10 lakh – Rs 12 lakh, 20% for Rs 12 lakh – Rs 15 lakh, and 30% for above Rs 15 lakh.
With the latest budget announcement, the revised tax structure simplifies taxation and brings substantial benefits to taxpayers across different income brackets.
Also read: Nirmala Sitharaman’s Budget Day Saree: A Tribute to Madhubani Art and a Special Request Fulfilled
Final Thoughts: A Budget for the People
This is Finance Minister Sitharaman’s eighth consecutive budget and is being viewed as a significant step toward economic relief and empowerment for the middle class. The move to increase tax exemptions aligns with the government’s commitment to inclusive growth and financial stability for all sections of society.
With a focus on reducing tax burdens and promoting savings, the Union Budget 2025 has laid the foundation for a stronger, more prosperous India.
