Here’s exactly what FM said about income tax cut for salaried middle class. Read full text

Union Budget 2025: Union Finance Minister Nirmala Sitharaman, in a major Budget announcement, said that there will be no income tax for salaried taxpayers with income up to ₹12 lakh.  

The government will also be introducing a new Income Tax bill next week to take forward the “trust first, scrutinise later” concept, FM Sitharaman announced. 

On Saturday, Finance Minister Nirmala Sitharaman also announced that the Prime Minister Narendra Modi-led government will forgo ₹1 lakh crore in direct taxes and ₹2,600 crore in indirect taxes on account of changes in tax rates.

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New Income Tax Slabs in Budget 2025:

New Income Tax Slabs in Budget 2025: What Nirmala Sitharaman Said About Income Tax

Personal Income- tax Reforms with special focus on middle class 156. Democracy, Demography and Demand are the key support pillars in our journey towards Viksit Bharat. The middle class provides strength for India’s growth. This Government under the leadership of Prime Minister Modi has always believed in the admirable energy and ability of the middle class in nation building. In recognition of their contribution, we have periodically reduced their tax burden.

Right after 2014, the ‘Nil tax’ slab was raised to ₹2.5 lakh, which was further raised to ₹5 lakh in 2019 and to ₹7 lakh in 2023. This is reflective of our Government’s trust on the middle-class tax payers. I am now happy to announce that there will be no income tax payable upto income of ₹12 lakh (i.e. average income of 1 lakh per month other than special rate income such as capital gains) under the new regime. This limit will be ₹12.75 lakh for salaried tax payers, due to standard deduction of ₹75,000.

Slabs and rates are being changed across the board to benefit all taxpayers. The new structure will substantially reduce the taxes of the middle class and leave more money in their hands, boosting household consumption, savings and investment.

In the new tax regime, I propose to revise tax rate structure as follows: 0-4 lakh rupees Nil 4-8 lakh rupees 5 per cent 8-12 lakh rupees 10 per cent 12-16 lakh rupees 15 per cent 16-20 lakh rupees 20 per cent 20- 24 lakh rupees 25 per cent Above 24 lakh rupees 30 per cent.

To tax payers upto ₹12 lakh of normal income (other than special rate income such as capital gains) tax rebate is being provided in addition to the benefit due to slab rate reduction in such a manner that there is no tax payable by them.

The total tax benefit of slab rate changes and rebate at different income levels can be illustrated with examples.

A tax payer in the new regime with an income of ₹12 lakh will get a benefit of ₹80,000 in tax (which is 100% of tax payable as per existing rates). A person having income of ₹18 lakh will get a benefit of ₹70,000 in tax (30% of tax payable as per existing rates). A person with an income of ` 25 lakh gets a benefit of ₹1,10,000 (25% of his tax payable as per existing rates).

Details of my tax proposals are given in the Annexure. 161. As a result of these proposals, revenue of about ₹ 1 lakh crore in direct taxes and ₹ 2600 crore in indirect taxes will be forgone. Mr. Speaker Sir, with this, I commend the budget to this august House. Jai Hind