Budget 2025: No income tax up to ₹12 lakh in new regime, new slabs brought in

In a significant relief to the middle class and taxpayers, Union Finance Minister Nirmala Sitharaman, presenting her eighth consecutive Union Budget 2025 today, announced that there will be no income tax payable on income up to ₹12 lakh.

The FM, apart from rejigging the income tax slabs, has also increased the tax rebate available under Section 87A. This will allow people to pay no taxes on income up to Rs 12 lakh, she says.

The FM says the Centre has implemented several reforms for the convenience of taxpayers. "Under the new regime, there will be no income tax ₹12 lakh," the FM says in her speech in Parliament.

Sitharaman says the income tax slabs and rates are being changed across the board for the benefit of all taxpayers. "New structure to substantially reduce taxes of middle class and leave more money in their hands, boosting household consumption, savings and investment," the Finance Minister adds.

She also said that the ‘Nil Tax’ provision for those with income up to ₹12.00 lakh under the new income tax will increase to ₹12.75 lakh for salaried taxpayers with a standard deduction of ₹75,000.

The finance minister says that the new structure will substantially reduce taxes on the middle class and leave more money in their hands, boosting household consumption, savings, and investment.

The FM says the new income tax slabs under the new tax regime will include no tax for those earning between Rs 0-4 lakh, while there will be a 5% income tax liability on people earning Rs 4-8 lakh. Individuals earning between Rs 8-12 lakh will income tax of 10%, while there will be a 15% income tax rate for people earning between Rs 12-16 lakh.

Under the income bracket of Rs 16-20 lakh and Rs 20-24 lakh, the income tax payable is 20% and 25%, respectively. Those in the highest income tax bracket of above Rs 24 lakh per annum will pay the income tax of 30%, says the Finance Minister.