Budget 2025: Big win for taxpayers, no income tax till Rs 12 lakh, Sitharaman makes big announcement

The Central government also allowed the individual taxpayers to claim annual value of two self-occupied properties as nil.

Check new tax regime:

Up to Rs 4 lakh - 0% 
Rs 4-8 lakh - 5% 
Rs 8-12 lakh - 10% 
Rs 12-16 lakh - 15% 
Rs 16-20 lakh - 20% 
Rs 20-25 lakh - 25% 
Above Rs 25 lakh - 30%

Nirmala Sitharaman said the personal Income Tax reforms will focus on the middle-class and the democracy, demography and demand are the key support builders in a journey towards 'Viksit Bharat'.

"The middle -class provides strength for India's growth. This government under the leadership of the PM 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 Rs 2.5 lakh, which was further raised to Rs 5 lakh in 2019 and to Rs 7 lakh in 2023. This is reflective of our government's trust in the middle-class taxpayers. I am now happy to announce that there will be no income tax payable upto income of Rs 12 lakh."

Under the new tax slabs income of up to Rs 4 lakh will have to pay Nil tax hiked from Rs 3 lakh. A tax payer in the new regime with an income of Rs 12 lakh will get a benefit of `Rs 80,000 in tax.
A person having income of `Rs 18 lakh will get a benefit of Rs 70,000 in tax. A person with an income of Rs 25 lakh gets a benefit of Rs 1,10,000 under the new tax slabs.

"The total tax benefit of slab rate changes and rebate at different income levels can be illustrated with a few examples, a taxpayer in the new regime with an income of 12 lakh rupees will get a benefit of 80,000 rupees in tax, which is 100% of tax payable as per the existing rates. A person having income, a person having income of 18 lakh rupees will get a benefit of 70,000 rupees in tax, that is 30% of tax payable as per existing base. A person with an income of 25 lakh gets a benefit of one lakh 10,000 rupees, that is 25% office tax payable as per existing rates," the Finance Minister said.
As a result of these proposals, revenue of about Rs 1 lakh crore in direct taxes and Rs 2600 crore in indirect taxes will be forgone.