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    Union Budget 2025: No Income Tax for Salaries Up to Rs 12 Lakh

    In a landmark announcement, Union Finance Minister Nirmala Sitharaman presented the Union Budget 2025 in Parliament today, unveiling a transformative tax reform aimed at middle-class taxpayers. Salaried individuals earning up to Rs 12 lakh per annum will now be exempt from paying income tax under the new tax regime. For salaried taxpayers, this threshold effectively increases to Rs 12.75 lakh due to a standard deduction of Rs 75,000.

    Highlighting the government’s unwavering commitment to the middle class, Sitharaman said, “The middle class provides strength for India’s growth. Since 2014, we have periodically reduced their tax burden, raising the nil tax slab from Rs 2.5 lakh to Rs 7 lakh in 2023. Today, we take another significant step by exempting incomes up to Rs 12 lakh.”

    More Details on New Income Tax Reforms

    The revised tax structure includes:

    • 0% for incomes up to Rs 4 lakh
    • 5% for incomes from Rs 4 to Rs 8 lakh
    • 10% for incomes from Rs 8 to Rs 12 lakh
    • 15% for incomes from Rs 12 to Rs 16 lakh
    • 20% for incomes from Rs 16 to Rs 20 lakh
    • 25% for incomes from Rs 20 to Rs 24 lakh
    • 30% for incomes above Rs 24 lakh

    This overhaul will not only reduce the tax burden but also leave more disposable income in the hands of taxpayers, thereby boosting household consumption, savings, and investments.

    Illustrating the impact of the new regime, Sitharaman shared examples:

    • A taxpayer earning Rs 12 lakh will save Rs 80,000, a 100% reduction in tax payable.
    • A taxpayer earning Rs 18 lakh will save Rs 70,000, or 30% of the tax previously payable.
    • A taxpayer earning Rs 25 lakh will save Rs 1.1 lakh, a 25% reduction.

    The Finance Minister acknowledged that these changes will result in a revenue loss of approximately Rs 1 lakh crore in direct taxes and Rs 2,600 crore in indirect taxes but emphasized the long-term benefits for the economy.

    Sitharaman concluded by reiterating the government’s trust in middle-class taxpayers and their vital role in nation-building, stating, “This budget reflects our commitment to fostering growth, supporting the aspirations of the middle class, and ensuring a brighter future for all.”

    Also read: Key Union Budget 2025 Highlights

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