Feb 01, 2025
New income tax slabs announced: Zero tax for earnings up to Rs 12 Lakh
Siddhartha JanaFinance Minister Nirmala Sitharaman announced that individuals earning up to Rs 12 lakh per year will pay no tax under the new income tax regime, a major rise from the previous level of Rs 7 lakh. By increasing disposable income, this seeks to support economic growth and alleviate the middle class.
Source: Canva
The following are the revised tax slabs under the new regime: Rs 0-4 lakh is taxed at 0%, Rs 4-8 lakh at 5%, Rs 8-12 lakh at 10%, Rs 12-16 lakh at 15%, Rs 16-20 lakh at 20%, Rs 20-24 lakh at 25%, and income over Rs 24 lakh at 30%.
Source: Canva
The government hopes to increase household consumption, savings, and investment by raising the tax-free income threshold and reducing the overall tax burden. Higher disposable income could encourage economic growth, particularly amid slowing GDP and consumption rates fall.
Source: Canva
As a result of these adjustments, the government would forgo paying Rs 2,600 crore in indirect taxes and Rs 1 lakh crore in direct taxes. Because of this decline in tax revenue, experts are worried about possible capital spending cuts.
Source: Canva
Senior citizens now have more financial relief thanks to the increased tax deduction ceiling, which was raised from Rs 50,000 to Rs 1 lakh.
Source: Express photo/Kamaleshwar Singh
The Finance Minister announced that the new income-tax bill, which aims for more equitable taxation practices and reflects the Bharatiya Nyay Sanhita's "nyay" (justice) ideals, would be introduced the following week.
Source: Canva
The Tax Deduction at Source (TDS) regime will be streamlined, resulting in more effective and simplified tax collection processes that benefit both taxpayers and the economy.
Source: Canva
Sitharaman emphasised that the ongoing reforms are not being pursued for their own sake, but as part of a larger goal of improving governance, which contributes to both economic growth and public well-being.
Source: Canva
Key highlights of the Union Budget 2025