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Updated 13:39 IST, February 1st 2025

Sitharaman Closes Budget Speech With 'No Tax Up To Rs 12L' | Here's How Your Money Changes

The new tax regime will now feature a ‘nil tax’ slab up to ₹12 lakh for individuals, and ₹12.75 lakh for salaried taxpayers with a standard deduction of ₹75K

Reported by: Surabhi Shaurya
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Old Tax Regime vs New Tax Regime: Key Differences
Will taxpayers receive any relief from the Union Budget 2025 announcements? Stay tuned for all big announcements | Image: Pexels

Income Tax Budget 2025 LIVE: In a massive relief for salaried taxpayers, Finance Minister Nirmala Sitharaman has announced a major overhaul in the income tax structure as part of Budget 2025-26. "I am now happy to announce that there will be no income tax payable up to income of Rs 12 lakh (i.e. average income of Rs 1 lakh per month other than special rate income such as capital gains) under the new regime," the finance minister said.

"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," Sitharaman said in her Budget speech.

The new tax regime will now feature a ‘nil tax’ slab up to ₹12 lakh for individuals, and ₹12.75 lakh for salaried taxpayers with a standard deduction of ₹75,000. This reform aims to ease the financial burden on the middle class and boost household consumption, savings, and investment.

Along with this, income tax slabs and rates will be revised across the board, benefiting taxpayers at various income levels.   

Income Tax Exemption Limits

  • 2005: ₹1 lakh
  • 2012: ₹2 lakhs
  • 2014: ₹2.5 lakhs 
  • 2019: ₹5 lakhs
  • 2023: ₹7 lakhs
  • 2025: ₹12 lakhs  

As per the rejig, for people earning more than Rs 12 lakh per annum, there will be nil tax for income up to Rs 4 lakh, 5 per cent for income between Rs 4 and 8 lakh, 10 per cent for Rs 8-12 lakh, 15 per cent for Rs 12-16 lakh.

A 20 per cent income tax will be levied on income between Rs 16 and 20 lakh, 25 per cent on Rs 20-24 lakh and 30 per cent above Rs 24 lakh per annum.

A taxpayer in the new regime with an income of Rs 12 lakh will get a benefit of Rs 80,000 in tax. A person having an 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 lakh.

 Biggest Tax Relief Ever : Under 12 LPA, How to Pay 0 Tax?

Salary- 0 - 4 LPA
Tax Slab - NIL
Rebate - NA

Salary - 4 - 8 LPA
Tax Slab - 5%
Rebate -  100%

Salary | 8 - 12 LPA
Tax Slab - 10%
Rebate - 100%

What Does the Rs 12 Lakh Rebate Mean? What Will You Pay if You Earn Above That?

The finance minister has raised the income tax rebate limit from Rs 7 lakh to Rs 12 lakh, meaning individuals with earnings up to Rs 12 lakh will have zero tax liability.

But does this mean that those earning Rs 15 lakh will only pay tax on the remaining Rs 3 lakh?

No, the rebate is applicable only to income up to Rs 12 lakh. If your taxable income exceeds Rs 12 lakh, you will be subject to the new tax regime slab rates for the amount above that limit.

Published 11:22 IST, February 1st 2025