1 Crore More People Will Pay No Income Tax Due to Hike in Rebate: Sitharaman

New Delhi: Nirmala Sitharaman, Union Finance Minister said the government has put a "substantial amount of money" in the hands of people through a rejig of I-T slabs, with an additional 1 crore people paying no tax due to the hike in tax rebate to Rs 12 lakh per annum.

The 2025-26 Budget hikes the tax rebate available to individual taxpayer to Rs 12 lakh from next fiscal, from Rs 7 lakh currently.

Sitharaman while addressing the press after budget said, “One crore more people will pay no tax. On the CAPEX, I think there are two things playing out. One, of course, this particular year has had the elections happening and because of that both central government and state governments were catching up with investments, public spending on investments only from the second and the third quarter.”

"So, it showed. It is equally true that when fundamental requirements are taken care of, when you are bringing in additional over it, there is a pace at which those additions happen..." she added.

The Budget has revised the tax slabs for computing tax liability on income earned in 2025-26 for those with income of more than Rs 12 lakh and filing ITR under new tax regime.

Under the new slab, income of up to Rs 4 lakh will be exempt. A 5 per cent tax will be levied for income earned between Rs 4-8 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 16-20 lakh, 25 per cent on Rs 20-24 lakh and 30 per cent above Rs 24 lakh per annum.

"We have reduced tax rates to benefit the middle class," Sitharaman added.

Finance Secretary Tuhin Kanta Pandey said tax bouyancy of 1.42 is expected in next fiscal, lower than 2 in current fiscal.

"We have assumed a moderate tax revenue bouyancy looking into the sacrifice of revenue (on account of rebate)," Pandey said.

He said 75 per cent of the income tax filers have already moved to the new income tax regime. "We expect every taxpayer to shift eventually."

(with agency inputs)