Budget 2025: Nirmala Sitharaman Announces New Income Tax Structure for Middle Class

Budget 2025: Nirmala Sitharaman, the Finance Minister, presented the Union Budget for the year 2025-26 on February 1 and, in this regard, announced that those earning up to ₹12 lakh will not be required to pay taxes in the new tax system. The new tax regime allows zero percent income tax on incomes up to ₹12 lakh (₹12.75 lakh for salaried taxpayers with a basic deduction of ₹75,000).

Also Read: Income Tax Slabs LIVE: Middle Class Awaits Tax Relief, Affordable Housing Ahead of Budget 2025

The government has now created new tax slabs which would greatly reduce taxes levied on the middle classes and leave them with more money in their hands which would generate more household consumption, savings and investment. The new tax structure will increase disposable incomes and subsequent household consumption, savings and investment, the FM said in her annual budget speech today.

"The new structure will substantially reduce taxes on the middle class and leave more money in their hands, boosting household consumption, savings and investment," said FM Sitharaman, while presenting what is being termed the 'reformist' budget for the next fiscal in the Lok Sabha today.

Finance Secretary Tuhin Kanta Pandey said that tax buoyancy for FY 26 is estimated to be lower at 1.42, when compared to two in FY 25. "We have assumed a moderate tax revenue buoyancy looking into the sacrifice of revenue (on account of rebate)," said Pandey. 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."

Also Read: Plane Crashes in Philadelphia Suburb, Homes on Fire, Casualties Feared | Videos

Income tax slab changes budget 2025: The tax slabs and rates are as follows

• 0-4 lakh rupees: Nil
• 4-8 lakh rupees: 5%
• 8-12 lakh rupees: 10%
• 12-16 lakh rupees: 15%
• 16-20 lakh rupees: 20%
• 20-24 lakh rupees: 25%
• Above 24 lakh rupees: 30%

Under the new tax regime, any individual earning up to ₹12 lakh will not be required to pay any income tax. For people with an income above ₹12 lakh, there will be nil tax for income up to ₹4 lakh, 5 per cent for income between ₹4 and 8 lakh, 10 per cent for income between ₹8-12 lakh, and 15 per cent for income between ₹12-16 lakh. Income will then be taxed at a rate of 20 per cent between ₹16 to ₹20 lakh, 25 per cent between ₹20-24 lakh and 30 per cent above ₹24 lakh per annum.

Also Read: Naga Chaitanya Praises Sobhita Dhulipala: ‘She Gives Me Great Advice When I’m Stressed’ | Exclusive