No income tax for those earning up to ₹12 lakh
01 Feb 2025

Finance Minister Nirmala Sitharaman has announced that there will be no income tax for an income of up to ₹12 lakh under the new regime.

"Average income of 1 lakh per month other than the income of special rate capital gains. This limit will be 12.75 lakh for salaried tax payers due to the standard deduction of ₹75,000," the finance minister announced.

'New structure will substantially reduce taxes of the middle class'
Exemption

The exemption, however, may only be earned if a taxpayer seeks relief under several sections of the Income Tax Act, such as the ₹1.5 lakh exemption under section 80CCC or the ₹1.5 lakh exemption for paying interest on house loans.

"The new structure will substantially reduce the taxes of the middle class...boosting household consumption, savings and investment," she said.

Benefits under new tax slabs
Benefit

This means a taxpayer earning ₹12 lakh will receive a tax benefit of ₹80,000.

An individual with an income of ₹18 lakh will enjoy a benefit of ₹70,000, and a person with an income of ₹25 lakh gets a benefit of ₹1,10,000.

These proposals will result in loss of around ₹1 lakh crore in direct tax collection and ₹2600 crore in indirect tax revenue.

Slabs and rates are being changed across the board: FM
Statement

She said all this will "substantially reduce the tax burden on the middle class," which had been hoping for a possible reduction in income tax rates and a hike in the standard deduction.

"The middle class provides strengths to the economy. In recognition of their contribution, we have periodically reduced the tax burden," she added.

Seniors will also benefit from increased tax deductions
Tax regime

Current income tax laws allow zero taxation on income up to ₹7 lakh in the new tax regime.

Senior citizens will also benefit from increased tax deductions. The deduction ceiling for interest income has been increased from ₹50,000 to ₹1 lakh.

Further, the annual tax deduction at source (TDS) exemption limit on rental income has been increased from ₹2.4 lakh to ₹6 lakh.