New Delhi: In a huge relief to the middle class, Union Finance Minister Nirmala Sitharaman on Saturday announced an increased income tax exemption for people with income up to Rs 12 lakh per annum.
Presenting the Union Budget for 2025-26 in Parliament, the Finance Minister announced that there will be no tax up to the income of Rs 12 lakh per annum.
Noting that the middle class provide strengths to the economy, Sitharaman in her budget speech said, “In recognition of their contribution, we have periodically reduced the tax burdens. I am now happy to announce that there will be no income tax up to an income of Rs 12 lakhs.
The Finance Minister also spelt out the details of the revised income tax slabs.
“I propose to revise tax rate structures as follows: 0 to Rs 4 Lakhs – nil, Rs 4 Lakhs to Rs 8 Lakhs – 5%, Rs 8 Lakhs to Rs 12 Lakhs – 10%, Rs 12 Lakhs to Rs 16 Lakhs – 15%, Rs 16 Lakhs to Rs 20 Lakhs – 20%, Rs 20 Lakhs to Rs 24 Lakhs – 25% and above Rs 24 Lakhs – 30%. To taxpayers up to Rs 12 Lakhs of normal income other than special rate income such as capital gains, a tax rebate is being provided in addition to the benefit due to slab rate reduction in such a manner that there is no tax payable by them,” she said.
Here is how the new tax regime will now look like:
Zero to Rs 4,00,000- No Tax
Rs 4,00,000 to Rs 8,00,000—5%
Rs 8,00,0001 to Rs 12,00,000—10%
Rs 12,00,001 to Rs16 lakh–15%
Rs 16,00,001 to Rs 20 lakh–20%
Rs 20,00,001 to Rs 24 lakh– 25%
Above Rs 24 lakh—30%
Salaried employees:
For salaried employees, this nil tax limit will be Rs 12.75 lakh per annum, after taking into account a standard deduction of Rs 75,000. Higher exemptions and rejigs have been effected under the new income tax regime.
Relief for senior citizens:
Stressing that the new tax structure would substantially reduce tax for the middle class, the Finance Minister said that the tax deduction at source (TDS) rates will be rationalised and the limit for tax deduction for senior citizens will be doubled to Rs 1 lakh.
Sitharaman also proposed to extend the time limit to file the updated return from two years to four years.
The threshold to collect TDS on remittances under the Liberalised Remittance Scheme (LRS) would be increased to Rs 10 lakh from Rs 7 lakh and an annual limit of Rs 2.4 lakh for TDS on rent has been raised to Rs 6 lakh.
Delay for payment of TCS up to the due date would be decriminalised. TCS on remittances, if a loan was taken for education, has been waived.
The Union Budget also proposes to exempt withdrawals from National Savings Scheme (NSS) accounts on or after August 2024 from tax.
