Union Budget 2025: Good News for the Middle Class
The Union Budget 2025 brought significant changes to income tax slabs, delivering welcome relief to the middle class. Finance Minister Nirmala Sitharaman announced a major overhaul, aiming for "growth with fairness," and significantly lowering the tax burden for many. Notably, the new income tax regime introduces a zero tax liability for individuals earning up to ₹12 lakh annually (or ₹12.75 lakh for salaried individuals, considering the standard deduction).
Revised Tax Slabs: A Simplified Structure
The new tax slabs, effective from FY26 onwards, are designed to be simpler and more transparent. They are as follows:
- Up to ₹4 lakh - Nil
- ₹4-8 lakh – 5%
- ₹8-12 lakh – 10%
- ₹12-16 lakh – 15%
- ₹16-20 lakh – 20%
- ₹20-24 lakh – 25%
- Above ₹24 lakh – 30%
This simplification, along with the increased tax-free threshold, aims to boost disposable income and stimulate consumption.
Marginal Relief: Protecting Taxpayers Near the Threshold
The budget also addresses concerns about taxpayers earning slightly above the ₹12 lakh threshold. Marginal relief ensures that the tax liability doesn't disproportionately impact those just above the limit. For example, an individual earning ₹12,10,000 would pay only ₹10,000 in tax, significantly less than the ₹61,500 calculated without the relief. This provision demonstrates a commitment to fairness and prevents a sudden jump in tax burdens.
Section 87A Rebate: Further Tax Benefits
The rebate under Section 87A has also been enhanced. Individuals with a net taxable income up to ₹12 lakh are now eligible, further reducing or eliminating their tax liability. This combined with the new slabs ensures that a large section of the population enjoys significant tax benefits.
A New Era of Tax Administration
Beyond the tax slab revisions, the government is implementing a new "PRUDENT" framework for tax administration. This initiative focuses on proactive and professional service, user-friendly processes, data-driven decision-making, and the use of technology for greater transparency.
Conclusion: A Budget Focused on Growth and Fairness
Budget 2025's income tax reforms represent a significant step towards a more equitable and growth-oriented tax system. The changes are intended to increase disposable income for a large segment of the population and create a more business-friendly environment. Use the Budget with ET Tax calculator to determine your exact tax liability under the new regime and plan your finances accordingly.