The Union Budget 2025-26 has brought significant relief for taxpayers by revising income tax slabs and rates. Under the new tax regime, individuals earning up to ₹12 lakh annually will not have to pay any income tax. For salaried individuals, this limit increases to ₹12.75 lakh, factoring in a standard deduction of ₹75,000. The revised tax structure aims to reduce the financial burden on the middle class, providing greater disposable income, encouraging savings, investment, and higher household spending to boost economic growth.
Key Highlights of the New Tax Regime
The revised tax structure simplifies taxation and reduces the burden on the middle class. The new tax slabs are as follows:
- Income up to ₹4 lakh – No tax
- ₹4 lakh to ₹8 lakh – 5%
- ₹8 lakh to ₹12 lakh – 10%
- ₹12 lakh to ₹16 lakh – 15%
- ₹16 lakh to ₹20 lakh – 20%
- ₹20 lakh to ₹24 lakh – 25%
- Above ₹24 lakh – 30%
This restructuring, combined with tax rebates, ensures that individuals earning up to ₹12 lakh (₹12.75 lakh for salaried persons) pay zero tax.
The total tax benefit of slab rate changes and rebate at different income levels can be illustrated in the table below:
How This Benefits the Middle Class
- More Disposable Income: With no tax burden on income up to ₹12-12.75 lakh, individuals will have more money for savings and spending.
- Boost to Consumption & Investment: The move is expected to increase household spending, contributing to economic growth.
- Simplified Tax Filing: The revised structure makes tax compliance easier by reducing complexities and ambiguities.
Government’s Commitment to Taxpayer Welfare
The Finance Minister emphasized the government’s focus on “trust first, scrutinize later”, ensuring a taxpayer-friendly approach. The new income tax system aims to bring transparency, certainty, and ease of filing, reducing tax disputes and litigation.The new tax regime marks a step towards simplified and fair taxation, benefiting millions of individuals and boosting economic activity. With these reforms, the government aims to enhance good governance, ensuring that citizens retain more of their hard-earned money while fostering overall economic growth.