Budget 2025: Income Tax Exemption Limit Increased to ₹12 Lakh

Finance Minister Nirmala Sitharaman today presented the first full-fledged budget of the third term of the NDA government. Delivering the budget speech in the Lok Sabha, she announced a significant relief for taxpayers by raising the nil tax slab to ₹12 lakh. Additionally, with the inclusion of a standard deduction of ₹75,000 for salaried individuals, annual incomes up to ₹12.75 lakh will now be exempt from taxation.

Revised Income Tax Slabs for 2025

Introducing a new tax regime, Ms. Sitharaman outlined the updated income tax structure:

• Income up to ₹4 lakh – No tax
• ₹4 lakh to ₹8 lakh – 5% tax
• ₹8 lakh to ₹12 lakh – 10% tax
• ₹12 lakh to ₹16 lakh – 15% tax
• ₹16 lakh to ₹20 lakh – 20% tax
• ₹20 lakh to ₹24 lakh – 25% tax
• Above ₹24 lakh – 30% tax

The finance minister emphasized that these revised slabs aim to reduce the tax burden on the middle class, thereby boosting disposable income, household consumption, savings, and investment.

Additional Tax Benefits

• The tax deduction limit on interest for senior citizens has been doubled from ₹50,000 to ₹1 lakh.
• The TDS (Tax Deducted at Source) exemption limit on rent has been increased from ₹2.4 lakh to ₹6 lakh, benefiting small taxpayers who receive rental income.

Impact on Economy & Revenue

The government estimates a revenue loss of ₹1 lakh crore due to direct tax relief measures and an additional ₹2,600 crore in indirect tax exemptions. Despite this, Ms. Sitharaman expressed confidence that the new tax structure would stimulate economic growth by empowering the middle class and encouraging private sector investment.

Vision for a Developed India

Calling taxation reforms a key pillar of good governance, Ms. Sitharaman reaffirmed the government’s commitment to simplifying tax laws and making India a business-friendly and taxpayer-centric economy. She underscored that the Budget 2025 focuses on growth acceleration, inclusive development, and enhanced purchasing power for the middle class.

With this being her eighth consecutive budget, Ms. Sitharaman reinforced the NDA government’s commitment to driving India’s economic progress through bold policy reforms and fiscal prudence.