Union Budget 2025 News Updates: The Finance Minister has given a big relief to the middle class on the income tax front in the budget. Income up to Rs 12 lakh has been made tax free.
Budget 2025: A big announcement has been made regarding income tax in the general budget. Finance Minister Nirmala Sitharaman has made income up to Rs 12 lakh tax free. However, its benefit will be available only to those who adopt the new tax regime. There is some confusion in the minds of the people about this relief announcement, because in the tax slab, 10% tax has been shown on income from 8 to 12 lakhs. In such a situation, the question becomes natural that how did the income of 12 lakhs become tax free? Let’s try to understand.
This is how you will get exemption
In the budget, income up to Rs 12 lakh has been exempted from income tax. If you earn even one rupee above this, then you will directly reach the category of 15% tax. The thing to understand here is that income of 12 lakhs is tax free, so it is outside the scope of the tax slab. Therefore, there is no need to get confused by looking at the tax slab. Tax slab calculation will not be applicable on those having annual income of Rs 12 lakh.
…then you will have to pay tax
If you earn even one rupee more than 12 lakhs, then you will come under the tax slab and tax will be determined accordingly. For example, if your income is more than 12 lakhs, then you will have to pay tax according to the tax slab. There will be no tax on 4 lakhs of your total income, because this amount will come in the slab of 0 to 4 lakhs, where the tax is zero. After this, 5% tax will be levied on the next 4 lakhs and so on.
More benefit to the salaried people
The Finance Minister has also said that salaried people will not have to pay any tax on income up to 12.75 lakhs annually including standard deduction. He also said that the new Income Tax Bill will be introduced next week, and it will focus on simplifying the tax rules.
How much tax will be levied on whom?
If your annual income is more than 12 lakhs, then you will fall in the 15% tax slab of 12 to 16 lakhs. In this way your tax will be around 1.20 lakh rupees. Those earning 16-20 lakhs annually will have to pay a tax of 2 lakh rupees. Those earning 20 to 24 lakhs will have to pay a tax of 3 lakh rupees. Similarly, on income above 24 lakhs, tax will have to be paid at the rate of 30%.
New Tax Regime: Tax Slabs
- No tax on income up to Rs 12 lakh.
- Zero tax on income of Rs 0 to 4 lakh.
- 5% tax on income of Rs 4 to 8 lakh.
- 10% tax on income of Rs 8 to 12 lakh.
- 15% tax on income of Rs 12 to 16 lakh.
- 20% tax on income of Rs 16 to 20 lakh.
- 25% tax on income of Rs 20 to 24 lakh.
- 30% tax on income above Rs 24 lakh.