Highlights of income tax changes in Budget 2025: No tax for income up to ₹12 lakh; All you need to know

Finance Minister Nirmala Sitharaman on Saturday announced that no income tax will be payable on income up to ₹12 lakh.

She presented the much-awaited Union Budget 2025 today. Speaking in Parliament, Sitharaman said the Union Budget 2025-26 aims to bolster the power of India’s rising middle class.

“Democracy, demography and demand are the key support builders in our journey towards Viksit Bharat,” she said.

In the run-up to the budget speech, she was expected to announce several changes to the income tax rules to provide relief to taxpayers and stimulate economic growth. From India Inc. to trade unions, most of the stakeholders had raised the demand in the consultation meetings with Sitharaman.

Following are the highlights of the top income tax-related announcements made by FM Sitharaman:

• Presenting the Union Budget 2025-26, Sitharaman proposed to introduce a new income tax bill next week.
• The finance minister said that the new bill will be clear and direct in text, with close to half of the present law in terms of both chapters and words.
• No income tax payable for individuals earning up to ₹12 lakh under the new regime (₹12.75 lakh for salaried taxpayers with standard deduction).
• A major increase from the previous ₹7 lakh tax-free threshold.
• Revised Income Tax Slabs (New Regime): ₹0-4 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%
• A person earning ₹12 lakh will save ₹80,000 in tax (100% of tax payable earlier).
• A person with ₹18 lakh income will save ₹70,000 (30% of tax payable earlier).
• A person with ₹25 lakh income will save ₹1,10,000 (25% of tax payable earlier).
• ₹1 lakh crore in direct tax revenue and ₹2,600 crore in indirect tax revenue forgone to support taxpayers.