Budget 2025: No Income Tax Up to ₹12 Lakh, Says FM Sitharaman

Government Announces Major Tax Relief: No Income Tax Up to ₹12 Lakh

In a significant relief for taxpayers, the government has announced that no income tax will be payable on annual earnings up to ₹12 lakh under the new tax regime. This marks a major revision in tax slabs and underscores the government’s commitment to easing the burden on middle-class taxpayers.

Progressive Tax Relief Since 2014

Since 2014, the government has steadily increased the nil-tax threshold. Initially set at ₹2.5 lakh, the exemption limit was raised to ₹5 lakh in 2019 and further to ₹7 lakh in 2023. Now, with the latest announcement, taxpayers earning up to ₹12 lakh annually will pay no income tax, ensuring a significant boost to disposable incomes.

For salaried taxpayers, an additional relief is provided. Under the new regime, the tax-exempt limit increases to ₹12.75 lakh. Those earning ₹18 lakh per year will receive a tax benefit of ₹70,000, equivalent to a 30% reduction in tax liability. Similarly, individuals with an annual income of ₹25 lakh will save ₹1.1 lakh, which translates to a 25% reduction in taxes.

Impact on Government Revenues

Presenting the tax proposals in Parliament, the Finance Minister revealed that these measures would lead to a revenue loss of ₹1 lakh crore in direct taxes and ₹22,600 crore in indirect taxes. However, the government remains confident that increased consumer spending and economic activity will balance the fiscal impact over time.

Finance Bill 2025 Introduced in Parliament

Following the tax announcement, the Finance Minister introduced the Finance Bill 2025 in the House. The bill was granted approval for introduction, with a voice vote confirming majority support.

The House has now been adjourned until Monday, February 3, at 11:00 AM, when further discussions on the budget and financial proposals are expected to continue.