New Delhi: In a significant move to benefit salaried individuals and the middle class, the Union government has announced an increase in the income tax exemption limit in the latest Union Budget 2025. Finance Minister Nirmala Sitharaman declared that individuals with an annual income of up to ₹12 lakh will now be exempt from income tax under the new tax regime. With the inclusion of the standard deduction, the total tax-free income limit rises to ₹12.75 lakh per year.
Key Highlights of the New Income Tax Reforms:
- Increased Income Tax Exemption Limit: Individuals earning up to ₹12 lakh annually are now fully exempt from income tax.
- Enhanced Standard Deduction: When combined with the standard deduction, the tax-free limit increases to ₹12.75 lakh.
- Higher TDS Threshold on Interest Income: The Tax Deduction at Source (TDS) limit on interest income has been raised from ₹50,000 to ₹1 lakh, offering greater relief to depositors.
- Relief for Senior Citizens: The exemption limit on rental income for senior citizens has been increased from ₹2.4 lakh to ₹6 lakh annually.
Revised Income Tax Slabs for FY 2025-26:
- 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%
These reforms aim to provide substantial financial relief, boost disposable incomes, and stimulate economic growth. The revised tax slabs and exemptions are expected to benefit millions of taxpayers across the country.
