[BREAKING] No Income Tax upto Rs. 12 Lakh Income, proposes FM during Budget 2025

In a move of major relief to middle-class taxpayers, the Union Finance Minister, Nirmala Sitharaman, proposed significant changes to the personal income tax structure in the Union Budget 2025-26 speech. Under the new proposal, individuals earning up to 12 lakhs rupees annually will be exempt from paying any income tax, a major shift from the previous tax brackets, leaving more money for consumption, investments and savings.

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This move, aimed at providing relief to the middle class and boosting disposable income, was among the key highlights of a budget that promises transformative reforms across multiple sectors.

Summary of Key Announcements in Budget 2025:

1. Income Tax Reforms:

   - No income tax for individuals earning up to Rs. 12 lakh annually.

   - Revised income tax slabs: 0-4 Lakhs (Nil), 4-8 Lakhs (5%), 8-12 Lakhs (10%), 12-16 Lakhs (15%), 16-20 Lakhs (20%), 20-24 Lakhs (25%), Above 24 Lakhs (30%).

   - Standard deduction increased to Rs. 70,000, benefiting salaried individuals up to Rs. 12.7 lakh.

   - Two self-occupied properties exempted from income tax.

2. New Income Tax Bill:

   - A new Income Tax Bill to be proposed next week, focusing on simplification and reduced compliance burdens.

3. Customs and Tariff Reforms:

   - Customs protocols to be eased.

   - Rationalization of tariff rates: removal of 7 tariff rates, application of cess on select items, and limiting surcharges to one per item.

   - Full exemption of Basic Customs Duty (BCD) on life-saving medicines and patient assistance programs.

   - Exemption of BCD on 35 capital goods for mobile phone manufacturing.

4. Support for MSMEs and Startups:

   - Revised turnover and credit limits for MSMEs to enhance investments.

   - New Fund of Funds for startups with an additional Rs. 10,000 crore.

   - Scheme for 5 lakh women, Scheduled Castes, and Scheduled Tribes first-time entrepreneurs.

5. Urban Development:

   - Urban Challenge Fund of Rs. 1 lakh crore to address urban infrastructure needs.

6. Agriculture and Farmer Welfare:

   - Agriculture productivity scheme to benefit over 1.5 crore farmers.

   - Establishment of a Makhana Board in Bihar to improve production and marketing.

7. Financial Sector Reforms:

   - FDI limit for the insurance sector raised to 100%.

   - Government to decriminalize more offences to improve ease of doing business.

8. Digitalization and Compliance:

   - Revamped KYC portal to be launched in 2025.

   - Digital platforms operationalized for resolving income tax disputes.

   - Increased time limit for updating ITR to 4 years for voluntary compliance.

   - Decriminalization of delays in TCS payments up to the due date.

9. Tax Compliance and Penalties:

   - Penalty removed for voluntary confession of tax evasion (excluding audit cases already initiated).

   - Higher TDS on non-PAN cases.

   - TDS on annual rent increased to Rs. 6 lakh.

   - TCS not applicable on remittances for certain education purposes.

10. Social Sector Initiatives:

    - Reduced compliance burden on small charitable trusts and institutions.

11. Global Economic Context:

    - The Finance Minister acknowledged slower global growth due to geopolitical challenges but expressed confidence in India’s resilience.

Conclusion:

Budget 2025 focuses on transformative reforms across taxation, urban development, agriculture, and entrepreneurship. With significant relief for middle-income earners, support for MSMEs and startups, and measures to boost investments and ease compliance, the budget aims to stimulate economic growth and inclusivity.

To Read the full text of the Finance Bill CLICK HERE

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