Transformative tax reforms announced in Budget 2025-26: No income tax for individuals earning up to Rs12 lakh | Full details inside

Union Budget 2025: India is recognized as the fastest-growing economy among major global players. The Modi government's development initiatives and structural reforms over the past decade have attracted considerable international attention. The transformative efforts during the first two terms of this administration serve as a guiding light, empowering the government to advance with renewed determination.

Development Measures

This year's budget proposes extensive development measures across various sectors, focusing on four key demographics: Garib (the poor), Yuva (youth), Annadata (farmers), and Nari (women). These initiatives aim to uplift and empower these critical segments of society.

Income Tax Relief

The pillars of India's economic journey are Democracy, Demography, and Demand, with the middle class playing a vital role in driving growth. The NDA government, led by Prime Minister Modi, has consistently recognized the energy and potential of the middle class in nation-building. To acknowledge their contributions, the government has periodically reduced their tax burden.Since 2014, the tax-free income threshold has increased from ₹2.5 lakh to ₹5 lakh in 2019, and further to ₹7 lakh in 2023.

In this budget, it has been announced that individuals earning up to ₹12 lakh will not be liable for income tax under the new regime. For salaried individuals, no income tax will apply until their annual income reaches ₹12.75 lakh, thanks to a standard deduction benefit of ₹75,000.

Tax Benefits Breakdown

The changes in tax slabs and rebates at various income levels can be illustrated as follows:

• A taxpayer with an income of ₹12 lakh will benefit from an exemption of ₹80,000 in taxes, resulting in an effective tax rate of 0%.
• An individual earning ₹16 lakh will receive a tax benefit of ₹50,000, leading to an effective tax rate of just 7.5%.
• A person with an income of ₹18 lakh will gain a benefit of ₹70,000, with an effective tax rate of 8.8%.
• Those earning ₹20 lakh will see a tax benefit of ₹90,000, resulting in an effective rate of 10%.
• A taxpayer at ₹25 lakh will enjoy a benefit of ₹1,10,000, equating to an effective tax rate of 13.2%.
• Similarly, someone earning ₹50 lakh will also receive a benefit of ₹1,10,000 with an effective rate of 21.6%.

These proposals are projected to result in a revenue loss of approximately ₹1 lakh crore in direct taxes.