In a significant move to benefit the Indian middle class, Finance Minister Nirmala Sitharaman announced on Saturday that individuals with annual incomes up to ₹12 lakh will be exempt from income tax, with the threshold extended to ₹12.75 lakh for salaried taxpayers, accounting for the standard deduction.
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The revised tax structure under the new regime is as follows:
- ₹0 – ₹4 lakh: No tax
- ₹4 lakh – ₹8 lakh: 5%
- ₹8 lakh – ₹12 lakh: 10%
- ₹12 lakh – ₹16 lakh: 15%
- ₹16 lakh – ₹20 lakh: 20%
- ₹20 lakh – ₹24 lakh: 25%
- Above ₹24 lakh: 30%
These adjustments aim to substantially reduce the tax burden on the middle class.
Presenting the Union Budget 2025-26, FM Sitharaman also proposed several other tax-related measures:
Tax Deduction at Source (TDS) Rationalization: TDS rates will be streamlined to simplify the tax process.
Senior Citizens’ Tax Deduction Limit: The limit for tax deductions for senior citizens will be doubled to ₹1 lakh.
Updated Return Filing Extension: The timeframe to file updated tax returns will be extended from two years to four years.
Liberalised Remittance Scheme (LRS) TDS Threshold: The threshold for TDS on remittances under the LRS will be increased from ₹7 lakh to ₹10 lakh.
TDS on Rent: The annual limit for TDS on rent will be raised from ₹2.4 lakh to ₹6 lakh.
Decriminalization of TCS Payment Delays: Delays in payment of Tax Collected at Source (TCS) up to the due date will be decriminalized.
TCS Waiver on Educational Loans: TCS on remittances for education loans will be waived.
National Savings Scheme (NSS) Withdrawals: Withdrawals from NSS accounts on or after August 2024 will be exempt from tax.
The Budget Session of Parliament commenced on January 31 and will be conducted in two phases: the first phase from January 31 to February 13, and the second phase from March 10 to April 4.
