New Delhi:
The 2025 Union Budget – which contained big-ticket announcements on revised income tax slabs and an increase to the rebate ceiling, from Rs 7 lakh to Rs 12 lakh – was a response to the ‘voice of the people’, Finance Minister Nirmala Sitharaman said Saturday, hours after her speech in the Lok Sabha.
An estimated one crore taxpayers will pay no income tax due to the hike in the rebate, she said, noting also that the Rs 12 lakh ceiling for the latter was effectively Rs 12.75 lakh after applying the standard deduction (which too has been raised, from Rs 50,000, and which is applicable to all).
These announcements – and confirmation of a new direct tax code, to be tabled in the House next week – were among the headline points in Ms Sitharaman’s 75-minute speech.
“It is a very responsive government… as a result, the income tax simplification which I announced in July is already completed… and we shall bring the bill next week. So, if we are talking of reform inclusive of taxation, the work is done,” she told reporters in the traditional, post-Budget presser.
READ | No Income Tax Up To Rs 12 Lakh: Big Relief For Middle Class
However, revisions to the tax slabs and the rebate hike, taken together, caused some confusion, prompting the Finance Minister to explain how the new slabs will work with an example.
Ms Sitharaman laid out two examples to clarify the revisions to the tax slabs, noting that it will mean individuals earning up to Rs 12 lakh will not pay any income tax. This, she said, marked a significant shift from the previous structure, in which they had to pay between Rs 60,000 and Rs 80,000.
People earning up to Rs 8 lakh, she said, will pay Rs 30,000 as tax for FY2024/25. But, after the changed slabs take effect, they will pay Rs 20,000 only, translating into a savings of Rs 10,000.
NDTV EXPLAINS | Revised Tax Slabs, Old Regime vs New? Top Questions Answered
The Finance Minister, meanwhile, also pointed out the revised new tax slabs will also benefit high earners. “Now they have Rs 2.6 lakh more than under the old system. So, it is not just those earning up to Rs 12 lakh who will benefit because they do not have to pay any tax due to exemptions…”
Comparison of taxes payable between current new and future new regimes.
To illustrate this point, she calculated that individuals earning Rs 24 lakh and over would pay at least Rs 4.1 lakh in taxes under the existing system. But, per the revisions announced, s/he would have to pay only Rs 3 lakh, which means Rs 1.1 lakh would, effectively, be put back in their pockets.
BUDGET 2025 | Under New Income Tax Slabs, How Much Do You Save?
As a result this government has ensured a “substantial amount of money” had been put back in the hands of consumers, particularly those from the middle class, thanks to the re-jig of tax slabs.
In other tax-related announcements, Ms Sitharaman also said TDS, or tax deduction at source, rates will be rationalised, and the limit for tax deduction for senior citizens will be doubled to Rs 1 lakh.
Further, she also proposed doubling the deadline to file updated returns to four years.
Ms Sitharaman’s message about the budget being a response to the peoples’ demands were an echo of what Prime Minister Narendra Modi said; Mr Modi, in a brief video statement, hailed his Finance Minister’s “peoples’ budget”, one that will help achieve the ‘Viksit Bharat’, or ‘developed India’, goal.
READ | “People’s Budget, Will Boost Savings And Investment”: PM Modi
“In this budget, income up to Rs 12 lakh per annum has been made tax-free. For all income groups, taxes have been reduced. It will hugely benefit our middle class. It will be an opportunity for the people who have recently joined the workforce…” he said.
On the budget as a whole, Ms Sitharaman said the focus of her eighth consecutive Union Budget was on six sectors, including health and education. These, she said, had been prioritised for reforms.
NDTV is now available on WhatsApp channels. Click on the link to get all the latest updates from NDTV on your chat.