Budget 2025 Highlights: Major Tax Relief for Middle-Class with Zero Tax on Income Up to ₹12.75 Lakh

Union Finance Minister Nirmala Sitharaman presented the Union Budget 2025 in the Lok Sabha on February 1, her eighth consecutive budget announcement. The budget introduced significant reforms to provide relief to the middle class, simplify the tax structure, and boost economic growth. One of the most prominent announcements was the exemption from income tax for individuals with income up to Rs 12.75 lakh under the new tax regime, along with several other measures to reduce the tax burden.

Important changes in income tax in Budget 2025:

Under the new tax regime, Finance Minister Nirmala Sitharaman has proposed a zero income tax for people with annual income up to Rs 12 lakh. The revised tax brackets and rates are as follows:

Salary	Income Tax Rates
₹0-4 lakh	Nil
₹4-5 lakh	5%
₹8-12 lakh	10%
₹12-16 lakh	15%
₹16-20 lakh	20%
₹20-24 lakh	25%
₹24 lakh above	30%

This restructuring will provide a major relief to the middle class, which is expected to significantly reduce their tax liabilities.

Streamlining of TDS and other reforms:

The budget also proposes to simplify tax deduction at source (TDS) by reducing rates and limits. Other major reforms include measures related to leasing, remittances, higher education, the sale of property, and the criminalization of certain offenses to promote ease of doing business.

Relief for the middle class:

The new tax regime, along with reduced tax rates and a zero tax limit for income up to Rs 12 lakh, is expected to significantly benefit the middle class in India. The budget aims to increase disposable income and boost consumption, which will provide a much-needed boost to the economy.

Key findings of the 2025 budget:

Fiscal deficit: The fiscal deficit is estimated at 4.8% for FY25, which is expected to come down to 4.4% in FY26.

Jan Vishwas Bill 2.0: Over 100 provisions will be decriminalized to improve the investment climate. An investment-friendly index for states will also be launched in 2025.

Revised duty rates: Seven additional duty rates will be abolished, leaving only eight rates in force.

Interest-free loans to states: An allocation of Rs 1.5 lakh crore has been announced for 50-year interest-free loans to states for capital expenditure and infrastructure development.

Customs duty exemption: Basic customs duty on 36 life-saving drugs and medicines has been completely waived to make healthcare more affordable.

Budget 2025 focuses on providing tax relief to the middle class, simplifying the tax structure, and boosting economic growth through policy reforms. With measures like zero tax on income up to Rs 12.75 lakh and streamlining of TDS, the budget aims to improve the disposable income and overall economic well-being of citizens.