In a major move to boost spending and support the middle class, Union Finance Minister Nirmala Sitharaman announced on Saturday that individuals earning up to ₹12 lakh annually will not have to pay any income tax. This change is part of the government’s efforts to encourage consumption and strengthen Asia’s third-largest economy, which is facing slower growth.
Key Highlights of the New Tax Regime:
- No Tax on income up to ₹12 lakh (₹12.75 lakh for salaried individuals with a standard deduction of ₹75,000).
- Revised Tax Slabs:
- ₹0–4 lakh: 0%
- ₹4–8 lakh: 5%
- ₹8–12 lakh: 10%
- ₹12–16 lakh: 15%
- ₹16–20 lakh: 20%
- ₹20–24 lakh: 25%
- Above ₹24 lakh: 30%
Savings for Taxpayers:
- Individuals earning up to ₹7 lakh already pay no tax due to existing rebates.
- Under the new proposal, this benefit is extended to those earning up to ₹12 lakh, offering significant savings for middle-income families.
Fiscal Deficit and Reforms:
- The government aims to reduce the fiscal deficit to 4.4% of GDP by FY26, down from 4.8% in FY25.
- To bridge the deficit, ₹11.54 lakh crore will be raised from the market in the next fiscal year.
- Other reforms include raising FDI limits in insurance, simplifying tax laws, and cutting duties on intermediaries.
