Union Budget 2025: No Income Tax up to Rs.1200000 “What it means for middle class”

Finance Minister announced Zero Income Tax for upto Rs 1200000.Standard deduction for salaried employee will be Rs.75000. The new Tax Slab Introduce a 10% Tax rate for income between Rs. 8-12 lakh, with varying rates for higher income.

Finance Minister gave a big relief to the middle class as she announced zero income tax for upto Rs.12 lakh under the new tax regime.

For salaried employees, this nil tax limit will be Rs.12.75 lakh p.a , after taking into account a standard deduction of Rs.75000.

Finance Minister gave relief to middle class by raising the exemption limit, there will be no tax payble upto income of Rs.12 lakh( i.e. average income of Rs. 1 lakh per month other than special rate income such as capital gain income).

As per new tax regime, for people earning  more than Rs.12 lakh per annum, there will be nil tax for income upto Rs.400000, 5% for income between Rs.4 and 8 lakh, 10% for Rs.8-12 lakh.

A 20% Income tax will be levied on income between Rs.16 and 20 Lakh,25% on Rs.20-24 lakh and 30% above Rs,24 lakh per annum.

Although the person earning to Rs. 12 lakh per annum(plus Rs 75000 standard Deduction) will not have to pay any tax the above mentioned slabs will be applicable when the income crosses this amount.

The income exceeding Rs.12lakh gets no rebate relief and is thus taxed from 4 lakhs..

For Example:

If your earning is Rs.13 lakh in a year under the new income tax regime here’s how your tax will be calculated:

-Total income: Rs.1300000

-Standard Deduction: Rs.75000

-Taxable Income: Rs.1300000-Rs.75000=Rs.1225000

Now the tax will be calculated on this amount, Rs 1225000

Upto Rs.4L: No Tax(0%)

Rs.4L-8L: 5% of 4Lakh=20000

Rs.8L-12L: 10% of 4Lakh=40000

Rs.12L to 12.25L: 15% of 25000=Rs.3750

Thus if you cross the 12L limit by Rs.1L your tax outgo will be Rs.63750 + health and Education @4%