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’Ye jo hawa chali hui hai…’: Entrepreneur decodes income tax relief up to ₹12 lakh in Budget 2025
Nirmala Sitharaman announced an overhaul of the income tax system, raising the exemption limit to ₹12 lakh. No tax will be levied on earnings below ₹4 lakh, with updated tax slabs ranging from 5% to 30% for higher incomes.
Finance Minister Nirmala Sitharaman announced a major overhaul of the income tax system on Saturday with changes to the exemption limits. Individuals earning up to ₹12 lakh annually will no longer have to pay any tax under the new income tax regime other than special rate income such as capital gains. The tax slabs and rates have also been updated — with no income tax levied on earnings below ₹4 lakh. The duality of this assertion has since sparked some confusion and prompted explanations on social media from financial experts.
“Zero tax till earnings of ₹12 lakh....this will be in the form of a rebate. And this will only be given to those with an yearly earning of ₹12 lakh or less. And if they are salaried employees then the amount is till ₹12.75 lakh because there is an additional standard deduction of ₹75,000,” explained Pranjal Kamra.
The fintech startup founder went on to remind that the newly announced exemption would not apply for those with earning higher than ₹12 lakh.
“So if you are earning ₹13 lakh you will not get the rebate in any way. You have to pay taxes based on the slabs. If someone is thinking that they will have to pay taxes on ₹2.25 lakh after earning ₹15 lakh (15 minus 12.75)….there is no such thing. If you're earning ₹15 lakh, you will have to pay according to the tax slabs,” he reiterated.
What does Budget 2025 say?
According to the proposal outlined in the Budget, there will be “no income tax payable up to income of ₹12 lakh” under the new regime — other than special rate income such as capital gains. This limit will be ₹12.75 lakh for salaried tax payers due to standard deduction of ₹75,000.
What are the new income tax slabs?
There will be no income tax levied on earnings below ₹4 lakh. Income between ₹4 lakh and ₹8 lakh will incur a 5% tax while the next slab — for salaries upto ₹12 lakh will have a 10% tax. A 20% tax will be levied on income between ₹16 lakh to ₹20 lakh. This will increase to 25% for earnings between ₹20 lakh and ₹24 lakh and further to 30% for income above ₹24 lakh.
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Business NewsBudgetNews’Ye jo hawa chali hui hai…’: Entrepreneur decodes income tax relief up to ₹12 lakh in Budget 2025
First Published:1 Feb 2025, 03:06 PM IST
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