Big Relief for Pouch Class: No Income Tax Up to Rs 12 Lakh in Union Budget 2025-26

Union Budget 2025-26: The finance minister announced that in the new tax regime, no income tax would be levied on annual earnings up to Rs 12 lakh. Salaried taxpayers would also get an additional standard deduction of Rs 75,000, making the tax-free income limit Rs 12.75 lakh.

Presenting the 14th successive Budget of the Narendra Modi government, Sitharaman reiterated the government’s commitment to accelerate economic growth and inclusive development. “Together, we embark on a journey to unlock our potential for greater prosperity,” she said.

Revised Tax Slabs Under New Tax Regime

• Income up to Rs 4 lakh – Nil
• Rs 4 to 8 lakh – 5%
• Rs 8 to 12 lakh – 10%
• Pay tax between Rs 12 lakh and Rs 16 lakh: 15%
• Pay tax between Rs 16 lakh and Rs 20 lakh: 20%
• Pay tax between Rs 20 lakh and Rs 24 lakh: 25%
• Pay tax above Rs 24 lakh: 30%

Sitharaman pointed out that where a taxpayer pays Rs 12 lakh in an year, the saving is Rs 80,000. Where the earning is Rs 18 lakh, the saving is Rs 70,000.

Union Budget 2025-26 : Major Announcements in Direct Taxation

Tax Reforms and Direct Benefits

• New Income Tax Bill to be introduced next week, simplifying tax laws.
• Taxpayers can now claim two self-occupied properties as tax-free.
• Time limit for filing updated returns extended to 4 years from the current 2 years.
• TCS exemption for education remittances where an education loan is taken from specified financial institutions.

Boost to Social Welfare and Employment

• Identity cards and e-Shram registration for 1 crore gig workers.
• Urban workers’ socio-economic upliftment scheme to be launched.
• 36 life-saving drugs exempted from basic customs duty, which will benefit cancer and chronic disease patients.

Infrastructure and Economic Development

• Greenfield airports to be developed in Bihar.
• FDI limit in insurance sector increased from 74% to 100%.
• India Post Payments Bank to be expanded for financial inclusion in rural areas.
• Central KYC registry to be revamped in 2025 for ease of documentation.

Support to Farmers and MSMEs

• Kisan Credit Card limit increased from Rs 3 lakh to Rs 5 lakh.
• Atmanirbhar Bharat in pulses: A six-year program to boost production of tur, urad, and masoor.
• Makhana Board in Bihar to improve processing, value addition, and marketing of makhana.
• MSME investment and turnover limits enhanced to support small businesses.
• Export-oriented MSMEs would get term loans up to Rs 20 crore and customized credit cards with Rs 5 lakh limits.

Science, Technology, and Education

• Centre of Excellence in AI for education with an outlay of Rs 500 crore.
• 10,000 fellowships for tech research in IITs and IISCs over the next five years.
• 50,000 Atal Tinkering Labs to be established to promote scientific temper among students.

Tourism and Regional Development:

UDAN scheme to connect 120 destinations, benefitting 4 crores additional passengers over the next decade

50 tourism sites to be developed with States.
Financial support to the Western Kosi Canal, benefiting 50,000 hectares of Bihar’s Mithilanchal region.
Promoting medical tourism with private sector participation.

Fiscal and Economic Outlook:

• Fiscal deficit for FY25 estimated at 4.8% of GDP, to be reduced to 4.4% in FY26.
• Net market borrowings will be pegged at Rs 11.54 lakh crore in the next fiscal year.
• A high-level committee will be set up for non-financial sectors for regulatory reforms.

**Cabinet Approvals and Budget Presentation

The Union Cabinet, led by Prime Minister Narendra Modi, has cleared the Union Budget 2025-26 before it goes to Parliament. This will be the second budget of the BJP-led NDA government in its third straight term.

Before her speech, Sitharaman met President Droupadi Murmu, who offered her ‘dahi-chini’ or curd and sugar, the traditional symbol of good luck. As she presented the Budget in the Lok Sabha, protests erupted from opposition parties, especially Samajwadi Party led by Akhilesh Yadav.

This Budget is aimed at setting the foundation for India’s economic trajectory over the next five years, fostering growth while ensuring financial relief for the middle class and bolstering key sectors like infrastructure, technology, and agriculture.

Big Relief for Pouch Class: