Union Budget 2025: FM announces major personal Income Tax reforms, nil tax for up to Rs 12 lakh

In a move aimed at providing relief to the middle class, Finance Minister Nirmala Sitharaman unveiled a new set of personal income tax reforms. A key highlight of the announcement is the introduction of a nil tax rate for individuals earning up to Rs 12 lakh. This move is set to significantly ease the tax burden for middle-income earners.

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Addressing the nation, the Finance Minister confirmed that taxpayers with an income of up to Rs 12 lakh, excluding special rate incomes, would benefit from a tax rebate that ensures no tax will be levied on their earnings. The revised tax slabs will bring greater relief to taxpayers across different income brackets, with progressive tax rates for higher earnings.

The following table outlines the new income tax slabs:

These changes are expected to provide significant relief to middle-class taxpayers while ensuring a more equitable tax structure for higher income groups.