Major Tax Relief: No Income Tax Up to ₹12 Lakh & New Simplified Tax Structure

Direct Tax Update: Major Reliefs and Revised Tax Structure

The Central Government, in today’s Budget announcement, has introduced a significant overhaul in the direct tax structure, bringing major relief to middle-class taxpayers. Below is a summary of the key highlights:

No Income Tax up to ₹12 Lakh

Under the new tax regime, individuals earning up to ₹12 lakh annually (₹1 lakh per month) will not be liable to pay any personal income tax, except for special rate income such as capital gains. For salaried taxpayers, this exemption limit is further increased to ₹12.75 lakh due to the standard deduction of ₹75,000.

Major Tax Relief to Boost to Middle-Class Savings and Investments

The revised structure aims to substantially reduce the tax burden on the middle class, leaving more disposable income in their hands. This is expected to drive higher household consumption, increased savings, and greater investments, thereby contributing to overall economic growth.

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Simplified Income Tax Bill

The new Income-Tax Bill will be drafted in a clearer and more direct manner. This simplification will enhance tax certainty, reduce litigation, and ensure ease of understanding for both taxpayers and tax authorities.

Revenue Implications

With these changes, the government estimates a revenue loss of approximately ₹1 lakh crore in direct taxes. However, the anticipated economic boost from increased spending and investment may offset this loss in the long run.

New Simplified Tax Structure 2025

The new tax regime will follow this revised tax slab structure:

Conclusion

This new tax framework is a game-changer for middle-class taxpayers, offering substantial relief and simplifying the tax compliance process. By reducing tax liability and enhancing financial flexibility, these reforms are poised to boost economic growth while ensuring a fair and efficient tax system for all.

Source : PIB