Union Budget 2025-26: No income tax for earnings up to ₹12 lakh

New Delhi, Feb 1: In a significant move for the Indian middle class, Finance Minister Nirmala Sitharaman announced on Saturday that individuals earning up to ₹12 lakh will not have to pay any income tax, while salaried taxpayers can benefit from a threshold of ₹12.75 lakh, including standard deductions.

The newly revised tax structure includes several tiers: individuals earning between ₹0 and ₹4 lakh will incur no tax, those with incomes from ₹4 to ₹8 lakh will pay 5%, and those in the ₹8 to ₹12 lakh range will pay 10%. The rates increase progressively to 15% for ₹12 to ₹16 lakh, 20% for ₹16 to ₹20 lakh, 25% for ₹20 to ₹24 lakh, and 30% for incomes above ₹24 lakh.

Presenting the Union Budget for 2025-26, FM Sitharaman highlighted that the new tax framework would significantly alleviate the tax burden on the middle class.

Additional proposals include doubling the tax deduction limit for senior citizens to ₹1 lakh, extending the time to file updated returns from two to four years, and raising the TDS threshold for remittances under the Liberalised Remittance Scheme (LRS) from ₹7 lakh to ₹10 lakh. Furthermore, TDS on rent has been increased from ₹2.4 lakh to ₹6 lakh.

The Budget Session of Parliament, which began on January 31, will take place in two phases, concluding the first on February 13 and resuming the second from March 10 to April 4.