Major Tax Reforms Announced by Finance Minister Nirmala Sitharaman

In a groundbreaking move, Finance Minister Nirmala Sitharaman announced a significant overhaul in the income tax slabs, proposing no tax on income up to Rs 12 lakh per annum under the New Tax Regime. This marks a substantial increase in tax exemption limits over the years, offering considerable relief to taxpayers.

New Income Tax Slabs for 2025-26

Nil tax for income up to Rs 4 lakh, 5% for income between Rs 4-8 lakh, 10% for income between Rs 8-12 lakh, and 15% for income between Rs 12-16 lakh.

Historical Evolution of Tax Exemption Limits

The tax exemption threshold has seen a steady increase, aligning with economic growth and inflation adjustments. From Rs 1 lakh in 2005 to Rs 12 lakh in 2025, the journey reflects the government's efforts to boost disposable income, encourage savings, and fuel consumption-led economic growth.