India's Middle Class Gets a Tax Break

On the eve of Budget 2025, Finance Minister Nirmala Sitharaman announced significant tax revisions aimed at reviving India's spending force. The most notable change is the increase in the tax rebate to Rs 60,000, up from Rs 25,000, effectively making income up to Rs 12 lakh tax-free for salaried individuals, thanks to a standard deduction of Rs 75,000.

New vs Old Tax Regime

With the introduction of the new tax regime, individuals earning over Rs 12 lakh will benefit from revised tax slabs. However, income such as capital gains will continue to be taxed separately. The government aims to provide marginal relief for those earning just above the Rs 12 lakh threshold, ensuring they don't end up with lower post-tax incomes than those earning Rs 12 lakh.

Impact on the Exchequer

This tax revision is expected to cost the exchequer a revenue loss of Rs 1 lakh crore, but it will benefit around 1 crore assessees who were previously required to pay taxes ranging from Rs 20,000 to Rs 80,000.