Sat Feb 01 12:30:00 IST 2025: **India Raises Tax-Free Income Threshold to ₹12 Lakh Under New Tax Regime**
NEW DELHI – Finance Minister Nirmala Sitharaman announced a significant tax relief for the middle class, raising the annual income threshold for zero taxation under the new tax regime to ₹12 lakh. This is a substantial increase from the previous limit of ₹7 lakh.
The standard deduction remains at ₹75,000. The new tax slabs under the new regime are as follows: 10% tax on income between ₹8-12 lakh, 20% on income between ₹15-20 lakh, and 30% on income above ₹24 lakh.
This effectively means that individuals earning up to ₹12.75 lakh (₹12 lakh + ₹75,000 standard deduction) will not be required to pay any income tax. Any income exceeding this amount will be subject to tax.
This is the second major tax relief in recent years. Last year’s budget also increased the standard deduction under the new tax regime from ₹50,000 to ₹75,000. Importantly, no changes were made to the old tax regime, which continues to offer no tax on income up to ₹5 lakh, along with a ₹50,000 standard deduction. The old tax regime slabs remain: 0% on income up to ₹2.5 lakh, 5% between ₹2.5 lakh and ₹5 lakh, 20% between ₹5 lakh and ₹10 lakh, and 30% on income above ₹10 lakh.
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