Sun Feb 02 05:07:10 UTC 2025: ## India Sweetens Tax Regime, Bringing Relief to Middle Class and High Earners

**New Delhi** – Finance Minister Nirmala Sitharaman announced significant changes to India’s New Tax Regime (NTR), offering substantial tax breaks for a wide range of income earners. The most dramatic change is the increase in the rebate limit from ₹7 lakh to ₹12 lakh. This means individuals earning up to ₹12 lakh annually (approximately ₹1 lakh monthly) will pay no income tax under the NTR.

The revisions also benefit higher earners. Tax slabs have been adjusted, lowering tax liabilities for those earning over ₹12 lakh. For instance, an individual earning ₹15 lakh annually will save approximately ₹35,000, while those earning ₹20 lakh will see savings of around ₹90,000. The changes are intended to incentivize taxpayers to switch from the older, deduction-heavy tax regime (OTR) to the simpler NTR.

While the ₹12 lakh rebate eliminates tax for those earning that amount, exceeding this threshold even slightly results in a significant tax increase. A person earning ₹12.1 lakh will pay substantially more than someone earning ₹12 lakh. Tax parity with the previous take-home pay is only achieved at approximately ₹12.71 lakh.

The government anticipates these changes will accelerate the shift away from the OTR, even though some individuals with substantial deductions under the OTR might still find it slightly more advantageous. However, the convenience of the simplified NTR and the elimination of the need to claim numerous deductions may outweigh minor tax differences for many. The Finance Ministry encourages taxpayers to re-evaluate their tax situations under both regimes to determine the most beneficial option.

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