Sun Feb 02 06:40:00 IST 2025: ## Income Tax Relief for Salaried Class and Middle Class in India

**New Delhi, February 2, 2025** – Finance Minister Nirmala Sitharaman announced significant income tax relief for salaried individuals and the middle class in the latest budget proposals. The biggest change is the increase in the tax exemption limit to ₹12.75 lakh per annum. This means individuals earning up to ₹12 lakh annually, excluding income subject to special tax rates like capital gains, will pay no income tax. Including the standard deduction of ₹75,000, the effective tax-free income limit rises to ₹12.75 lakh.

This move is expected to benefit a substantial portion of the population. The government estimates that an additional 10 million people will be exempted from paying income tax. The revised tax slabs also offer considerable benefits, with potential savings of up to ₹80,000 for some taxpayers compared to the current system. These changes will reduce direct tax revenue by ₹1 lakh crore and indirect tax revenue by ₹2600 crore. The government believes that this increased disposable income will stimulate consumption, savings, and investment. However, economic experts predict a higher propensity for spending due to the lack of tax benefits on savings under the new regime.

For those earning above ₹12.75 lakh, the first ₹4 lakh will remain tax-free. Tax will be levied on income above this amount according to revised slabs (5% for ₹4-8 lakh, 10% for ₹8-12 lakh, and 15% for income above ₹12 lakh). The Finance Minister also increased the highest tax bracket to 30% applicable on income above ₹24 Lakh.

Further relief measures include:

* **Enhanced NPS benefits:** A tax deduction of up to ₹50,000 will be allowed for contributions to the NPS Vatsalya scheme.
* **Second home tax benefits:** Taxpayers can now claim both their primary and secondary residences as self-occupied, eliminating the need to pay tax on notional rental income from the second property.
* **Extended time for filing revised returns:** The deadline for filing revised income tax returns has been extended from two years to four years.

These changes will be effective from the 2025-26 financial year. While the new tax regime has undergone significant revisions, the old tax regime will remain available as an option.

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