Finance Minister Nirmala Sitharaman today presented the budget for the financial year 2025-26. In this, she has given huge relief to the middle class. Sitharaman has announced an increase in tax exemption in the new tax regime under section 87A of Income Tax.
Under this, now no tax will have to be paid on taxable income up to Rs 12 lakh. Under the new tax system, there will be no tax on standard deduction of Rs 75,000. That is, salaried people will not have to pay any tax on taxable income up to Rs 12.75 lakh. Till now there is no tax on income up to Rs 7 lakh. After including the standard deduction, this amount becomes Rs 7.75 lakh.
In her speech, the Finance Minister said, ‘I am now happy to announce that there will be no income tax on income up to Rs 12 lakh. Now there will be zero tax on zero to four lakh rupees, 5% on 4 to 8 lakh rupees, 10% on eight to 12 lakh rupees, 15% on 12 to 16 lakh rupees, 20% on 16 to 20 lakh rupees, 25% on 20 to 24 lakh rupees and 30% tax on income above 24 lakh rupees. Tax exemption under section 87A is given under both the old and new tax regimes.
What do experts say
Manoranjan Sharma, Chief Economist of Infomerics Ratings, said that in the budget, the Finance Minister had announced tax exemption on income up to Rs 12 lakh. This was expected. The middle class is suffering from inflation and its disposable income was shrinking. The country’s GDP was showing sluggishness for the last few quarters. The biggest reason for this was that consumption was decreasing in urban areas. This is the reason why there was a demand for giving more income tax exemption to the middle class. With the increase in disposable income of the middle class, more money will come in their pockets and this will give a boost to the economy.
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