Budget 2025: Center To Introduce New Income Tax Bill Next Week; Big Relief To Middle Class

In the major announcement, Union Finance Minister Nirmala Sitharaman said the government will introduce a new Income Tax Bill next week.

The Finance Minister announced that the new Income Tax Code and the I-T Department will “trust first, scrutinize later”, the Finance Minister said while presenting the Budget 2025-26.

‘New Income Tax Bill Will Be Simple To Understand’, Says Union Finance Minister

Finance Minister Sitharaman on direct tax proposals, “I am happy to inform, for new income tax, we will carry forward the spirit of ‘nyay’, the new bill will be clear and direct in-text… it will be simple to understand for taxpayers, leading to reduced litigation.”

Further, Nirmala Sitharaman highlighted focus areas of tax proposals. The Finance Minister’s tax proposals include:

• The thing in proposal is personal income tax reforms with a special focus on the middle class.
• There will be a rationalization of TDS and TCS while reducing the compliance burden.
• The proposal says that there will be ease of doing business with employment and investment.

Union Finance Minister Says, ‘Tax Relief To Middle Class’

Amid high anticipation of tax measures and relief to the middle class, Finance Minister Nirmala Sitharaman announced that she will introduce the new income tax bill next week. Union Minister Sitharaman announced that no income tax will be levied up to ₹12 lakhs under the new tax regime.

Further, Sitharaman announced that under the New Tax Regime, there will be a ‘Nil Tax’ slab up to Rs 12 lakh (i.e Rs 12.75 lakhs for salaried taxpayers with a standard deduction of Rs 75,000). Meanwhile, the new structure will substantially reduce taxes for the middle class and leave more money in their hands, boosting household consumption, savings, and investment.

On income tax rebate in Union Budget 2025, finance minister Nirmala Sitharaman said, “Resident individuals with total income up to ₹7,00,000 do not pay any tax due to rebate under the new tax regime.”

She added, “It is proposed to increase the rebate for the resident individual under the new regime so that they do not pay tax if their total income is up to ` ₹12,00,000.”

“Marginal relief as provided earlier under the new tax regime is also applicable for income marginally higher than ₹12,00,000.”

Big Relief To With Revised Income Tax Slab

Finance Minister Nirmala Sitharaman on the revised income tax slab said, “A taxpayer in the new regime with an income of ₹12 lakh will get a benefit of ₹80,000 in tax (which is 100% of tax payable as per existing rates). A person having an income of ₹18 lakh will get a benefit of ₹70,000 in tax (30% of tax payable as per existing rates). A person with an income of Rs 25 lakh gets a benefit of ₹1,10,000 (25% of his tax payable as per existing rates).”

Meanwhile, the revised tax rate structure still mentions a ‘Nil’ tax on income of ₹0-4 lakh while 10 percent tax on income of ₹8-12 lakh and 15 percent tax on income of ₹12-16 lakh.

Following this, Nirmala Sitharaman said, “To taxpayers up to Rs 12 lakh of normal income (other than special rate income such as capital gains) tax rebate is being provided in addition to the benefit due to slab rate reduction in such a manner that there is no tax payable by them.”

Also Read: Parliament Budget Session Live: FM Nirmala Sitharaman To Propose New Income Tax Bill Next Week