In a major step to ease the financial pressure on the middle class, Finance Minister Nirmala Sitharaman announced significant tax reforms in the Union Budget 2025-26 under the New Tax Regime. One of the standout changes is the decision to fully exempt individuals earning up to Rs 12 lakh from paying taxes. This move is expected to lighten the load for middle-income earners and encourage more spending, which could help boost the economy.
On top of that, the budget also raises the tax exemption limit to Rs 12.75 lakh and introduces a new 25% tax slab, something that had been widely anticipated. These changes are part of the government’s efforts to simplify the tax system and give taxpayers more breathing room, ultimately putting more money back into their pockets. It’s a clear push to support the middle class and stimulate economic growth.
In a series of key announcements, Finance Minister Nirmala Sitharaman revealed that individuals with an annual income of Rs 24 lakh or more could save up to Rs 1.10 lakh in income tax under the new tax regime. Meanwhile, those earning Rs 12 lakh annually will be completely exempt from paying taxes, saving them up to Rs 80,000 starting next fiscal year. These changes are part of the government’s efforts to provide significant relief to taxpayers and boost disposable income.
The Union Budget 2025-26 outlined a total expenditure of Rs 50,65,345 crore, marking a 7.4% increase over the current fiscal year’s revised estimates of Rs 47.16 lakh crore. This higher spending reflects the government’s focus on driving economic growth and development.
Prime Minister Narendra Modi praised the budget, calling it a “people’s budget” that empowers citizens by putting more money in their hands. He described it as a force-multiplier that will not only encourage investments but also fuel overall growth. “The budget lays a strong foundation for increasing savings and making citizens active partners in the nation’s development,” he said.
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