New Delhi, March 19, 2025 — As the financial year 2025-26 approaches, taxpayers are set to experience substantial relief owing to the income tax reforms announced in the Union Budget 2025-26 by Finance Minister Nirmala Sitharaman. These reforms, effective from April 1, 2025, aim to enhance disposable incomes and stimulate economic growth.
The most notable change is the increase in the basic exemption limit, ensuring that individuals earning up to ₹12 lakh annually will not be liable to pay any income tax. Additionally, the revised tax slabs aim to simplify the tax structure while offering significant relief across various income groups. For those earning above ₹12 lakh, tax rates range from 5% to 30%, depending on the income bracket.
To further support taxpayers, the rebate under Section 87A has been enhanced from ₹25,000 to ₹60,000, resulting in zero tax liability for individuals with taxable incomes up to ₹12 lakh. Moreover, a standard deduction of ₹50,000 for salaried individuals under the new tax regime aims to simplify tax calculations while providing additional relief.
These reforms are expected to leave more money in the hands of taxpayers, particularly benefiting the middle class. By increasing disposable incomes, the government aims to boost household consumption and savings, stimulating overall economic growth. The measures also reflect the government’s commitment to creating a more taxpayer-friendly, simplified, and efficient tax system.
Finance Minister Nirmala Sitharaman emphasized that these changes are part of a broader strategy to simplify taxation and reduce disputes. The government’s approach seeks to provide greater tax certainty, streamline compliance, and support the long-term growth of the economy.
As the new financial year begins, taxpayers can anticipate a more favorable tax environment, which not only reduces their tax burden but also encourages increased participation in the nation’s economic activities. These reforms represent a step toward a more inclusive and growth-oriented economy.