Startup For Middle Class: No Income Tax Up To Rs 12 Lakh

No Income Tax Up To Rs 12 Lakh—Finance Minister Ms Nirmala Sitaraman

This time, Finance Minister Nirmala Sitharaman has filled the middle class with happiness. Now even if your salary is more than Rs 1 Lakh per month, you will not have to pay any income tax. Nirmala Sitharaman has decided to change the new tax slab once again because the government is very keen that people adopt the new tax regime and get fed up with the old tax regime. About 65 percent of taxpayers have already adopted the new tax regime. This time too, no changes have been made in the old tax regime.
Finance Minister Ms Nirmala Sitaraman has presented the eighth budget for 2025-26 and announced new tax slabs which will be applicable to the new tax regime only. Salaried person who is opting new tax regime, income up to Rs. 12,75,000 will be tax free.

Startup For Middle Class: No Income Tax Up To Rs 12 Lakh : The new tax regime’s slab has undergone modifications. The old tax regime remains unchanged. However, in the new tax regime, an exemption of up to Rs 12 lakh has been given under Section 87A of the Income Tax Act; that is, those earning Rs 12 lakh annually will waive off their 5% tax on Rs 4 to 8 lakh and 10% tax on income of Rs 8 to 12 lakh. This will give a benefit of Rs 60,000 to the taxpayer.

Let us compare and understand new Income tax regime: Startup For Middle Class: No Income Tax Up To Rs 12 Lakh

Income	Tax Old	Tax Now	Benefit	Rebate Upto 12 lakh	Total Benefit	Tax after Benefit
8 Lakh	30 K	20 k	10 K	20 K	30 K	0
9 Lakh	40 K	30 k	10 K	30 K	40 K	0
10 Lakh	50 K	40 K	10 K	40 K	50 K	0
11 Lakh	65 K	50 K	15 K	50 K	65 K	0
12 Lakh	80 K	60 K	20 K	60 K	80 K	0
16 Lakh	1.7 L	1.2 L	50 K	0	50 K	1.2 L
20 Lakh	2.9 L	2.0 L	90 K	0	90 K	2 L
24 Lakh	4.1 L	3.0 L	1.1 L	0	1.1 L	3 L
50 Lakh	11.9 L	10.80	1.1 L	0	1.1 L	10.80 L

Start Up for Middle class: No Income Tax Up to Rs 12 Lakh

Seven Major changes in Income Tax or Tax system:

TDS exemption on rental income doubled–  The limit on rental income has been increased from Rs 2.4 lakh to Rs 6 lakh; i.e., now TDS will not be deducted on annual rent up to Rs 6 lakh. 

Exemption on withdrawal of money from National Savings Account—Many senior citizens have very old National Savings Schemes on which no interest is being given. The Finance Minister Nirmala Sitaraman has announced that those who will withdraw money on or after 29th August 2024 will not have to pay any tax on withdrawal. The same rule will also apply to NPS National Pension Scheme Vatsalya accounts, but there will be a limit on the exemption.

Filing of returns for the last 4 years—The limit for filing old income tax returns has been increased from 2 years to 4 years; that is, if a taxpayer has filed his return wrongly or has yet to file it, then he can now correct this mistake in 4 years and will be able to fix it by filing an updated return within 4 years.

Higher tax if there is no PAN number—TDS (Tax Deduction at Source) and TCS (Tax Collected at Source) were generally used while selling goods; this caused many problems for both the customer and the shopkeeper. The finance minister has announced the removal of TCS. He also stated that higher parties will only be subject to TDS if they lack a PAN number.

Double exemption on income on interest for senior citizens—The tax exemption given to senior citizens on interest income from banks and post offices has been increased from Rs 50,000 to Rs 1 lakh, which means now every year citizens will get an exemption on interest income up to Rs 1 lakh.

No tax on money sent abroad up to Rs 10 lakh for studies—tax collected at source on sending money abroad for studies. We have now increased the TCS limit to Rs 10 lakh when sending money abroad for study purposes. Currently, if a person sends more than Rs 7 lakh, then TCS is levied on it; however, you will get this exemption only if this money is loaned from any financial organization, like a bank, etc.

The benefit of a self-occupied house will be available on two houses. – The budget provides relief from self-occupied house tax. So if you have two houses and live in both, you can claim tax benefits on both. Previously, only a self-occupied house could benefit from the tax.

However, If your income is more than Rs 16 lakh, You are falling in the Tax bracket category and there is a need to save tax. ELSS Tax Saver Funds are the best option for you because it generate more returns in comparison to other 80C tax-saving options. Read more…