During the 2025 Budget speech Finance Minister Nirmala Sitharaman delivered a major tax system reform that gave significant tax benefits to middle-class income earners. The new tax system eliminates income tax burdens for people whose annual earnings remain below ₹12 lakh under the new tax regime. The government implemented this change to increase disposable income because they expect this action will extend benefits to consumption savings and investment.
Under the latest tax slab framework these rates are implemented:
₹0-4 lakh: No tax
₹4-8 lakh: 5%
₹8-12 lakh: 10%
₹12-16 lakh: 15%
₹16-20 lakh: 20%
₹20-24 lakh: 25%
Above ₹24 lakh: 30%
The government’s tax cut decision generates favorable results among the middle class and provides necessary financial benefits to create better economic stability.
