Kolkata: If there is one big announcement in Budget 2025, it’s income tax. At a press conference after presenting Budget 2025, finance minister Nirmala Sitharaman explained how her liberal income tax relief would translate into significantly more disposable income in the hands of the people. The finance minister was urged by all sectors this year, including the industry captains, to put more disposable income in the hands of the taxpayer. The target was to induce them to spend, which would raise consumption in the economy that will lead to jobs and growth.
Giving examples of how a person earning Rs 8 lakh a year in 2014 and now (FY26), the finance minister reeled off some figures. If someone earned Rs 8 lakh a year in 2014, he/she would have paid income tax of Rs 1 lakh. “Now that amount has come down to zero, which means, he/she has got that extra amount of money in his/her hands,” said the FM.
If you earn Rs 1 lakh a month, you need not pay income tax
Sitharaman expanded the examples to include someone earning Rs 12 lakh a year and Rs 20 lakh a year as well. She also said that if one was earning Rs 12 lakh a year in 2014, the taxpayer would have to cough up Rs 2 lakh. Now this amount will crash to zero and the money that would have gone to the government coffers will now stay in the hands of the individual as extra cash.
The FM then gave the example of someone earning Rs 20 lakh a year in 2014, which would have made him/her eligible to pay an income tax of Rs 5.6 lakh. This amount will now come down to Rs 3 lakh, she pointed out, indicating Rs 2.6 lakh will remain as extra money in the hands of the person. One of guiding factors was that if a person earns Rs 1 lakh a month, he/she need not pay any income tax. The FM said that 1 crore more people will not pay income tax after the hike in rebate to Rs 12 lakh in the budget for FY26.
Tweaking both slabs and rates
“If any money is put in the hands of the people, it always comes back to the economy — either in the form of consumption or investments,” explained finance secretary Tuhin Kanta Pandey. He also pointed out that relief has been given both by tweaking the tax slabs as well as the income tax rates. He also gave example of how there is now a jump from the 20% rate to 30% rate and nothing in between. By introducing a 25% rate, a large number of people will also benefit from paying lower rates too, he remarked.
The FM also said that once the new Income Tax Bill is tabled, it will go to a standing committee, which will get the views of stakeholders. And then it would come back for incorporating any views if necessary. She also avoided to comment on whether it will be implemented in FY26.
Income Tax Budget 2025 Announcements by FM Nirmala Sitharaman: Budget 2025: If you earned Rs 8 lakh a year in 2014, you would have paid Rs 1 lakh as income tax, which will be zero today, meaning thereby you will have that extra money in pocket from the next financial year. At a press conference on the afternoon of February 1, after Budget 2025, FM Nirmala Sitharaman went on to explain how income tax payable has gone down in 10 years. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
