Budget 2025: No income tax upto ₹12 lakh income. Here's how much you will save

Union Finance Minister Nirmala Sitharaman on Budget 2025 announced that there will be no income tax on income upto ₹12 lakh. This will be done by raising the limit of tax rebate which stands at ₹25,000 to ₹60,000.

Salaried taxpayers are now entitled to claim standard deduction of ₹75,000 which means even if their income is upto ₹12.75 lakh, they wont have to pay any income tax.

Let us understand how this happens:

“To tax payers upto ₹12 lakh of normal income (other than special rate income such as capital gains) tax rebate is being provided in addition to the benefit due to slab rate reduction in such a manner that there is no tax payable by them,” she said during her speech.

“This means tax rebate under 87A which was ₹25,000 has been raised to ₹60,000. For salaried persons, there will be no income tax upto ₹12.75 lakh because there is a standard deduction of ₹75,000,” said CA Pratibha Goyal.

A tax payer in the new tax regime with an income of ₹12 lakh will be entitled to get a benefit of ₹80,000 in income tax (which is equivalent to 100 per cent of tax payable as per current rate). 

A person having income of ₹18 lakh will receive a benefit of ₹70,000 in income tax (which is 30 per cent of income tax payable as per current rate). 

A person who has an income of ₹25 lakh will receive benefit of ₹1,10,000 (25 per cent of his tax payable as per current rate).