Nirmala Sitharaman on February 1 presented the Union Budget for fiscal year (FY) 2025-26 in the Lok Sabha. She’s the only finance minister to do so for the eighth straight time- the highest number of back-to-back budgets presented by any of her predecessors in India’s history. The Union Budget 2025 had generated high expectations as it will be the second budget after Modi government was voted to power for the third term in 2024.
Sitharaman made a crucial announcement regarding Income Tax in Union Budget 2025-2026. Under the Revised new tax regime 2025, there will be zero income tax upto an annual income of Rs. 12 Lakh.
“The middle class provides strength to the economy. In recognition of their contribution, we have periodically reduced the tax burdens. I am now happy to announce that there will be no income tax up to an income of Rs 12 lakhs,” says Finance Minister Nirmala Sitharaman.
Here are the new income tax rates under the new tax regime:
Rs 0-4 lakh — Nil
Rs 4-8 lakh — 5%
Rs 8-12 lakh — 10%
Rs 16-20 lakh — 20%
Rs 20-24 lakh — 25%
Above Rs 24 lakh — 30%
Tax rebate for those with income up to Rs 12 lakh.
In Union Budget 2024-2025, under the previous revised new tax regime the Effective Tax-Free Salary income Amount was Rs. 7,75,000 with rebate eligibility on Income of Rs. 7,00,000.
This was with a renewed Standard Deduction of Rs. 75,000 and Increased Rebate Allowance of Rs. 25,000 under Section 87A.
Comparing the 2024-25 and 2025-26 Tax Slab, the basic exemption limit has been increased from Rs. 3 lakh to Rs. 4 lakh. A new tax slab of 25% for income between Rs. 20 lakh to 24 lakh has been introduced. The highest tax rate of 30% now starts at Rs. 24 lakh, compared to Rs. 15 lakh in the previous year. These changes aim to provide relief to taxpayers and Simply the tax structure.
Sitharaman was appointed as India’s first full-time woman Finance Minister in 2019, after PM Modi secured a second term. Since then, she has delivered seven straight budgets, including the interim budget in February 2024.
Parliament’s budget session began on Friday, January 31, with President Droupadi Murmu’s address to both Houses. As per the Parliamentary Bulletin, the Budget Session will be in two phases: The first that began January 31 includes the Union Budget presentation on February 1 and will conclude on February 13; the second part of the session will commence on March 10 and will conclude on April 4.
Former Prime Minister Morarji Desai holds the record of presenting the most number of Union budgets in India. Desai has presented a total of 10 budgets, six during his tenure as finance minister in 1959-1964, and four between 1967-1969.
