New Tax Regime: Government Eases Burden on Middle Class

The Indian government has revised income tax slabs, significantly increasing tax rebates, resulting in about one crore individuals paying no income tax. Finance Minister Nirmala Sitharaman announced these changes in the 2025-26 Budget, aiming to boost middle-class savings and stimulate economic growth.

The Indian government has announced substantial revisions to its income tax slabs, significantly benefiting the middle class. In the 2025-26 Budget, unveiled by Finance Minister Nirmala Sitharaman, the tax rebate threshold has been increased to Rs 12 lakh per annum, up from the current Rs 7 lakh.

Sitharaman stated that this change means an additional one crore people will be relieved from paying income tax. She emphasized that the government's decision was driven by public demand, aiming to promote savings and economic growth among the middle class.

The updated tax slabs offer relief for those earning up to Rs 4 lakh with no tax obligation, and impose gradual tax rates of 5% to 30% for higher income brackets. Finance Secretary Tuhin Kanta Pandey noted that despite anticipated revenue sacrifices, tax buoyancy is expected to remain positive.