Budget An Overview 

The Indian Budget 2025 has introduced a significant change in the income tax slab, exempting individuals with an annual income of up to ₹12 lakhs from paying income tax. 

This move has garnered mixed reactions from citizens and parties.  Biggest tax break for the middle class in years, but some people will never be happy. They want no tax, no GST, and probably a free government funded vacation too!

Big relief in Personal Income Tax?

If income exceeds ₹12 Lakh, the tax slabs are:
Rs 0-4L: NIL
Rs 4-8L: 5%
Rs 8-12L: 10%
Rs 12-16L: 15%
Rs 16-20L: 20%
Rs 20-24L: 25%
Above Rs 24L: 30%

For the Salaried Class, NO Income Tax is applicable up to ₹12 lakh rupee. The exempt income therefore goes up to ₹12.75 lakh, due to standard deduction benefit of ₹75,000 available to salaried class.

Here is how income tax exemption limits have moved over the few last years.

2005 : ₹1 lakh
2012 : ₹2 lakhs
2014 : ₹2.5 lakhs 
2019 : ₹5 lakhs
2023 : ₹7 lakhs
2025 : ₹12 lakhs

Imagine a scenario where both husband and wife are working.

Each earns up to ₹12 lakh (or ₹12.75 lakh with the ₹75,000 standard deduction), meaning a combined family income of ₹25.5 lakh could be completely tax-free.

In effect, the government has abolished income tax for the real middle class.

Taxpayers had 3 complaints. These seem to be largely addressed. 

1. Only a very few taxpayers are taking the burden of all other citizens. Everyone should contribute a little. 

2. The insane taxes and double taxation. This adversely affect salaried class. Businesses can escape this. 

3. Do not use our taxes for freebies. Instead give us some facilities in return.

Citizen Reactions

Many citizens have welcomed this move, seeing it as a relief from the financial burden of income tax. They believe it will increase their disposable income and improve their overall standard of living.

However, some citizens have expressed concerns that this exemption might lead to a loss of revenue for the government, potentially impacting public services and infrastructure development.

Party Reactions

The ruling party has hailed this move as a significant step towards reducing the financial burden on the middle class. They believe it will boost economic growth and increase consumer spending.

On the other hand, opposition parties have criticized the move, arguing that it will benefit only a select few and widen the income inequality gap. They have also expressed concerns about the potential loss of revenue for the government.

Expert Analysis

Experts have pointed out that this exemption will simplify the tax structure and reduce the compliance burden on taxpayers. However, they have also cautioned that it might lead to a loss of revenue for the government, which could impact public services and infrastructure development.

Overall, the reaction to the income tax exemption has been mixed, with some welcoming it as a relief and others expressing concerns about its potential impact on the economy and public services.