NEW DELHI: After giving major tax relief to middle class salaried individuals in Union Budget 2025, finance minister Nirmala Sitharaman said the significant tax relief provided by the Modi government has put more more money in people’s hands compared to the tax structure in 2014 under the previous Congress-led government. The reforms, aimed at putting more money back into taxpayers’ hands, have resulted in substantial savings across different income brackets, Sitharaman said.
“If you compare what we have done today with what was done in 2014 under the Congress government, the change in rates has also benefited people earning Rs 24 lakh.Now they have Rs 2.6 lakh more than under the old system,” Sitharaman said.
“So, it is not just those earning up to Rs 12 lakh who are benefited, because they do not have to pay any tax due to exemptions,” the minister added.
Also Read: No income tax up to Rs 12 lakh – a simple guide to what it actually means for taxpayers
Adding to this, finance secretary Tuhin Kanta Pandey said, “Earlier, it (rebate) was Rs 2.2 lakh, and in 2014, it became Rs 2.5 lakh; in 2019, it became Rs 5 lakh. Later, it was raised to Rs 7 lakh and now it being raised to Rs 12 lakh. The government feels that on the average Rs 1 lakh per month (income), you need not pay tax.”
Tax savings compared to 2014
Speaking on the changes, officials emphasised that middle-class and higher-income earners alike are benefitting from the lower tax rates and increased rebates. The government provided a comparative breakdown:
For those earning Rs 8 lakh per year:
- 2014 Tax: Rs 1 lakh
- 2025 Proposal: Rs 0 tax
- Savings: Rs 1 lakh more in hand
For those earning Rs 12 lakh per year:
- 2014 Tax: Rs 2 lakh
- 2025 Proposal: Rs 0 tax
- Savings: Rs 2 lakh more in hand
For those earning Rs 24 lakh per year:
- 2014 Tax: Rs 5.6 lakh
- 2025 Proposal: Rs 3 lakh
- Savings: Rs 2.6 lakh more in hand
The government stressed that the benefits extend beyond just those earning up to Rs 12 lakh, where tax rebates have been introduced.
Even those earning Rs 24 lakh per year will see a reduction in their tax liability, ensuring a more progressive and taxpayer-friendly system.
Further relief under new regime
Additionally, the Finance Ministry provided a comparison with the prevailing 2024 tax rates and the newly proposed structure:
- For Rs 8 lakh income: Tax savings of Rs 30,000
- For Rs 12 lakh income: Tax savings of Rs 80,000
- For Rs 24 lakh income: Tax savings of Rs 1.10 lakh
Finance Secretary emphasised that these tax cuts represent a “substantial amount being put back into the hands of people who deserve it.” He also noted that not only have rebates been introduced, but the overall tax rates have been lowered, benefiting a broader segment of taxpayers.
With these changes, the government has reinforced its commitment to reducing the tax burden, boosting disposable income, and supporting economic growth, ensuring that taxpayers retain a greater share of their earnings.
