'No tax on Rs 25L soon?': FM's Rs 12 lakh tax-free move sparks hope for future cuts, expert says 'time to tax...'

Finance Minister Nirmala Sitharaman’s Budget 2025 has sent shockwaves through India’s middle class—and for all the right reasons. In a move that’s being hailed as a game-changer, she announced, “Good news! No income tax payable up to Rs 12 lakh under the new regime.”

The announcement has turned out to be a financial lifeline for millions. The finance minister has announced an increase in the tax rebate under Section 87A. This means that resident individuals with a net taxable income of up to Rs 12 lakh will not have to pay any income tax.

Additionally, for salaried individuals, if they benefit from a standard deduction of Rs 75,000, they will also pay no tax if their gross taxable income is up to Rs 12.75 lakh. Currently, under the new tax regime, individuals can pay zero tax on income up to Rs 7 lakh.

Reacting to the announcement, financial consultant Alok Jain took to X, writing, “In another 5 yrs maybe there will be no income tax on 25-30L... gradually we are moving to indirect taxes and direct taxing rich folks.” His bold prediction has sparked a debate, with many speculating whether this budget signals the beginning of an era with lower direct taxes and heavier reliance on indirect levies.

The tweet hit a nerve, quickly going viral as taxpayers and financial experts weighed in. Many are wondering—could India really be heading toward a future where even higher incomes are tax-free?

This comes in response to a post from a lawyer who crunched the numbers, noting, “Out of 7.9 cr returns, 4.9 cr were already zero tax… 2.2 cr were paying less than 1.5 lakh tax… the percentage will get bigger probably, hope this revives the consumption story.”

Here’s the new tax slab breakdown:

• Rs 0–Rs 4 lakhs: NIL
• Rs 4–Rs 8 lakhs: 5%
• Rs 8–Rs 12 lakhs: 10%
• Rs 12–Rs 16 lakhs: 15%
• Rs 16–Rs 20 lakhs: 20%
• Rs 20–Rs 24 lakhs: 25%
• Above Rs 24 lakhs: 30%

Sitharaman emphasized the rationale behind the move, saying, “The middle class provides strength to the economy. In recognition of their contribution, we have periodically reduced the tax burdens.”