1 February 2025, Saturday, New Delhi: Finance Minister Nirmala Sitharaman announced a notable relaxation of tax exemption rules for self-occupied properties in the 2025 Union Budget. Taxpayers are now permitted to claim tax benefits for two self-occupied residences, a significant alteration from the prior regulation that permitted relief for only one home.
In what ways has the Budget for 2025-26 pleased the common man and the middle class?
The middle class anticipated a beneficial adjustment in the income tax brackets before to the Union Budget 2025-26, and their expectations were met. One day prior, PM Modi sought the blessings of Goddess Lakshmi for the impoverished and middle class, possibly alluding to significant alterations in income tax policy.
The exemption of income tax for persons with annual earnings up to Rs 12 lakh significantly enhances consumption. This action is anticipated to enhance the demand for affordable homes. The new income tax law will preserve around 50% of current provisions while implementing personal tax reforms and modernizing the TDS and TCS frameworks by standardizing rates and thresholds.
Furthermore, she declared that income tax brackets and rates are undergoing comprehensive revision to establish a more progressive taxation framework. Individuals with earnings up to Rs 25 lakh will obtain a tax advantage of up to Rs 1.1 lakh, thereby alleviating the financial strain on the middle-income demographic.
New Income Tax Regime AY 2025-26
| Income (Rs in Lakh) | Tax Rate (%) |
| Rs 0 - Rs 4 lakh | Nil |
| Rs 4 lakh - Rs 8 lakh | 5% |
| Rs 8 lakh – Rs 12 lakh | 10% |
| Rs 12 lakh – Rs 16 lakh | 15% |
| Rs 16 lakh – Rs 20 lakh | 20% |
| Rs 20 lakh – Rs 24 lakh | 25% |
| Above Rs 24 lakh | 30% |
According to the amended New Income Tax Regime 2025, no income tax is applicable on earnings up to Rs 12 lakh, and with the standard deduction, the tax-exempt income threshold rises to Rs 12.7 lakh.
However, there is a stipulation: the exemption can only be obtained if a taxpayer avails himself of relief under various provisions of the Income Tax Act, such as the ₹1.5 lakh exemption under Section 80CCC and the ₹1.5 lakh exemption for interest paid on house loans.
FM Sitharaman states, "Taxpayers with normal income up to Rs 12 lakh (excluding special rate income such as capital gains) will receive a tax rebate, in conjunction with the benefits from slab rate reductions, ensuring that they incur no tax liability."
A 4% cess will be imposed on the overall tax amount, along with further surcharges on incomes surpassing Rs 50 lakh.
