Finance Bill 2025 introduces a revised tax rate structure under the new tax regime, reducing tax burdens across income groups, particularly benefiting the middle class. The updated slabs provide tax exemptions up to ₹4 lakh, followed by a progressive tax rate from 5% to 30% for higher incomes. Additionally, the rebate for resident individuals has been increased, ensuring zero tax liability for incomes up to ₹12 lakh. These measures aim to enhance financial relief, encourage savings, and boost household consumption. However, there are no specific provisions to monitor the long-term impact on domestic consumption or additional reforms targeting lower-income and rural populations. The government maintains that the revised tax structure benefits all earning groups, without introducing targeted tax rebates for underprivileged sections.
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
RAJYA SABHA
UNSTARRED QUESTION NO. 1352
ANSWERED ON 11.03.2025
IMPACT OF REDUCTION IN TAX RATES
1352. SHRI NARHARI AMIN:
SMT. REKHA SHARMA:
SHRI BABURAM NISHAD:
Will the Minister of FINANCE be pleased to state:
a. how the reduction in tax rates and the standard deduction for salaried individuals will specifically benefit the middle class in terms of overall financial relief;
b. the measures being taken to monitor the long-term impact of these tax changes on household consumption; and
c. whether there will be any additional reforms aimed at including lower-income groups or those in rural areas who may not fully benefit from the proposed changes, particularly in terms of the tax rebates?
ANSWER
MINISTER OF STATE IN THE MINISTRY OF FINANCE
(SHRI PANKAJ CHAUDHARY)
(a) The Finance Bill, 2025 has proposed to revise tax rate structure in the new tax regime as follows: –
| Total income | Rate of tax |
| Upto Rs. 4,00,000 | Nil |
| From Rs. 4,00,001 to Rs. 8,00,000 | 5 per cent |
| From Rs. 8,00,001 to Rs. 12,00,000 | 10 per cent |
| From Rs. 12,00,001 to Rs. 16,00,000 | 15 per cent |
| From Rs. 16,00,001 to Rs. 20,00,000 | 20 p er cent |
| From Rs. 20,00,001 to Rs. 24,00,000 | 25 per cent |
| Above Rs. 24,00,000 | 30 per cent |
Slabs and rates are being changed across the board to benefit all taxpayers. The new structure will substantially reduce the taxes of the middle class and leave more money in their hands, boosting household consumption, savings and investment.
Further, Finance Bill, 2025 has also proposed to increase the rebate for the resident individual under the new regime of an amount equal to the tax payable under the above slabs on income up to Rs. 12,00,000. Marginal relief as provided earlier under the new tax regime is also applicable for income marginally higher than Rs. 12,00,000.
These measures will play a big role in the creation of fair, equitable direct taxation regime that ensures no additional burden of direct taxes on the working and middle-class population of the country.
(b) There are no specific or separate measures to monitor the long-term impact on domestic consumption of these reforms in taxation.
(c) There is no such proposal in this regard. The revised tax structure proposed in the Finance Bill 2025 positively impacts all earning sections of the population and shall benefit all taxpayers.
