Finance Bill, 2025 proposes a revised tax structure under the new regime, reducing tax rates across various income slabs. Income up to ₹4,00,000 is tax-free, while rates gradually increase from 5% to 30% for higher income brackets. A key change includes an increased rebate for resident individuals, ensuring those earning up to ₹12,00,000 have no tax liability under the new regime, with marginal relief for incomes slightly above this threshold. These changes aim to reduce the tax burden on salaried individuals, boost disposable income, and encourage savings and investment, particularly benefiting the middle class. However, no specific measures have been introduced to track the long-term effects on domestic consumption. Additionally, no further tax reforms are planned for lower-income or rural groups beyond the current slab adjustments. The revised structure is expected to provide relief across all income groups, ensuring a more equitable tax system.
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
LOK SABHA
UNSTARRED QUESTION NO. 1748
TO BE ANSWERED ON MONDAY, MARCH 10, 2025/PHALGUNA 19, 1946 (SAKA)
REDUCTION OF TAX RATES FOR SALARIED INDIVIDUALS
1748. SHRI ALOK SHARMA:
SHRI PRAVEEN PATEL AND:
SHRI ANURAG SHARMA:
Will the Minister of FINANCE be pleased to state:
(a) The manner in which the reduction in tax rates and standard deduction for salaried individuals are likely to 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 domestic consumption; and
(c) Whether there is likely to be any additional reforms aiming at lower income groups or those in rural areas who may not fully benefit from the proposed changes, especially with regard to tax rebate?
ANSWER
THE 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.
