Big news for income tax payers. If you still do not file income tax then today’s article is for you. Finance Minister Nirmala Sitharaman has really stepped up for the middle class with the budget announcement for 2025-26 on February 1. She’s made income up to Rs 12 lakh completely tax-free, which is a big jump from the previous threshold of Rs 7 lakh.

 

The Finance Ministry clarified that this zero tax rule only applies to the New Tax Regime, which has been the default since 2023-24. To benefit from this new tax bracket, all individuals need to do is file their Income Tax Return (ITR); there’s no extra hassle involved.

 

Previously, someone earning Rs 12 lakh a year would typically pay around Rs 80,000 in taxes. Now, thanks to this new budget announcement, they’ll need to file an ITR to enjoy the tax exemption. CA (Dr.) Suresh Surana mentioned in a chat with Business Today that even if your income is below Rs 12 lakh, filing a return is still necessary.

 

Taxpayers can only claim exemptions when they haven’t crossed the basic exemption limit, which is set at Rs 2.5 lakh for regular citizens under 60, Rs 3 lakh for senior citizens aged 60 to 79, and Rs 5 lakh for very senior citizens aged 80 and above under the old tax regime. Under the new tax regime, the limit is Rs 4 lakh for everyone.

 

Additionally, there are some other situations where you still need to file a return even if your total income is below the basic exemption limit, like if you have a savings account with over Rs 1 crore in deposits, if your electricity bill exceeds Rs 1 lakh, or if you spend more than Rs 2 lakh on foreign travel.

 

The goal of these changes in the new tax system is to make annual income up to Rs 10 lakh tax-free and to introduce a new tax slab of 25% for incomes between Rs 15 lakh and Rs 20 lakh. Here’s how the new slab structure looks:

 

0 – Rs 4,00,000 – 0 percent

Rs 4,00,001 – Rs 8,00,000 – 5%

Rs 8,00,001 – Rs 12,00,000 – 10%

Rs 12,00,001 – Rs 16,00,000 – 15%

Rs 16,00,001 – Rs 20,00,000 – 20%

Rs 20,00,001 – Rs 24,00,000 – 25%

Rs 24,00,001 and above – 30%.