Finance Act 2025: Major Tax Relief for Salaried and Middle-Class Indians

The Government of India had made important changes in the income tax structure for salaried individuals. While answering a question asked in Lok Sabha regarding the reduction of tax rates for salaried individuals, the Minister of Finance gave a detailed answer.

The questions raised by Shri Dushyant Singh, Former Member of the Lok Sabha, were as follows:

“(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; and
(b) the measures being taken by the Government to monitor the long-term impact of these tax changes on domestic consumption and economic growth?”

Under the Finance Act, 2025, the income threshold for claiming a tax rebate under 87A of the Income Tax Act has been raised from Rs 7 lakhs to Rs 12 lakhs. The rebate amount has been increased from Rs 25,000 to Rs 60,000. The marginal relief is also allowed for the income marginally higher than Rs 12,00,000.

As per the Minister of State in the Ministry of Finance, Shri Pankaj Chaudhary, the new tax regime has new slabs and lower tax rates, giving relief to all taxpayers. The new tax regime offers great relief to the middle class. This will increase their savings and their consumption.

These efforts aimed to make the tax system fair and equal for all taxpayers so that the salaried and the middle class segment in our country do not face any unnecessary income tax burden.

Here is how much tax you now have to pay under the new tax regime:

The Shri Pankaj Chaudhary clarified that there is no specific system in place to monitor the long-term impact on Domestic spending and Economic growth.