Budget 2025: Rs25,000 Salary Hike, Rs 75,000 Extra Tax

In the Budget 2025 announcement, Finance Minister Nirmala Sitharaman introduced a major relief for taxpayers by declaring that individuals with an annual income of up to Rs 12 lakh will not have to pay any income tax under the new tax regime. This change is aimed at easing the tax burden for the middle class, with individuals earning Rs 1 lakh per month being completely tax-free, excluding special income like capital gains.

Additionally, the Finance Minister highlighted a standard deduction of Rs 75,000 for salaried taxpayers, increasing the tax-free income limit to Rs 12.75 lakh. This standard deduction provides further relief, helping those with salaried income to keep more of their earnings.

However, there’s a small catch. If your income surpasses Rs 12.75 lakh, even by a small amount (for example, Rs 25,000), and crosses the Rs 13 lakh mark, you will be required to pay a tax of Rs 75,000. This means while most taxpayers will benefit from the new limit, those with slightly higher incomes will see a shift in their tax liability once they exceed the threshold.