Finance Minister Nirmala Sitharaman announced sweeping changes to the income tax structure in the Union Budget 2025-26. The highlight of the budget is the introduction of zero income tax for individuals earning up to ₹12 lakh annually under the new tax regime. This bold step, along with adjustments to TDS and TCS thresholds, is set to provide significant relief to low- and middle-income taxpayers.
Key highlights of the budget announcement
The Finance Minister unveiled a revamped tax structure under the new tax regime, designed to benefit millions of taxpayers. Key changes include:
This restructuring aims to leave more money in the hands of taxpayers, encouraging higher consumption, savings, and investment.
Historic relief for the middle class
The announcement has been hailed as a "historic relief" for the middle class, with the Telugu Desam Party (TDP) calling it a transformative step. By increasing the tax-free income threshold, the government aims to address the financial pressures faced by middle-income families, particularly in urban areas.
Boost for consumption and economic growth
The tax reforms are expected to have a ripple effect on the economy. With more disposable income, households are likely to increase spending on goods and services, benefiting sectors like FMCG, automobiles, and retail.
TDS and TCS thresholds revised
In addition to the income tax changes, the budget also introduced tweaks to Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) thresholds:
These changes aim to simplify the tax process and reduce the compliance burden on taxpayers.
Sector-specific reactions
The budget has garnered positive responses from various sectors:
A step toward Viksit Bharat
The budget aligns with the government’s vision of a Viksit Bharat (Developed India) by 2047. By empowering the middle class, simplifying tax processes, and boosting key sectors, the budget aims to lay the foundation for sustainable economic growth.
Conclusion
The Union Budget 2025-26 marks a significant milestone in India’s fiscal policy, with its focus on reducing the tax burden on the middle class and stimulating economic activity. By increasing disposable income and simplifying tax structures, the government has taken a decisive step toward fostering financial inclusion and growth. As taxpayers across the country welcome these changes, the budget sets the stage for a brighter, more prosperous future. Now would be the perfect time to invest—buy shares online and take advantage of new opportunities!