Mumbai: A singular highlight of Budget 2025 is the finance minister’s announcement that no income tax will be levied on income up to Rs 12 lakh and the lowering of tax slabs under the new tax regime. Salaried Mumbaikars are pleased at this unexpected announcement. They say it will offset some of the burden of inflation. Financial experts say citizens may utilise the amount thus saved on household consumption, personal savings or investment as per their individual need.
A happy beneficiary who had migrated to the new tax regime is Amit Raokar, a senior private sector executive from south Mumbai.He said, “Since the past two years I have opted for the new tax regime. Saturday’s Budget announcement of zero tax up to Rs 12 lakh is definitely a relief for the middle-class taxpayer who was struggling to save and make investments. Already, the inflation in food and retail purchase has added to the common man’s burden. This rebate will give partial relief.”
A tax consultant from Veera Desai Road, Andheri, said, “The govt’s intent is to ensure that salaried persons have more money in hand and will spend more. It wants to boost domestic consumption, be it in housing, auto, FMCG or the retail sectors, thereby oiling the wheels of the economy. Certainly, additional disposable income always motivates people to spend. But given the current price rise and inflation scenario, households are also keen to save and invest for future uncertainty. Either way, both are good for the economy and public confidence.”
Lakhs of salaried persons are yet to be drawn towards the new tax regime because it does not offer the tax deductions under various heads that the old regime does. Saturday’s announcement may now draw more employees towards the scheme, said experts. Finance expert Vishwanathan Iyer said, “Definitely there is good benefit in the new regime. In fact now many people would opt for the new regime.”
S D Naik, financial planner, agreed, saying, “Most experts had predicted that the earlier Rs 7 lakh nil tax limit would be raised to, say, Rs 8 lakh or at best Rs 10 lakh. This unexpected sop of Rs 12 lakh nil tax—only for new regime users—is the govt’s way to attract the old regime users to cross over. In fact my estimate is that the old regime will then be abolished or phased out.”
Cost accountant Pankaj Kannaujiya said, “Various experts are echoing the Budget announcement that there will be no tax on income up to Rs 12 lakh under the new tax regime. Middle-class individuals currently reporting an annual income of around Rs 5 lakh may start declaring higher incomes, up to Rs 12 lakh, since no tax will be payable.”
