Narendra Modi has stressed once again the Centre’s income-tax relief to the middle class and the government’s decision to make normal annual income of up to ₹12 lakh tax-free under the new income-tax regime.
PM Modi says “I have to keep reminding you all of this again and again that tax has been exempted on income up to ₹12 lakh for the middle class".
The statement is timely, as it brings the government’s new tax initiative on February 1, 2025, which is the central part of the Union Budget 2025-26 in the light of Finance Minister Nirmala Sitharaman’s announcement to reduce the tax burden on eligible individual taxpayers and to allow households more disposable income.
Budget 2025 saw the release of ₹12 lakh tax relief. In the new tax regime, the government raised the income threshold at which people living in India can receive a rebate to zero in income tax.
The tax relief is to be enjoyed by people who have made regular income up to ₹12 lakh and not by people who receive tax at special rates on capital gains.
Salaried taxpayers can also get a bonus. Salaried individuals with a gross salary of between ₹12.75 lakh and ₹25 lakh can claim the standard deduction of ₹75,000 under the new law. There is no income tax payable to a salaried taxpayer who has a gross salary of ₹12.75 lakh if the conditions are met and the income is not to be subtracted from the rebate for the reason that the ₹12 lakh tax-free income is for total income for the rebate while that is for salaried people and the standard deduction is paid.
Taxpayers need to calculate their taxable income accurately, not to read the announcement as an unconditional exemption for every kind of income.
The new tax structure also changed the income slabs. Income up to ₹4 lakh is taxed at zero per cent, while income up to ₹8 lakh is taxed at 5 per cent and income up to ₹12 lakh at 10 per cent.
Higher tax rates are applicable to income above ₹12 lakh and for the next slabs. For those with a total income of above ₹12 lakh who can apply for the rebate, this can be a good alternative to the tax that is calculated under these slabs and therefore the final income tax paid is zero.
People who have income above ₹12 lakh can still get help with the new slabs but they should not assume that their tax exemption is for their whole income. There may be slight relief in some cases just above the threshold. <Cite refs={["turn631255search0","turn631255search3"]}/>
The policy was presented as a way to help household finances at a time when middle-income families are faced with housing, education, healthcare, transport and other essential items. With lower income tax payments, eligible taxpayers might have more money to save, invest in debt or buy.
The government has also contended that higher disposable income could spur consumption across the economy. But the true benefit for each household will depend on income composition, deductions, tax regime and personal financial circumstances. The new regime provides revised rates and rebates but also limits the numerous exemptions and deductions available under the old regime, so it remains vital to do an individual comparison before filing a tax return.
On the one hand, Modi has made the point again and again that tax changes are for the common man and the middle class. And it has been a big topic and this has been one of the main reasons why it has been a big deal for salaried workers and other eligible people since the announcement.
The taxpayers need to know that the relief is conditional on the tax rules and does not come in a bill that is automatically tax free on special-rate income and will be in line with the old policy. They need to file income tax returns to claim the rebate, too.
What is the best way to determine eligibility and calculate final liability for a benefit that does not come with tax exemptions and also make sure that the income tax exemptions are paid and is calculated according to the income tax returns are full of exemptions and tax requirements are provided by income tax and tax code.
Modi Ji: "Middle class ki income mein 12 lakh tak tax maaf hua hai, ye aapko baar baar yaad dilana padta hai." 🤣 And yet, people still ask what Modi Ji has done for the middle class. 😂 https://t.co/etZazD76dO
— Amit Kumar Sindhi (@AMIT_GUJJU) October 22, 2026
With discussions of the government’s tax policy still going on around the ₹12 lakh threshold, the new tax regime that the government has introduced in Budget 2025-26 is a primary component of it. Modi’s statement is to underline the size of the relief and the significance of the tax relief to the middle class as well.
For taxpayers, the key takeaway is knowing everything about the rebate threshold, standard deduction for salaried people and how to deal with income taxed at special rates can be seen to be different. If they are properly implemented, the eligible taxpayers can be told if they are entitled to zero income tax liability.
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