Budget 2025: A welcome tax cut for middle-class professionals

The sweeping reform represents the biggest overhaul of personal income tax slabs in recent years, increasing the zero-tax threshold from the current ₹7 lakh.

Sonal Khanna’s eyes lit up as she calculates her tax savings for the coming year. The 32-year-old marketing professional earning ₹15 lakh annually will save over ₹70,000 in taxes, thanks to the most significant middle-class tax relief announced in years on Saturday.

For India’s vast middle class, long praised as the backbone of the economy, the tax relief arrives as validation of their patience and persistent contribution to nation-building. (Raj K Raj/HT Photo)

“For years, we’ve watched other segments get attention. Finally, it’s our turn,” said Khanna, echoing the sentiment of millions of salaried professionals across India who received a major boost when Union finance minister Nirmala Sitharaman, while presenting the budget, announced zero tax up to ₹12 lakh annual income, which extends to ₹12.75 lakh with standard deduction for salaried individuals.

The sweeping reform represents the biggest overhaul of personal income tax slabs in recent years, increasing the zero-tax threshold from the current ₹7 lakh.

Under the new regime, even those earning higher incomes will pay significantly lower taxes through restructured slabs that range from 5% to 30%.

“This change puts more money in the pockets of middle-class salaried people, helping them save more or spend on other needs,” explained MK Agarwal from the University of Lucknow’s economics department.

Agarwal notes that the middle class has been instrumental in expanding India’s tax base, with income tax return filings surging to nearly seven crore in recent years.

The relief is significant for those earning more than ₹12 lakh. For instance, people earning between ₹12-16 lakh annually will now pay only 15% tax instead of the previous 30% on income above ₹10 lakh.

For someone earning ₹15 lakh, like Khanna, this translates to substantial savings that can go toward long-delayed aspirations.

“We were expecting the relief to be capped around ₹10 lakh. The government has exceeded expectations,” said Apoorv Srivastava, a corporate professional who sees this as a response to growing middle-class demands for recognition of their economic contribution.

Beyond the immediate tax relief, the budget also simplifies compliance by raising various TDS thresholds, making tax filing easier for salaried individuals. “This isn’t just about savings,” notes Praveena Srinivasan, an IT professional.

“It’s recognition of our role in building a ‘Viksit Bharat’ by 2047.”

For India’s vast middle class, long praised as the backbone of the economy, the tax relief arrives as validation of their patience and persistent contribution to nation-building.

“We can finally plan for those investments we’ve been postponing, knowing we’ll have more money in hand each month,” said Khanna.