India exempts tax on income up to INR1.2mn for salaried class

Mumbai: Indian Finance Minister Nirmala Sitharaman has announced Budget 2025 and its biggest highlight is that under the new tax system, people earning up to INR1.2 million will not have to pay any income tax.

According to the budget document, earlier in India there was no tax on income up to INR0.7 million, but under the new tax system, this limit has been increased to INR1.2 million. If an individual’s income is slightly more than INR1.2 million, then a specific marginal relief will be applied to it too.

Under the new tax slabs, a person earning INR1.275 million will have to pay INR95,000 in tax per year.

It is pertinent to note that in Pakistan, tax is imposed on an income of Rs0.6 million which is equivalent to INR0.18 million in India, while India’s INR1.2 million is equivalent to Pakistani Rs3.85 million. In Pakistan, salaried individuals earning Rs3.8 million annually have to pay tax at a rate of 30 percent. And the annual tax is more than Rs0.5 million.

According to an Indian media report, Karanjawala & Company partner Manmeet Kaur says that the government has kept in mind the financial needs of the middle class in this budget. Increasing the minimum tax slab from Rs0.7 million to Rs1.2 million is a big step, which will not only promote spending but also savings and investment.

Economic impact

According to the government, the reduction in taxes will make more money available to the public, which will not only stabilize the domestic economy but will also increase the trend of investment and purchasing in the market.