New Delhi, February 1 . The Prime Minister Narendra Modi 3.0 government has made a big jump in the income tax exemption limit while continuing the system of giving income tax relief to the salaried class people started by the NDA government in 2014. This looks completely different from the practice of giving small relief to taxpayers by the UPA.
In fact, Union Finance and Corporate Affairs Minister Nirmala Sitharaman presented the Union Budget 2025-26 on Saturday and gave relief to income tax payers by announcing that no income tax will have to be paid on total income up to Rs 12 lakh. According to the relief given to those who pay their income tax under the new tax system, now people with an average income of Rs 1 lakh per month will not have to pay any tax. At the same time, the salaried class will get an additional benefit of Rs 75 thousand in the tax limit exemption, meaning that they will no longer have to pay tax up to Rs 12.75 lakh, that is, under the new tax system, the income tax exemption limit has been increased from Rs 7 lakh per year to Rs 12 lakh per year.
Under the UPA government, the income tax exemption limit was Rs 1 lakh in 2005 and it took seven years for the Manmohan Singh government to double this exemption limit to Rs 2 lakh in 2012.
Keeping in mind the long-standing demand of salaried, middle class taxpayers, PM Modi’s government increased the income tax exemption limit by 25 percent to Rs 2.5 lakh in 2014.
Modi 2.0 began in 2019 with another mega bonus for middle class taxpayers, raising the income tax exemption limit from Rs 2.5 lakh to Rs 5 lakh.
At the same time, as part of the Modi government’s effort, a less complex new tax system was introduced in the financial year 2020-21 to offer lower tax rates to taxpayers without any general deductions and exemptions.
Subsequently, under this system, in 2023, Finance Minister Nirmala Sitharaman increased the exemption limit by Rs 2 lakh, effectively making the income tax exemption limit under the new system Rs 7 lakh.
Now let us understand this in such a way that for the first time after the Narendra Modi government came to power, Finance Minister Arun Jaitley, while presenting the budget, increased the personal income tax exemption limit from Rs 2 lakh to Rs 2.5 lakh. This meant that people who earned an annual income of up to 2.5 lakh would not have to pay tax. At the same time, in the same budget, this limit for senior citizens was increased from Rs 2.5 lakh to Rs 3 lakh. Apart from this, the limit of Section 80C for getting tax exemption was increased from Rs 1 lakh to Rs 1.5 lakh.
After this, the 2020 budget of the Modi government was historic, as in this the government brought a new income tax slab, in this slab taxpayers were given the option to stay in the old slab with exemptions and deductions or without exemptions with lower tax rates in the new slab.
In 2023, the government made another important change, in which the limit of tax rebate was increased for taxpayers with income up to Rs 7 lakh under the new income tax slab. This gave relief to those taxpayers whose income was up to Rs 7 lakh. Along with this, a new tax slab was implemented, in which a standard deduction of Rs 50,000 was also implemented.
For the financial year 2024-25, the Modi government made many important changes in the income tax system, under the new tax system, the income tax slab was reformed, in which no tax was levied on annual income up to Rs 7 lakh, whereas earlier this limit was Rs 5 lakh. Apart from this, provision was made for 15 percent tax on income up to Rs 10 lakh, 20 percent on income up to Rs 12 lakh and 30 percent tax on income up to Rs 15 lakh.
After this, Nirmala Sitharaman presented the budget for the financial year 2025-26, in which it was announced to increase the income tax exemption limit from Rs 7 lakh per year to Rs 12 lakh per year under the new tax system.
