“PM Modi was clear…”: FM Sitharaman on ₹12 lakh income Tax Relief Plan

Finance Minister Nirmala Sitharaman announced a major overhaul of the income tax system in her budget speech on Saturday. Under the new plan, individuals earning up to ₹12 lakh annually will no longer pay any tax, along with an ₹80,000 benefit. Sitharaman also made changes to exemption limits, tax slabs, and rates across the board. She explained that Prime Minister Narendra Modi had been clear about wanting the reform. However, it took effort to convince the ministry and boards to accept the proposal.

“The PM was very clear that he wanted to do something,” Sitharaman said. “It was more about convincing the boards to support the proposal and ensure efficient tax collection and fairness for honest taxpayers.” The Finance Minister emphasized that the work involved was within the ministry.

The new income tax regime brings significant changes. No income tax will be charged on earnings up to ₹4 lakh. Income between ₹4 lakh and ₹8 lakh will be taxed at 5%, while those earning up to ₹12 lakh will face a 10% tax. Income between ₹16 lakh and ₹20 lakh will incur a 20% tax, rising to 25% for earnings between ₹20 lakh and ₹24 lakh. For incomes above ₹24 lakh, the tax rate will increase to 30%.

Sitharaman’s proposal aims to ease the tax burden on the middle class. By reducing taxes, the new regime is expected to encourage higher household consumption, savings, and investment. The revised system will leave more money in the hands of taxpayers.

This reform is expected to significantly impact the economy by fostering financial growth, offering relief to a large portion of the population, and potentially stimulating further investments and savings.