Amid rising public curiosity and confusion, the government has finally addressed speculations around the recently proposed Income Tax Bill 2025—particularly the claim that income up to ₹12 lakh would be tax-free under the new regime. The Ministry of Finance issued a clarification that while changes are being considered, no final decision has been made to make ₹12 lakh income entirely tax-free.
A few media reports that suggested the new tax structure would provide full exemption on income up to ₹12 lakh sparked a social media frenzy. Small business owners, salaried professionals, and the middle class were all excited about this because they saw it as a significant step towards relief from inflationary pressures. A lot of people thought it was a component of the new income tax bill that was being developed for FY 2025–2026.
However, the Finance Ministry on Monday clarified that these reports are “misleading and premature” and that no such provision has been approved yet.
What the Government Said
In an official statement, a senior official from the Ministry of Finance said:
“The Income Tax Bill 2025 is still under review. A number of suggestions are being studied, including rationalization of tax slabs, but no final structure has been approved by the Cabinet. Any confirmed tax reforms will be announced in due course.”
The official also mentioned that while a more progressive and simplified tax regime is a goal, it must be financially sustainable and carefully implemented.
What Might Change?
Although the ₹12 lakh tax-free claim is inaccurate for now, the government is actively working on reforming the tax structure to:
Increase disposable income for the middle class
Simplify compliance procedures
Merge old and new regimes into a single, easier-to-navigate system
Experts believe the government may eventually revise tax slabs to ensure greater relief without drastically impacting revenue. One widely discussed proposal is raising the basic exemption limit from ₹3 lakh to ₹5 lakh under the new regime, and tweaking the rates for higher income groups accordingly.
Expert Opinions
Tax analysts say the ₹12 lakh claim, although currently incorrect, may not be entirely unrealistic in the long run. With growing digitalization of tax filings and widening of the tax base, the government may have more room to offer relief without losing revenue.
“A complete exemption up to ₹12 lakh is unlikely, but more relaxed slabs could be introduced,” says Rahul Bajaj, a tax expert from Mumbai. “For example, the 5%, 10%, and 15% brackets could be widened.”
The government is undoubtedly developing a new, taxpayer-friendly structure, but as of right now, the ₹12 lakh tax-free income rumour has been disproved. Before making rash financial decisions, the public is encouraged to wait for the Finance Ministry’s official budget announcements or statements.
This article is for informational purposes only. The current income tax structure remains unchanged until officially amended by the government. Please consult a qualified tax advisor for personalized guidance.
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