In a significant move aimed at benefiting the middle class, Finance Minister Nirmala Sitharaman announced that individuals earning up to ₹12 lakh annually will not have to pay any income tax under the new tax regime. Additionally, with a standard deduction of ₹75,000, those earning up to ₹12.75 lakh will also be exempt from taxes. The revised tax slabs introduce a progressive structure, starting with zero tax for incomes up to ₹4 lakh, followed by 5% for incomes between ₹4-8 lakh, and going up to 30% for those earning over ₹24 lakh. The finance minister also revealed plans for a new Income Tax Bill, which is set to be introduced next week, ensuring a more structured and taxpayer-friendly system.

Apart from tax reforms, the government has announced an increase in the Foreign Direct Investment (FDI) limit for the insurance sector to 100%, with the condition that the entire premium collected in India must be reinvested domestically. Additionally, Sitharaman emphasized the government’s commitment to ease of doing business by ensuring quicker approvals for company mergers and introducing a modern, trust-based regulatory framework. To further simplify tax compliance, the Income Tax Department will adopt a “trust first, scrutinize later” approach, reducing bureaucratic hurdles for individuals and businesses.

The budget also focuses on international trade and domestic manufacturing, with plans to establish digital public infrastructure for financing solutions. The “Export Promotion Mission” will work on targeted sectoral growth, while the Jan Vishwas Bill 2.0 aims to decriminalize over 100 provisions to create a more business-friendly environment. Furthermore, an investment-friendly index for states is in the pipeline to promote economic competition. The Budget Session of Parliament, which started on January 31, will proceed in two phases, concluding on April 4.