The Union Budget 2025 has given a great relief to the middle-class tax payers by announcing reduction in tax slab rate and hike in tax rebate. This hike ensures that those earning up to Rs 12 lakh will have zero tax liability for the Financial Year 2025-26 (AY 2026-27).
Is this new proposal going to have significant impact on the tax paying individuals? What per centage of tax-payers are going to benefit with this hike in tax rebate?
Let us go through the important and relevant data provided by the Income Tax Department in this regard!
9 out of 10 individual tax payers may now have NIL income tax liability
Every year, the IT department publishes the statistical data on the Income Tax Returns filed for the respective Assessment Years. The IT returns data for the Assessment Year 2023-24 was published in June 2024 and is available at income tax department official website. (The Income Tax Return statistics for AY 2024-25 will be available after March 2025.)
As per this data, around 7.5 crore individual tax assessees have filed their income tax returns for the Assessment Year 2023-24. The below table has the details about the income range, number of returns that were filed, average gross income for the given income range and the cumulative per centage of the ITRs that were filed.
| Income Range (in INR) | No of ITRs | Average Gross Total Income (in Lakh INR) |
Cumulative % |
|---|---|---|---|
| < 0 | – | – | – |
| = 0 | 214,914 | – | 0.2848 |
| 0 and <=1,50,000 | 31,94,597 | 0.71 | 4.5182 |
| 150,000 and <= 2,00,000 | 13,69,529 | 1.76 | 6.3331 |
| 2,00,000 and <=2,50,000 | 26,57,722 | 2.32 | 9.8551 |
| 2,50,000 and <= 3,50,000 | 56,44,045 | 3.03 | 17.3345 |
| 3,50,000 and <= 4,00,000 | 39,53,743 | 3.75 | 22.5739 |
| 4,00,000 and <= 4,50,000 | 59,32,002 | 4.26 | 30.4349 |
| 4,50,000 and <= 5,00,000 | 1,25,11,491 | 4.81 | 47.0149 |
| 5,00,000 and <= 5,50,000 | 60,86,356 | 5.22 | 55.0804 |
| 5,50,000 and <= 9,50,000 | 2,04,02,971 | 6.99 | 82.1181 |
| 9,50,000 and <= 10,00,000 | 10,60,450 | 9.75 | 83.5234 |
| 10,00,000 and <= 15,00,000 | 62,28,002 | 12.05 | 91.7766 |
| 15,00,000 and <= 20,00,000 | 24,27,058 | 17.16 | 94.9929 |
| 20,00,000 and <= 25,00,000 | 11,92,990 | 22.25 | 96.5739 |
| 25,00,000 and <= 50,00,000 | 18,43,287 | 33.87 | 99.0165 |
| 50,00,000 and <= 1,00,00,000 | 5,14,814 | 67.51 | 99.6988 |
| 1,00,00,000 and <=5,00,00,000 | 2,10,693 | 177.68 | 99.9780 |
| 5,00,00,000 and <=10,00,00,000 | 10,386 | 679.58 | 99.9917 |
| 10,00,00,000 and <=25,00,00,000 | 4,438 | 1,486.75 | 99.9976 |
| 25,00,00,000 and <=50,00,00,000 | 1,077 | 3,425.89 | 99.9990 |
| 50,00,00,000 and <=100,00,00,000 | 436 | 6,940.28 | 99.9996 |
| 100,00,00,000 and <=500,00,00,000 | 262 | 18,344.57 | 100 |
| 500,00,00,000 | 23 | 79,650.91 | 100 |
| Total | 7,54,61,286 |
* Gross Total Income is the income before chapter VI-A deduction as computed in the “Computation of total income” schedule of return of income.
* The “Average Gross Total Income” is the average Gross Total Income within the value range slab i.e. “Sum of Gross Total Income” divided by total number of returns within the value range slab. Gross Total Income is the income before chapter VI-A deduction as computed in the “Computation of total income” schedule of return of income.
- Nearly 7.5 crore individuals filed their Income Tax Returns during the assessment year 2023-24. Out of this, nearly 6.3 crore individuals reported an income of less than Rs 10 lakh.
- Around 91% of the filed ITRs fall under the average gross total income of Rs 12,05,000.
- This effectively means that 9 out of 10 individual taxpayers may now pay zero income tax w.e.f FY 2025-26. This is a significant relief to the Indian middle-class tax payers!
- Even though the new tax relief proposal is on normal income only and incomes like capital gains are taxable at different rates. Still this is a great relief to the assessees, considering the less number of ITRs with capital gains, as one of the sources of incomes.
- The central government sees a revenue loss of around Rs 1 lakh crore after the implementation of the revised income tax slab rates.
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(Post first published on 03-Feb-2025) (Reference : incometaxindia.gov.in)
