RAS question
The new income tax regime in Budget 2025-26 made income up to how much tax-free?
Correct answer: (B) ₹12 lakh.
Budget 2025-26 made annual income up to Rs. 12 lakh effectively tax-free under the new income tax regime.
Explanation
Budget 2025-26 did not merely change a headline slab; it combined revised slabs with rebate relief so that no income tax is payable up to annual income of Rs. 12 lakh under the new regime. The cited PIB release from the Ministry of Finance records the Finance Minister's statement that the limit is Rs. 12 lakh, excluding special-rate income such as capital gains. For salaried taxpayers, the effective threshold rises to Rs. 12.75 lakh because of the Rs. 75,000 standard deduction. This is why option B is the precise answer: the policy point tested is the general new-regime tax-free income level, with the salaried figure as a qualification rather than the main MCQ answer.
Why the other options are wrong
- (A) Rs. 15 lakh is too high; the PIB release fixes the no-tax threshold at Rs. 12 lakh under the new regime, with only salaried taxpayers reaching Rs. 12.75 lakh after standard deduction.
- (C) Rs. 7 lakh reflects the earlier limit mentioned in the question's framing, not the revised Budget 2025-26 figure of Rs. 12 lakh.
- (D) Rs. 10 lakh is not the notified threshold; the Budget 2025-26 relief made income up to Rs. 12 lakh tax-free under the new regime.
Concept
This tests Budget taxation under Indian Economy, especially how slab changes and rebate provisions affect personal income tax liability. RAS repeats such points because Union Budget measures are high-yield current affairs with direct economic-policy relevance.