Budget 2025: Finance Minister Nirmala Sitharaman will present the Union Budget on February 1, 2025. As the budget date is approaching, the curiosity of taxpayers about income tax exemption is increasing. They hope that this time the Finance Minister will reduce the tax burden on them by changing the tax slab. However, their expectation may also be fulfilled
In fact, according to a report by Business Today, government sources have indicated major changes in the tax regime in the upcoming Union Budget 2025-2026, such as making annual income up to Rs 10 lakh tax-free and introducing a new 25% tax slab for income ranging from Rs 15 lakh to Rs 20 lakh. It is believed that the government may reduce income tax to increase consumption.
The government is considering two options.
The government is considering two relief options. Completely exempt annual income up to Rs 10 lakh from tax or introduce a new tax bracket of 25 percent for income between Rs 15 lakh and Rs 20 lakh. Currently, the new tax regime imposes a 30 percent tax on income above Rs 15 lakh.
A government source said, "We are considering both options. If our budget allows, we can implement both measures - making income up to Rs 10 lakh tax-free and introducing a 25 percent slab for income between Rs 15 lakh and Rs 20 lakh.'
The government is ready to bear a revenue loss of Rs 50,000 crore to Rs 1 lakh crore to provide income tax relief. Tax relief is expected to boost consumption.
Let us tell you that in the Budget 2024-25, the standard deduction limit for salaried employees in the new tax regime was increased to Rs 75,000. This means that if a person's salary is Rs 7.75 lakh per annum, then he will not have to pay any tax.
Will the government implement a 25% tax slab?
According to Akhilesh Ranjan, PwC advisor, and former CBDT member, it would be more beneficial for the government to implement a 25% tax slab for people with income between Rs 15 lakh and Rs 20 lakh. This move can promote consumption by putting more money in the hands of these taxpayers, who are likely to spend on things like refrigerators and televisions.
Changes expected in income tax provisions under the new tax regime
Most experts anticipate that Budget 2025 will bring changes in the income tax provisions under the new tax regime. However, Ankit Jain, partner at tax firm Ved Jain & Associates, suggests that the old tax regime should not be discarded. Instead, he says that the government can retain it as an alternative to the new tax regime.
Ankit Jain emphasizes the old tax regime, which takes into account the expenses of taxpayers, such as rent, home loans, school tuition fees, and other essential expenses. Therefore, he is in favor of maintaining the old tax regime. However, the government seems to be more inclined towards the new tax regime.
Let us tell you that the tax rates are low in the New Tax Regime, but taxpayers do not get the benefit of most deductions. Therefore, even now many taxpayers opt for the Old Tax Regime.
Disclaimer: This content has been sourced and edited from NDTV India. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content
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