Budget 2025- The government is considering increasing the scope of income tax exemption and creating a new tax slab. If this happens, it will be a big relief for the middle class.
New Delhi. The middle class has high hopes from the budget to be presented by Finance Minister Nirmala Sitharaman on February 1. The middle class has not got any major relief in the last two-three budgets. The middle class is expected to get a big relief from the change in tax slabs in Budget 2025. This step can not only improve the economic condition of the people, but will also give new energy to the slowing economy. The government is considering changes in the income tax slabs, which can benefit salaried taxpayers earning up to Rs 20 lakh annually.
According to a report by Business Standard, the government is currently considering two major options. First, making annual income up to Rs 10 lakh completely tax-free. Second, bringing a new tax slab of 25% on income of Rs 15 to 20 lakh. Currently, 30% tax is levied on income above Rs 15 lakh. If the budget allows, both options can be implemented. For this, the government is ready to bear a revenue loss of Rs 50,000 crore to Rs 1 lakh crore.
The concession of the previous budget was incomplete
In 2023, the Finance Minister had increased the rebate under Section 87A to make income up to Rs 7 lakh tax-free, but for this there was a condition of giving up most of the deductions. Now under the new tax system, the tax exemption limit can be increased to make income up to Rs 10 lakh tax-free. Currently, those with income up to Rs 7.75 lakh with a standard deduction of Rs 75,000 do not have to pay tax.
The economy will get a boost
If the government increases the scope of tax exemption or introduces a new slab, it can help boost urban consumption, especially when the country’s GDP growth is slowing down. GDP growth in the second quarter of FY 2025 was 5.4%, which is the lowest in seven quarters. Tax concessions will increase the spending capacity of the people, which will increase demand in the market and strengthen the economy.
PwC consultant and former CBDT member Akhilesh Ranjan believes that a tax slab of 25% should be introduced for those with income ranging from Rs 15 lakh to Rs 20 lakh. This will leave more money with the middle class, which will increase the purchase of consumer durables (such as fridge, TV). IASCC Professor Anil K Sood says that 30% tax on income a little more than Rs 15 lakh is unfair. He suggested that the government should provide relief to the salaried class, but without changing the existing incentives.
