Budget 2025: If sources are to be believed, the government can make changes in the income tax exemption. But, this exemption will be available only in the new tax regime. To make the new tax system more attractive, the scope of exemption can be increased in it.
Budget 2025: Only a few days are left for Budget 2025 to come. Meanwhile, there is good news for taxpayers. According to government sources, Finance Minister Nirmala Sitharaman can make two big announcements related to the new tax regime in Budget 2025. There is a plan to give new momentum to the country’s economy by giving exemption in the new tax regime. Also, the aim is to increase the spending capacity of the people by giving more money in their hands.
If sources are to be believed, the government can make changes in the income tax exemption. But, this exemption will be available only in the new tax regime. To make the new tax system more attractive, the scope of exemption can be increased. If sources are to be believed, the first benefit can be given in standard deduction. At the same time, the second benefit can be given to those in the tax slab of Rs 15-20 lakh.
1. Will the limit of standard deduction increase?
The current limit of standard deduction in the New Tax Regime is ₹ 75,000. According to sources, the government can increase this limit to Rs 1 lakh. In the last budget also, the government had increased the limit of standard deduction from Rs 50000 to Rs 75000. If this change happens, then taxpayers will get a chance to make an amount of up to ₹ 1 lakh from their income tax free, which will reduce their taxable income. Both employees and pensioners will get direct benefit from this. This is expected to save more money in the hands of taxpayers.
2. Will the scope of 20% tax slab increase?
The second big good news is that the government can increase the scope of the 20% tax slab in the new tax regime. According to sources, till now 20% tax was levied on those with income of Rs 12-15 lakh. But, now it can be increased to an income of Rs 20 lakh. This change will bring relief especially to those whose income is between Rs 15-20 lakh. This change will benefit the middle and high income group taxpayers the most, as they will have to pay less tax than before.
PMO can take the final decision
Even though there is a possibility of tax-related changes in Budget 2025. But, the final decision will be taken by the PMO. According to sources, a report has been submitted on this by the Finance Ministry. The report cites that to withdraw the old tax policy, it is necessary to make the new tax system more attractive. Therefore, the scope of the existing tax exemption will have to be increased. In the new tax system, income up to Rs 7 lakh is currently tax free and standard deduction exemption is available. Apart from this, there is no provision for any other kind of exemption yet.
Reducing fiscal deficit will be a challenge
The country’s general budget will be presented on February 1. Finance Minister Nirmala Sitharaman will present her 8th consecutive budget. At the same time, this will be the second full budget of the third term of the Modi government. Big economists are emphasizing that the government’s focus will be on keeping the fiscal deficit under control. The fiscal deficit target for the current financial year is 4.9%, which is targeted to be reduced to less than 4.5% by 2026.
