Budget 2025 Expectations on Income Tax: According to a report, government sources have indicated major changes in the tax regime in the upcoming Union Budget 2025-2026. Most experts estimate that the provisions of income tax will be changed under the new tax regime in Budget 2025.
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. Give complete exemption from tax on annual income up to Rs 10 lakh or introduce a new tax bracket of 25 percent for income between Rs 15 lakh and Rs 20 lakh. Currently, in the new tax regime, income above Rs 15 lakh is taxed at 30 percent.
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 per cent slab for income between Rs 15 lakh and Rs 20 lakh.”
The government is ready to bear the revenue loss of Rs 50,000 crore to Rs 1 lakh crore to give relief in income tax. Consumption is expected to be boosted by giving tax relief.
Let us tell you that in the Budget 2024-25, the limit of standard deduction 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 25% tax slab?
According to Akhilesh Ranjan, PwC advisor and former member of CBDT, it would be more beneficial for the government to implement 25% tax slab for people with income between Rs 15 lakh and Rs 20 lakh. This move can boost 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 expect that Budget 2025 will bring changes in 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 the government can retain it as an alternative to the new tax regime.
Ankit Jain emphasizes on the old tax regime, which takes into account the expenses of taxpayers, such as rent, home loan, 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 definitely 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
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