Bhubaneswar, Jan 31 (FN Bureau) As the Indian Union Budget 2025 approaches, taxpayers across the country have their eyes set on possible income tax reforms. Every year, the budget brings changes that impact salaried individuals, business owners, and investors. With rising inflation and economic challenges, taxpayers are hoping for relief and incentives. Here’s a look at what common citizens expect from the upcoming budget regarding income tax:
Increase in Basic Exemption Limit: Currently, the basic exemption limit under the old tax regime is Rs.2.5 lakh for individuals below 60 years and Rs. 3 for new tax regime, Rs.3 lakh for senior citizens, and Rs.5 lakh for super senior citizens. Many taxpayers expect the government to increase this limit to at least Rs.5 lakh for all individuals, reducing the tax burden on lower and middle-income groups. Following are some suggestion from CA Manish Kumar Sinha who has discuss with various tax payers.
Revision of Income Tax Slabs: Only three caste as per Income tax i.e PMR (Poor, Middle and Rich class). Poor who has income below tax limit. Middle class who has income upto Rs. 20 lakhs and Rich person who has income above Rs. 20 laksh. The new tax regime introduced in 2020 has lower tax rates but without deductions. Many expect an overhaul of tax slabs, making them more beneficial for taxpayers. Possible changes include: Raising the zero-tax limit under the new tax regime. Reducing tax rates for middle-income earners. Introducing higher rebates for the salaried class.
Higher Standard Deduction for Salaried Employees: The standard deduction is currently Rs.50,000 for old and Rs. 75,000 for new tax regime, but with increasing living costs, taxpayers expect an increase to at least Rs.1.25 lakh. This will help salaried individuals and pensioners retain more of their income.
Higher Section 80C Limit: Section 80C provides deductions on various investments like PPF, ELSS, life insurance premiums, and EPF, with a cap of Rs.1.5 lakh. Many taxpayers hope for an increase to Rs.2.5 lakh, which would encourage savings and investments as this limit last amended in 2014.
Relief on Home Loan Interest (Section 24(b)): Currently, home loan borrowers can claim a deduction of up to Rs.2 lakh on home loan interest under Section 24(b). Given rising real estate prices, taxpayers expect this limit to be raised to Rs.3-4 lakh, making homeownership more affordable. Last amendment in this section was in 2018-19.
Reduction in Capital Gains Tax Rates and re introduce indexation: Investors hope for a relaxation in capital gains tax rules, especially for long-term capital gains on equities, real estate, and mutual funds. A simplified structure with lower tax rates would encourage investment in financial markets. Short term capital gain should be tax less than 15 or less. Index benefit must be introduced for long term capital gain.
Tax Relief for Senior Citizens: As seniors citizen has max income from interest income so he must be maximum tax benefit for interest income form fixed deposit and saving accounts. Senior citizens expect an increase in exemption limits, higher interest income deductions, and more tax-free pension benefits. Many also hope for additional benefits for medical expenses. Simplification of Tax Filing Process: A simpler and more transparent tax filing system with fewer complexities would be beneficial for all taxpayers. Many expect more automation and clarity in tax laws to make compliance easier. The Union Budget 2025 presents an opportunity for the government to provide relief and incentivize taxpayers. Whether it’s raising exemption limits, revising tax slabs, or offering higher deductions, these changes would help ease the financial burden on the common man. As Finance Minister Nirmala Sitharaman prepares to unveil the budget, taxpayers remain hopeful for positive reforms that align with their expectations. Stay tuned to see how the budget unfolds and what it means for your taxes!