Finance Minister Nirmala Sitharaman is scheduled to present Budget 2025 in the Lok Sabha on February 1, 2025. This budget is expected to provide relief to the middle class. The government is considering giving tax exemption on income up to Rs 10 lakh. This step can be taken to provide relief to the middle class and promote consumption.
This decision could benefit crores of taxpayers, especially those urban residents who are troubled by the high cost of living. This move will be under the 2020 tax system, in which exemptions like housing rental are not given.
Income Tax Slabs 2025-26: Information about new tax slabs
Changes in income tax slabs are expected in Budget 2025. Here is a possible outline of the new tax slabs:
Income Limit (in Rs) | tax rate |
0 – 5 lakhs | no tax |
5 lakh – 10 lakh | 10% |
10 lakh – 20 lakh | 20% |
above 20 lakhs | 30% |
Budget 2025 Expectations: What could happen for the middle class?
- Increase in basic tax exemption limit: It can be increased from Rs 3 lakh to Rs 5 lakh in the new tax regime.
- Increase in standard deduction: Standard deduction for salaried employees may be increased from Rs 50,000 to Rs 1 lakh.
- Increase in Section 80C limit: The existing limit of Rs 1.5 lakh can be increased to Rs 2 lakh or Rs 2.5 lakh.
- Higher discount on health insurance premium: The limit of health insurance premium can be increased under Section 80D.
New tax regime vs old tax regime: What is the difference?
The new tax regime has lower rates but no exemptions and deductions. There are more exemptions in the old regime but the tax rates are also higher. Here is a comparison of both the regimens:
- New tax regime: No tax up to Rs 5 lakh, 10% on Rs 5-10 lakh, 15% on Rs 10-15 lakh, 30% above Rs 15 lakh.
- Old tax regime: No tax up to Rs 2.5 lakh, 5% on Rs 2.5-5 lakh, 20% on Rs 5-10 lakh, 30% above Rs 10 lakh.
Budget 2025: What can happen for senior citizens?
- Increase in tax exemption limit: For people aged 60-80 years, it can be increased from Rs 3 lakh to Rs 4 lakh.
- Higher discount on health insurance premium: The limit under Section 80D can be increased from Rs 50,000 to Rs 1 lakh.
- Higher interest on fixed deposits: Higher interest rates on bank FD may be announced for senior citizens.
Income Tax Return Filing: What changes can happen?
- Simplification of ITR form: ITR form can be further simplified to provide ease to the taxpayers.
- Pre-filled ITR: Most of the information can be pre-filled.
- Fast Refund: The process of tax refund can be made faster.
What changes can happen in GST?
- Simplification of slabs: The existing 4 slabs (5%, 12%, 18%, 28%) can be reduced to 3 slabs.
- Changes in composition scheme: The limit of composition scheme can be increased for small traders.
- Simplification of return filing: GSTR form can be further simplified.
Budget 2025: What can happen for the real estate sector?
- Higher exemption on home loan: Under section 24(b), the exemption limit on home loan interest can be increased from Rs 2 lakh to Rs 3 lakh.
- Promotion of Affordable Housing: More tax exemption can be given on cheap houses.
- Incentives to REITs and InvITs: Further incentives may be given to Real Estate Investment Trusts and Infrastructure Investment Trusts.
What can happen for startups and MSMEs?
- Tax Holiday: Tax holiday period can be extended for new startups.
- Relief in Angel Tax: Further relief in angel tax can be given on investments in startups.
- Credit Guarantee for MSME: The credit guarantee scheme for MSME can be further strengthened.
What are the expectations for the agriculture sector?
- Kisan Credit Card limit increase: KCC limit can be increased.
- Increase in agricultural infrastructure funds: More funds can be allocated for agricultural infrastructure.
- Improvements in Crop Insurance Scheme: Further improvements can be made in the Prime Minister Crop Insurance Scheme.
Disclaimer:
This article is for informational purposes only. It is still uncertain what announcements will be made in Budget 2025. Till the official announcement from the government, all these things should be considered as rumors or speculations. Taxpayers are advised to wait for the official announcement of the budget and seek tax expert advice before taking any decision.