Union Budget 2025: Everyone is expecting that there will be relief in income tax in Budget 2025. What is the government’s decision in this direction, it will be known only after the presentation of the budget on January 1. However, speculations are still going on, under which there is also an estimate that the government may announce a plan to gradually abolish the old income tax system in the next few years while making the new tax system attractive.
A report by CNBC-TV18 said that the government is considering a plan to provide tax relief to taxpayers, which will boost consumption and economic activity. Also, consideration is being given to making the new income tax system more beneficial or attractive.
Two options are being considered
The report quoted sources as saying that the government is considering two options to provide tax relief under the new tax system. The first option is to further increase the standard deduction limit under the new tax regime for salaried taxpayers. At present, the standard deduction limit under the new tax system is Rs 75,000.
The second option is to adjust the tax slabs in the new tax regime. The government may expand the 20% tax slab under the new regime to cover annual income up to ₹12-18 lakh or even ₹20 lakh. Additionally, a tax bracket of 30% may be imposed on income above ₹18 lakh or ₹20 lakh. The current tax slabs under the new income tax system are as follows…
₹0 to ₹3,00,000: 0%
₹3,00,001 to ₹7,00,000: 5%
₹7,00,001 to ₹10,00,000: 10%
₹10,00,001 to ₹12,00,000: 15%
₹12,00,001 to ₹15,00,000: 20%
Above ₹15,00,001: 30%
Government may bring a new Income Tax Bill in the budget session, how will it be different from the existing Act
Ahead of the Budget, many tax experts and industry bodies are expecting the government to revise tax slabs and rates under the new regime to put more money in the hands of taxpayers. Recently, EY India said that it expects the government to increase the basic exemption limit from ₹3 lakh to ₹5 lakh in the new income tax regime and also reduce the tax rates. EY Chief Policy Advisor DK Srivastava says that in the upcoming budget, there is a need to focus on domestic factors like reducing personal income tax and allocating more capital expenditure to boost growth amid global economic uncertainties.