With Budget 2025 fast approaching, taxpayers are eagerly awaiting announcements that could address rising inflation, improve financial relief and promote economic stability. Finance Minister Nirmala Sitharaman is expected to focus on several key areas concerning income tax.
Revised Income Tax Slabs: Relief for Salaried Individuals
One of the top expectations is an adjustment to the income tax slabs under the new tax regime. Speculations suggest that the 30% tax rate could be shifted to income levels above ₹20 lakh, offering significant relief to middle and upper-middle-class taxpayers.
Tailored Tax Benefits for Senior Citizens
Senior citizens may see reforms specifically aimed at easing their financial burden. The government could raise the basic exemption limit for individuals aged 60 and above, potentially exceeding the current ₹3 lakh. This step would align with the support previously offered under the old tax regime.
Increased Standard Deduction for Salaried Taxpayers
Another expectation is the enhancement of the standard deduction for salaried individuals. Reports hint at an increase from the existing ₹50,000 to ₹1 lakh, providing substantial relief and improving take-home income for millions of employees.
Higher Section 80C Limit for Tax-Saving Investments
Taxpayers are hoping for a rise in the Section 80C deduction limit, currently capped at ₹1.5 lakh. Increasing this limit to ₹2 lakh or more would encourage higher investments in Public Provident Fund (PPF), Equity-Linked Savings Schemes (ELSS), and other approved instruments.
Expanded Exemptions Under Section 80D for Health Insurance
With healthcare costs on the rise, the government may consider increasing the exemption limits under Section 80D, which currently provides relief for health insurance premiums. Enhancing this limit could reduce the financial strain on families while promoting better health coverage.
Tax Incentives for Startups and Entrepreneurs
To boost entrepreneurship and innovation, the Budget 2025 may introduce enhanced tax benefits for startups. Proposals could include extended exemptions on profits, simplified compliance requirements, and increased funding incentives for new ventures.
Simplified Tax Filing Process
Taxpayers also expect measures to make the filing process simpler and more transparent. Streamlining procedures and providing clearer compliance guidelines would ensure a hassle-free experience for individuals and businesses alike.
As Nirmala Sitharaman prepares to present the Union Budget 2025-26 on February 1, these income tax expectations remain at the forefront.