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Budget 2025: Raising Minimum Slab Rates to Simplifying Property Transactions, Key Expectations from Nirmala Sitharaman

Budget 2025: Key expectations include higher income tax slab rates, simplified property transactions, and extended support for start-ups under Nirmala Sitharaman's reforms.

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Budget 2025

Photograph: X (formerly Twitter)

With Budget 2025 just around the corner, there is widespread anticipation among taxpayers and businesses for significant reforms. The focus remains on easing financial burdens and simplifying tax systems to promote growth. Finance Minister Nirmala Sitharaman is set to unveil the Union Budget on February 1, 2025, and expectations are high.

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Raising Income Tax Slab Rate

A major demand this year is to increase the income tax slab rate for individuals under the new tax regime. Currently, no tax is levied on incomes up to ₹3 lakh annually. Experts, however, believe this threshold should be raised to ₹5 lakh. This adjustment could bring substantial relief to middle-income families, boosting their purchasing power and stimulating economic activity.

Additionally, taxpayers earning up to ₹7.5 lakh annually benefit from a full tax rebate under the new tax regime. Analysts suggest extending this rebate limit to ₹10 lakh. Such a move would increase disposable incomes for a broader section of society, encouraging spending and fostering economic growth.

Simplifying Property Transactions

Property transactions involving Non-Resident Indians (NRIs) often face unnecessary complications. Currently, buyers must obtain a Tax Deduction Account Number (TAN) and adhere to cumbersome TDS (Tax Deducted at Source) procedures when dealing with NRI sellers. A proposal to simplify this process includes introducing standardised TDS rates or restricting deductions to the capital gains portion only. Such changes would streamline transactions and encourage more investments in the real estate sector.

Long-Term Capital Gains (LTCG) Tax Changes

The taxation of Long-Term Capital Gains is another area ripe for reform. At present, gains exceeding ₹1 lakh on equity investments attract taxes. Raising this exemption limit to ₹2-2.5 lakh has been proposed. This measure aims to attract more investors to the equity markets, ensuring steady growth in India’s capital market participation.

Supporting India’s Startup Ecosystem

India's start-up ecosystem has been a driving force in its economic growth. The sunset clause under Section 80-IAC of the Income Tax Act currently allows eligible start-ups to enjoy a 100% tax deduction on profits for three out of the first ten years of their operation, provided they are incorporated by March 31, 2025. Experts are urging the government to extend this deadline, enabling more start-ups to benefit.

Extending this support aligns with Prime Minister Narendra Modi’s vision to foster innovation and entrepreneurship. It would ensure sustained growth in the start-up sector and strengthen India’s global standing as a hub for innovation.

Expectations from Budget 2025

The recommendations for Budget 2025 emphasise financial relief for taxpayers and simplified processes for businesses. From raising the income tax slab rate to easing property transactions and supporting start-ups, these measures aim to create a more inclusive and efficient economic framework.

Finance Minister Nirmala Sitharaman’s announcements on February 1 will be closely watched as the nation hopes for reforms that drive growth while addressing the financial concerns of individuals and businesses alike. The outcome of these expectations could shape the economic trajectory of India in the years to come.

Income tax Budget 2025
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