Wed Jan 08 08:40:00 UTC 2025: **India Poised to Announce Major Tax Breaks in Upcoming Budget**
NEW DELHI – Finance Minister Nirmala Sitharaman is expected to present India’s Union Budget 2025 on February 1st. Speculation is rife that the government will announce significant tax relief for individuals. Reports suggest that those earning up to ₹15 lakh annually could benefit from tax deductions under the revised New Tax Regime.
The proposed changes aim to increase disposable income and stimulate consumption. The government is reportedly considering adjustments to the New Tax Regime, introduced in FY2020-21, which has already attracted over 70% of taxpayers due to its simpler structure.
Currently, under the New Tax Regime, income up to ₹3 lakh is tax-free. Higher slabs attract 5%, 10%, 15%, 20%, and 30% tax on income brackets of ₹3-6 lakh, ₹6-9 lakh, ₹9-12 lakh, ₹12-15 lakh, and above ₹15 lakh respectively. A standard deduction of ₹75,000 effectively makes income up to ₹7.75 lakh tax-free.
Proposed changes may raise the basic exemption limit from ₹3 lakh to ₹4 lakh, with adjustments to other slabs. For instance, the 5% slab might cover income from ₹4 lakh to ₹7 lakh, potentially benefiting those earning up to ₹14 lakh annually.
The government’s focus is reportedly on reducing the tax burden on individuals earning ₹13-14 lakh annually, particularly in urban areas where inflation has impacted purchasing power. The goal is to provide relief to urban taxpayers, who contribute significantly to the economy. Experts believe a ₹1 lakh increase in the tax slab limit could significantly reduce the tax burden and boost spending.
Strong tax revenue collection – a 25% increase in personal income tax collection to ₹7.41 lakh crore during April-November FY2025 – strengthens the government’s position to implement these reforms. Unlike corporate tax, personal income tax collections have consistently exceeded targets, bolstering government coffers. This surplus is seen as a contributing factor to the anticipated tax relief.
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