Wed Jan 29 14:40:00 UTC 2025: ## Budget 2025: Expectations High for New Tax Regime Boost

**New Delhi, Jan 30, 2025** – With India’s Union Budget 2025 just two days away, all eyes are on Finance Minister Nirmala Sitharaman. Taxpayers are keenly anticipating further improvements to the New Tax Regime, particularly an increase in the standard deduction.

Introduced in FY 2020-21, the New Tax Regime has gained traction due to its simpler structure and more attractive tax slabs. However, its limited deductions have led to calls for enhancements to make it more competitive.

The current standard deduction of ₹75,000 (up from ₹50,000 in Budget 2024) under the New Tax Regime is considered insufficient by many tax experts, especially given the current inflationary climate. Several experts, including Sudhakar Sethuraman of Deloitte India, Vivek Jalan of Tax Connect Advisory Services LLP, Aakash Uppal of BDO India, Sundeep Agarwal of Vialto Partners, and Surabhi Marwah of EY India, advocate for raising it to ₹100,000. Some even suggest a percentage-based standard deduction, mirroring the system used for rental income.

The government’s push for the New Tax Regime, making it the default option, heightens the pressure to make it more appealing. An increase in the standard deduction is seen as a crucial step in attracting more taxpayers. Speculation also abounds about a potential sunset clause for the old tax regime, signaling its eventual phase-out. The Budget is expected to provide clarity on these crucial aspects, offering potential relief to middle-class taxpayers.

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