The Union Budget 2025 is highly anticipated, with taxpayers, businesses, and financial analysts closely monitoring the potential changes in income tax regulations. Every year, the government makes crucial decisions regarding taxation, aiming to boost economic growth while ensuring financial relief for citizens. As the Budget 2025 Expectations unfold, individuals are hopeful for tax reforms that promote savings, increase disposable income, and simplify compliance.
Income Tax Reforms in Union Budget 2025: Key Expectations
1. Changes in Income Tax Slabs
One of the most awaited announcements in the Union Budget Live updates is a revision of income tax slabs. Taxpayers expect the government to raise the basic exemption limit from ₹2.5 lakh to ₹5 lakh under the old tax regime. This change would provide much-needed relief to the middle class, reducing their overall tax burden.
Similarly, the new tax regime, introduced to simplify taxation, might see further revisions in tax slabs or increased deductions to make it more attractive for individuals.
2. Higher Standard Deduction for Salaried Employees
Currently, salaried individuals and pensioners enjoy a standard deduction of ₹50,000. However, considering inflation and rising costs, taxpayers are hoping for an increase in this deduction to at least ₹75,000 or even ₹1 lakh. An increase would help employees manage expenses better and reduce their taxable income significantly.
3. Increased Deduction Limit Under Section 80C
Section 80C of the Income Tax Act allows deductions of up to ₹1.5 lakh for investments in schemes like PPF, EPF, life insurance premiums, and ELSS. There is growing demand to increase this limit to ₹2 lakh or more, encouraging greater savings and investment in long-term financial instruments.
4. Relief on Home Loan Interest Under Section 24(b)
Homebuyers are eagerly waiting for an increase in the deduction on home loan interest payments under Section 24(b). Currently, the limit stands at ₹2 lakh per annum for self-occupied properties. Expanding this to ₹3 lakh or ₹5 lakh could provide significant relief to homeowners and boost the real estate sector.
Additionally, first-time homebuyers are looking forward to enhanced benefits under Section 80EE and 80EEA, which provide extra deductions for home loan interest.
5. Higher Exemption for Health Insurance Premiums
With rising medical costs, an increase in the deduction limit for health insurance premiums under Section 80D is highly expected. The current limit is ₹25,000 for individuals and ₹50,000 for senior citizens. Raising these limits would help families manage healthcare expenses more efficiently.
6. Boost for Startups and MSMEs
Entrepreneurs and small business owners are eagerly following the Union Budget Live coverage for potential tax incentives. Expectations include:
- Reduction in corporate tax rates for startups and MSMEs
- Increased tax holiday period for new startups
- Simplified tax filing processes for small businesses
7. GST Rate Rationalization
Although GST does not directly impact income tax, any changes in GST rates can affect overall business profitability and consumer prices. Many industries are expecting a reduction in GST rates on essential goods and services, making products more affordable for the common man.
Government’s Possible Approach in Budget 2025
The government may focus on a balanced approach by offering tax relief while maintaining fiscal discipline. Given the emphasis on economic recovery post-pandemic and global uncertainties, tax cuts might be moderate. However, incentives for digital transactions, affordable housing, and green energy initiatives are likely to be included.
Conclusion
As Budget 2025 Expectations unfold, taxpayers are optimistic about positive income tax reforms. The Union Budget Live updates will reveal whether the government meets these expectations or introduces new fiscal policies. Regardless of the announcements, financial planning and tax-saving strategies will remain crucial for individuals and businesses.
Stay tuned to the latest updates and analyses as the Income Tax Budget 2025 unfolds.