In the Union Budget for 2024–25, Finance Minister Nirmala Sitharaman introduced several changes to relieve taxpayers who opted for the New Tax Regime. As a result of the government introducing some new and exclusive benefits over the past few union budgets for the new regime takers, government data suggests that over 72% of income tax filers have already moved out of the Old Tax Regime. Around 8.76 crore income tax returns (ITRs) have been filed for the Assessment Year 2024-25.
This data can sometimes be misleading. While it suggests that only 28% of taxpayers remain under the Old Tax Regime, a closer look at the breakdown of overall tax filers reveals that around 5 crore individuals paid zero tax, accounting for approximately 60% of the total returns filed.
Among these zero-tax return filers, a majority may have switched to the New Tax Regime. This indicates that the majority of taxpayers who significantly contribute to government tax collections are likely still under the Old Tax Regime.
In this context, many taxpayers who continue to follow the Old Tax Regime are hopeful that the government will announce much-needed relief measures. This is particularly relevant as Finance Minister Sitharaman has refrained from introducing such relief in the budgets she has presented in recent years.
Also read: Budget 2025: Home loan tax benefits to be included in New Tax Regime? Here’s what tax experts say
The possibility of the Finance minister (FM) offering major relief to taxpayers under the Old Tax Regime in the upcoming Union Budget 2025 remains a matter of great interest, says CA (Dr.) Suresh Surana.
While there have been no official announcements, most of the taxpayers including the middle-class income group, is expecting some relief from the upcoming budget. Some of the potential income tax reliefs that may be expected in the upcoming budget under the Old Tax Regime are:
Key expectations Old Tax Regime taxpayers have from the Budget 2025-26: Potential relief in tax rates
A common expectation of the taxpayers is a reduction of tax rates under the Old Regime, especially from the taxpayers in the middle-income brackets. The government may adjust tax slabs or increase the exemption limit under the Old Regime to make it more competitive with the new regime.
For instance, an annual income of Rs 5-10 lakh is attracting 20% tax,
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