Union Budget 2025: Significantly affected by rising inflation, decreasing real wages, and the increasing cost of living, individual taxpayers are turning their attention to Finance Minister Nirmala Sitharaman as the Budget 2025 is set to be presented on February 1.
Among the primary expectations of taxpayers are the rationalization of income tax slab rates, an increase in the Section 80C deduction limit, an enhancement of the standard deduction limit, additional tax incentives for homebuyers and investors, and modifications to the New Tax Regime to improve its attractiveness.
Outlined below are 5 key anticipations that taxpayers hold for Budget 2025.
Also Read Budget 2025 Expectations: Taxpayers anticipate key changes in personal tax Bring all taxpayers under New Tax Regime, remove all exemptions under old regime: SBI report suggests FM Budget 2025: Annual income up to Rs 10 lakh to be tax-exempt? Higher deductions, new 25% slab on taxpayers’ wishlist Budget 2025 Expectations Highlights: Tax reforms, GST rates rationalisation – What are industry stakeholders expecting? 1. Increase in Exemption Limit
Taxpayers want the government to increase the maximum exemption limit and reduce the overall tax rate to provide immediate relief to taxpayers and stimulate broader economic growth. Allowing individuals and businesses to retain a higher portion of their income would raise disposable earnings, fueling consumer spending and demand for goods and services.
“A higher exemption limit and reduced tax rates would make the taxation system more progressive by effectively supporting low- and middle-income groups, who often experience the greatest financial strain. It is recommended that the maximum exemption limit be increased to Rs 5,00,000 for all taxpayers, with a maximum tax rate of 30% applied after Rs 20 lakh,” says CA Naveen Wadhwa, Vice-President, Taxmann.
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2. Streamlining Section 80C
Since its last review in 2014, Section 80C of the Income Tax Act requires necessary modifications to enhance its effectiveness in tax savings. This section encompasses a range of financial commitments, including principal repayments on housing loans, tax-saving fixed deposits, contributions to the employees’ provident fund, tuition fees for children, and premiums for life insurance. To optimize the advantages for taxpayers, a strategic reorganization of Section 80C is essential.
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