As the much-anticipated Budget 2025 approaches, India’s salaried class is hoping for reforms from Modi 3.0 that could alleviate financial burdens and enhance disposable income. Representing a significant portion of the taxpayer base, the salaried workforce is looking for a more inclusive and supportive financial framework. Their expectations range from tax reforms and higher exemptions to savings incentives and reliefs in housing and healthcare costs. Here’s a detailed look at their key demands:
Focus on tax reforms and simplification
One of the foremost expectations from Budget 2025 is relief in personal income tax rates. There is a growing demand for rationalized tax slabs that are equitable and easy to navigate. Salaried individuals earning up to Rs 15 lakh annually are particularly hopeful for reductions under both the old and new tax regimes. Simplifying the tax structure by reducing the number of brackets and adjusting tax rates would make the system fairer and more transparent.
Moreover, salaried taxpayers anticipate a reduction in compliance burdens. Streamlining tax filing processes and introducing measures to reduce associated costs would be a welcome step. Many believe such reforms could foster confidence in the tax system, encouraging voluntary compliance and boosting revenue collection.
Amendments to the New Tax Regime
While the new tax regime offers a standard deduction of Rs 75,000 for all income groups, there is scope for improvement. The salaried class suggests introducing progressive standard deductions based on income levels to ensure fairness across salary brackets. Furthermore, allowing reasonable exemptions, such as for health insurance premiums, housing loans, and life insurance, could make the new regime more attractive and competitive with the old system.
Relief in housing and rent costs
Section 10(13A): The rising cost of living, particularly in urban areas, has put immense pressure on salaried individuals. There is a demand for higher exemptions under House Rent Allowance (HRA) in the old tax regime. Currently, the exemption is calculated as the lowest of the actual HRA received, 50% of basic salary for metro residents (40% for non-metro), or rent paid less 10% of basic salary. Increasing these limits could provide significant relief to those grappling with high rental expenses.
Section 24(b): Similarly, the deduction limit for interest on housing loans under Section 24(b), currently capped at Rs 2 lakh, is long overdue for an increase.
» Read More
