Union Budget 2025: Finance Minister Nirmala Sitharaman is set to unveil the budget for the fiscal year 2025 on February 1. There’s a great deal of anticipation among taxpayers and industry players regarding this budget. The economy is currently grappling with several challenges, which raises the likelihood of significant reforms being introduced in the upcoming budget.
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One of the key proposals that may be included is a new Income Tax Bill. Here are five expected changes related to income tax that experts are looking forward to in this budget:
1. Call for an increase in the standard deduction limit
Experts suggest that the government should raise the standard deduction limit to provide relief to the average citizen. Middle-class salaried employees are hoping for an increase in this limit to Rs 1 lakh.
If the government acts on this, it would leave individuals with more disposable income, enabling them to spend more, which in turn could stimulate economic activity across the country.
2. There is a strong hope among the middle class for Budget 2025 to raise the Basic Exemption Limit from Rs 3 lakh to Rs 5 lakh. Such an increase would provide significant relief to lower and middle-income individuals.
3. Additionally, experts are advocating for an increase in the deduction limit under section 80C from Rs 1.5 lakh to Rs 2.5 lakh. This change would allow individuals to save and invest more, ultimately helping to secure their financial future and that of their families. Encouraging investment in this way would also positively impact the nation’s economy.
Moreover, there is a call for the government to raise the exemption limit for taxable income to Rs 8.5 lakh, further alleviating the tax burden on the middle class.
Advocating for Enhanced Women’s Workforce Participation via Tax Reforms
4. Experts are urging the government to prioritize boosting women’s involvement in the workforce through tax reforms, which would create more job opportunities for women. It’s essential for the government to implement policies that motivate companies to hire women. The salary threshold for tax benefits related to new job creation under section 80JJA of the Income Tax Act has remained unchanged for quite some time.
There is a call to raise this limit from the current Rs 25,000 to Rs 35,000, along with offering an additional 50% incentive for hiring female employees. This initiative would encourage businesses to increase their female workforce.
5. Potential Tax Relief for Citizens in Budget 2025
Experts predict that the upcoming Budget 2025 may introduce modifications to tax regulations aimed at fostering investment. There is anticipation for increased tax exemptions on equity investments, encouraging individuals to invest their money for the long term. Additionally, tax regulations may be simplified and aligned with international standards to facilitate easier investing.