Income tax highlights of Budget 2025: Lakshmi blesses middle class taxpayer The government continues to incentivise the new tax regime, making no changes to the existing income tax slabs under the old tax regime for individual taxpayers
Finance minister Nirmala Sitharaman presented the Union Budget 2025 in Parliament today, emphasising the three key support pillars in India’s journey towards Viksit Bharat—Democracy, Demography, and Demand. The government acknowledged the contribution of the middle class towards India’s economic growth and nation building and committed to fostering the confidence of the low- and middle-income taxpayers through this historic Budget, which has brought in more relief to the salaried class than any other budget we have seen in the last few years.#sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;}
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With a promise to further simplify the current tax law by introducing a new Income-tax Bill next week, the taxpayer-friendly Budget included key changes in personal taxation designed to simplify compliance, modernise tax administration, and stimulate economic growth.
Also read | Income Tax Slabs Budget 2025 Live Updates
The government continues to incentivise the new tax regime, making no changes to the existing income tax slabs under the old tax regime for individual taxpayers. The tax slabs have been rationalised further under the new tax regime, rendering an annual income of up to Rs.12 lakh (Rs.1.2 million) tax-free (Rs.12.75 lakh for the salaried taxpayers, considering a standard deduction of Rs.75,000 which remains unchanged).
The new tax slabs and corresponding tax rates under the new tax regime:
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Income slab (Rs)Tax rate Up to 400,000Nil400,001 to 800,0005%800,001 to 12,00,00010%12,00,001 to 16,00,00015%16,00,001 to 20,00,00020%20,00,001 to 24,00,00025%Above 24,00,000 30%
There are no changes in the rates of surcharge and heath and education cess.
Also read | No income tax for income up to Rs 12.75 lakh for salaried individuals under the new tax regime
The rejig in the structure is aimed at substantially reducing the taxes of the middle class and leaving more money in their hands, boosting household consumption and savings and promoting investment.
The Government has introduced a series of tax reforms aimed at simplifying the tax system and reducing the burden on taxpayers. The property owners can now declare a ‘nil’ annual value for a maximum of two self-occupied or unoccupied properties, irrespective of the reason for non-occupation. One of the key changes is the proposed increase in the threshold for Tax Collected at Source (TCS) on remittances under the RBI’s Liberalized Remittance Scheme (LRS), which is set to rise from Rs.7 lakh to Rs.10 lakh. Additionally, TCS will no longer be applicable to educational remittances funded by loans from specified financial institutions, easing the financial load and cash flow for students studying abroad.
In an effort to streamline Tax Deduction at Source (TDS), the Government has increased the threshold limits for TDS on various streams of income. This includes a significant benefit for senior citizens, as the TDS limit on interest income is doubled to Rs.1 lakh, which saves them from having to claim tax refunds. Similarly, the annual TDS limit on rent is raised from Rs.2.40 lakh to Rs 6 lakh, which will reduce the number of rent transactions subject to TDS and benefit small taxpayers. In another taxpayer-friendly move, the higher TDS rate of 20% will now only be applied to transactions where the PAN is not provided.
The updated return facility, which was introduced in 2022, has seen a positive response with around 90 lakh taxpayers voluntarily updating their incomes and paying additional tax. The time limit for filing updated tax returns is extended by an additional 2 years to provide an additional window and flexibility for taxpayers to ensure compliance.
Finally, the Vivad Se Vishwas Scheme has been successful in resolving income tax disputes, with approximately 33,000 taxpayers utilising the scheme to settle appeals. These comprehensive tax proposals are designed to simplify the tax system, lessen the financial burden on the middle class, and promote voluntary compliance and investment, ultimately contributing to a more efficient and taxpayer-friendly environment.
Overall, the Budget's impact on prioritising the tax relief for middle-class taxpayers is expected to have positive results and will go a long way in instilling confidence of the common man in the Government and its vision for economic growth.
(The article is written by Shalini Jain, Tax Partner, EY India. Mohan Reddy, Tax Professional, EY India also contributed to this article)
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This story originally appeared on: India Times - Author:Faqs of Insurances
