Budget 2025: Taxpayers Eye Relief with Higher Exemptions and Deductions

28 Jan 2025 , 11:05 AM

As the Union Budget 2025 approaches, salaried employees and taxpayers across India are eagerly awaiting announcements that might ease their economic burdens. On February 1, Finance Minister Nirmala Sitharaman is going to present her eighth budget against a backdrop of growing expectations of reforms that would help reduce the tax burden on people and support growth in the economy.

The major tax expectations from Budget 2025 are as follows:

Basic Tax Exemption Limit Increased: The tax exemption limit in the current regime stands at ₹3 lakh for taxpayers. There is an increasing demand to increase this threshold to ₹5 lakh so that more discretionary income can be available to individuals.

Greater Income Tax Rebate: The new regime provides tax rebate to those earning up to ₹7 lakh. Experts have been suggesting this limit be raised to ₹9 lakh, which would help the middle-class taxpayer. Suggestions include new tax slabs for higher-income brackets, such as taxing incomes between ₹15 lakh and ₹18 lakh at 25%.

Hike in Standard Deduction: The relief to taxpayers would be huge if the standard deduction limit is raised to ₹1 lakh, which is expected, and this will provide much relief to salaried taxpayers.

Increase in Tax-Free Investment Limit in NPS: The tax-free investment limit under NPS currently is ₹50,000. A higher limit is recommended to increase retirement savings and have better withdrawal flexibility.

Rise in Deduction on Interest for Home Loan: Under Section 24(b) of the Income Tax Act, the current limit for home loan interest deduction is ₹2 lakh. Taxpayers are calling for this to be increased to ₹3 lakh per year, or even full deductions for interest payments on a single property, to make housing more affordable.

Capital Gains Tax: Taxpayers have again reiterated demands on Long-Term Capital Gains Tax on equity, seeking a hike in LTCG exemption limits to ₹2 lakh or more for increasing returns to investors. Rationalization of Grandfathering rules to reduce complexities under the indexation benefit for property sales is another key demand.

Relief for Small Businesses and Professionals: The presumptive tax limits under Sections 44AD and 44ADA for small businesses and professionals are likely to be increased. This will ease compliance burdens and promote ease of doing business.

Investment Incentives: Tax benefits for investments in healthcare, renewable energy, and skill development can be introduced, which would align with India’s broader development goals.

Demands for tax slab revisions to enhanced deductions, the salaried class hopes that Budget 2025 will actually yield meaningful reforms to ease their financial burdens. All eyes will now be on Finance Minister Nirmala Sitharaman as she will unveil the government’s plans, which could shape the future of millions of taxpayers in the country. It would be an important time in the life of the country where the Union Budget may influence economic stability and financial planning for all people and businesses in the country.