Standard Deduction in Budget 2025: Giving a big relief to the middle class and the employed, the Finance Minister has reduced the tax rates and also increased the scope of exemption. Now the common man will have more money left and the country’s economy will also benefit from it.
Finance Minister Nirmala Sitharaman had indicated even before presenting the Budget 2025 that this budget would be dedicated to the common man and the middle class. She made these indications true with her announcements and provided relief to the employed and middle class by giving a big exemption in income tax. TDS and TCS will be reduced, so that they will have more money in their hands. TDS deducted on salary will be reduced.
Under this, now a standard deduction of 1 lakh has been made. The exemption on rent will also be increased from 2.5 lakh to 6 lakh. The money sent abroad has also been increased to 10 lakh. TCS will now be deducted only on those without PAN. Facility of updated return has also been provided, which will benefit 90 lakh taxpayers. Return can be filed again i.e. updated return in assessment year up to 4 years. The amount of exemption on donation will be increased from 5 to 10 lakhs.
Now no tax will be levied on taxpayers if they have 2 properties. Till now it was limited to one property only. The limit of TDS has been increased to 10 lakhs.
Gift given to the middle class
The middle class will not have to pay any tax up to Rs 12 lakh. Till now it was only Rs 7 lakh. There was an increase of 5 lakhs in this at once and those earning up to 1 lakh per month will not be charged any tax. A tax deduction of Rs 75 thousand will also be given in this.
These changes were made last year as well
Slabs changed in the new regime: The Finance Minister had also changed the slabs of the new tax regime last year. Under this, income up to Rs 3 lakh was completely exempted from tax. After this, a tax of 5 percent was imposed on Rs 3 to 7 lakh, while only 10 percent tax was kept on income from Rs 7 to 10 lakh. 15 percent tax was kept on 10 to 12 lakh and 20 percent tax was kept on 12 to 15 lakh. The rate of income tax on income above 15 lakh has become 30 percent.
Standard deduction also increased: Finance Minister Nirmala Sitharaman has also increased the standard deduction to give relief to the common man. The government has increased the exemption of Rs 50 thousand earlier available in the form of standard deduction to Rs 75 lakh. In this way, salaried people got more exemption under income tax.
Changes in capital gain tax: The Finance Minister has also made changes in the capital gain tax on returns from investments in stock market and mutual funds. Short term capital gain tax on selling shares or mutual funds before 12 months has been increased from 15% to 20%, while long term capital gain tax on selling units after 12 months has been increased from 10% to 12.5%. However, the exemption limit on long term capital gain tax (LTCG Tax) has been increased from Rs 1 lakh to Rs 1.25 lakh. LTCG tax on property has been reduced from 20% to 12.5%, but the benefit of indexation on it has been abolished.
More benefits on NPS: The Finance Minister has also increased the benefits on NPS in last year’s budget. In the 2024 budget, the deduction on NPS has been increased to 14 percent. Earlier, deduction was available only on 10 percent contribution on investment made by the employer in the private sector, now it has been increased to 14 percent. This means that up to 14 percent of the employer’s contribution will remain out of the tax purview.
Exemption also given on ESOPs: In Budget 2024, the exemption on ESOPs for employees working in multinational companies has been doubled. Actually, MNC employees often get posting abroad and companies give them shares under ESOPs. Earlier the rule was that if assets worth more than Rs 10 lakh were found, it had to be disclosed. If this was not done, the government used to impose a penalty of 10 lakhs. Now this amount has been increased to Rs 20 lakh, which means that no penalty will be imposed for not disclosing assets up to Rs 20 lakh.
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