Budget 2025: The government is constantly trying to promote the new tax system. In the last few years’ budgets, changes in personal tax were made only for the individuals who chose the new tax system.
Budget 2025: Finally, only a few hours are left for the moment to arrive, which the whole country is waiting for. Tomorrow Finance Minister Nirmala Sitharaman will present the 8th consecutive Union Budget. There are many questions in the minds of the countrymen like which sector will be focused on in the budget, whether the government will announce tax exemption for the common man or not, will the tax system be made easier for taxpayers? All the questions will be answered tomorrow.
Let us see what the people of the country expect from the government and what options the government has
New personal tax system
In the year 2020, the foundation of the new tax system was laid to simplify the tax system. In this, concessional tax rates and some deductions were abolished. The government has been trying to promote the new tax system. In the last few budgets, changes in personal tax were made only for individuals who chose the new tax system. While filing income tax returns for the financial year 2023-24, 72 percent taxpayers chose the new tax system. Some changes were also proposed in the new tax system, which can be discussed in the upcoming Budget 2025.
Income Tax Slab
It is expected that the government may increase the basic exemption limit from Rs 300,000 to Rs 350,000 in Budget 2025-26. This will increase the disposable income in the hands of taxpayers, which will give them some relief from rising inflation. The government can introduce new income tax slabs for the middle class. Under this, those having income up to Rs. 3 lakh will be kept out of tax limit, those having annual income of Rs. 3,00,001- 6,00,000 will be taxed at 5%, those in the category of Rs. 6,00,001- 9,00,001 will be taxed at 10%, those having annual income of Rs. 9,00,001- 12,00,000 will be taxed at 15%, those having annual income of Rs. 12,00,001- 15,00,000 will be taxed at 20%, those having income of Rs. 15,00,001- 18,00,000 will be taxed at 25% and those having income of Rs. 18,00,001 and above will be taxed at 30%.
Limit of deduction under the new tax system
There is very little provision of exemption in the new tax system. In this, the deduction in the contribution made by the employer for the employee in NPS is the most important. In fact, last year the deduction of expenditure made by employers on NPS was increased from 10 percent to 14 percent of the employee’s salary, while a deduction of up to Rs 50,000 can be availed for one’s contribution to the National Pension Scheme. The government can also consider increasing this benefit under the new tax system. This will benefit non-salaried taxpayers and at the same time NPS will also get a boost.
This much exemption can be given on tax
Under section 87A, in the new tax system, it is expected that up to 100 percent exemption will be able to claim tax on income up to seven lakhs. While to provide more benefits to the lower income group, this limit can be increased to Rs 8 lakh. Income tax slab under the old tax system There has been no change in the basic exemption limit since the government came to power in 2014. This can be increased to 50,000, i.e. from Rs 250,000 to Rs 300,000. This means that there may be no tax on income up to Rs 3 lakh.
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