The upcoming Union Budget 2025, set to be presented by Finance Minister Nirmala Sitharaman in February, may bring tax relief for the low-income group. According to ETNow sources, the government is considering reducing taxes for individuals in the Rs 3 lakh – Rs 7 lakh tax slab under the new tax regime. Additionally, the exemption limit under this regime could be raised beyond Rs 3 lakh.
Relief for Lower-Income Group
While significant tax relief is expected for lower-income earners, no major changes are currently anticipated for higher tax slabs. A final decision on these proposals will be made closer to the Budget announcement.
Key Changes in Budget 2024
In the previous Budget, Sitharaman introduced several reforms in the income tax structure under the new regime for FY 2024-25, including:
- Relaxation of income tax slabs for incomes up to Rs 10 lakh.
- Increase in the standard deduction limit for salaried individuals and pensioners to Rs 75,000 (up from Rs 50,000).
- Hike in the standard deduction for family pensioners to Rs 25,000 (up from Rs 15,000).
- Increase in the employer’s NPS contribution deduction for private-sector employees to 14% (from 10%).
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Recommendations for Budget 2025
The Confederation of Indian Industry (CII) has suggested the government adhere to the fiscal deficit targets of 4.9% of GDP for 2024-25 and 4.5% for 2025-26 to maintain economic stability.
Chandrajit Banerjee, Director General of CII, emphasized the importance of prudent fiscal management in supporting India’s rapid growth amid global economic challenges. The CII also highlighted the need to reduce the central government’s debt-to-GDP ratio, suggesting a medium-term target of below 50% by 2030-31 and a long-term goal of below 40%.
Additionally, the CII recommended instituting fiscal stability reporting, which would involve annual assessments of fiscal risks under various stress scenarios to enhance transparency and long-term planning.
These measures could improve India’s sovereign credit rating and contribute to lower interest rates, bolstering the nation’s economic outlook.