Budget 2025: Will Middle Class Get Sought-After Tax Relief?
Union Budget 2025-26 is just round the corner, and once again, the salaried class awaits some after-tax relief from heavy financial burdens. Finance Minister Nirmala Sitharaman is going to table her financial plan on 1st February, a set of crucial reforms benefitting salaried taxpayers have been presented by economists.
The proposed reforms include an upward revision in the exemption limit and further increase in standard deduction under the new tax structure. Last year’s budget had enhanced standard deduction to Rs.75,000 from Rs.50,000. It had pegged the basic exemption limit at Rs.3 lakh under the new regime. Experts believe some more changes in the above areas might go a long way in helping salaried classes reduce their burden of taxes further.
The new tax regime has been made rather widely known for its simplified structure as well as lower tax rates. However, it erases all the deductions on permissible investments and expenses available under the old tax regime. Analysts forecast that any new tax benefits that come into the statute book are most likely to be in favour of the taxpayers under the new tax regime, mainly through changes in tax slabs, rates, or the exemption limit itself.
Inflation has further reduced purchasing power, thereby increasing demands for measures that improve middle-class disposable incomes. Many people believe that salaried individuals in India are unfairly taxed more compared to those earning through other sources. The more direct taxation of salary over other forms of income has always been a bone of contention in the tax structure. Moreover, the personal income tax and post-tax expenditure tax or capital gain tax on investments such as equity shares and properties is a tax upon a tax.
The other recommendations include boosting sectors like housing and encouraging the adoption of electric vehicles. Facilitating real estate transactions for Non-Resident Indians is another area where reform can be brought about, along with measures to streamline tax compliance for overseas taxpayers.
One of the perennial problems faced by foreign nationals and NRIs is that they cannot make tax payments from overseas bank accounts. The current regulations insist on making these payments only through Indian accounts, which poses problems for those who have income from investments in India but are abroad. Addressing this problem is considered one of the crucial steps to reducing compliance difficulties and promoting smoother tax payments.
So many suggestions have thrown up the hopes; yet, everyone remains to ponder over whether a transformative change India’s taxation could witness through these Budgets and leave the Indian middle-class with more in hopes.
