Union Budget 2025: Expected Tax Reforms to Bring Relief to Salaried Employees and Middle Income Class
The Union Budget 2025 is going to be a wait-and-watch affair for salaried employees and middle-income earners as they are waiting for some relief in the form of tax measures. According to latest reports, the government intends to bring considerable changes in the personal income tax structure under the new tax regime.
Currently, income more than Rs.15 lakh is subject to a tax of 30% under the new tax regime. Industry analysts and media reports say that the forthcoming budget may have the following amendments:
1. Income up to Rs. 10 lakh is likely to become tax-free.
2. A new tax slab of 25% may be announced for incomes in the range of Rs.15 lakh to Rs.20 lakh.
Such steps, if enacted, are going to lighten the financial burden for middle-class households and salaried employees in bringing about higher disposable income. These above-mentioned changes have already been described as going a long way in helping taxpayers. The burden of tax on middle-income earners would reduce, giving salaried class more elbow room in their pockets. A new 25% tax slab for income between Rs.15 lakh and Rs.20 lakh would bring down the marginal tax rate for individuals in this income bracket, offering additional relief.
This would largely depend on other factors as well, including whether the existing deduction, surcharge, and other provisions are continued; also whether new ones are incorporated in the budget.
Economic Impact of the Proposed Tax Cuts
Tax professionals believe that these reforms would boost consumption, which would further stimulate the economy. An increase in disposable income is likely to lead to higher spending on consumer goods, which could, in turn, contribute to GDP growth.
Such tax cuts will certainly have to result in low revenue in the short run for the government; however, such tax cuts should enhance consumer demand, hence propelling economic activities. Thus, it will call for the right balancing by the government on which way to head.
However, experts also point out that the tax slabs can be changed, but this is just one step toward relief for taxpayers. The whole strategy may involve changes in deductions and surcharges to provide maximum relief to taxpayers and promote economic growth.
Current Tax-Free Income Under the New Regime
Under the new tax regime, salaried individuals up to Rs.7.75 lakh earn no tax due to standard deduction of Rs.75,000 and rebate under Section 87A of the Income-tax Act, 1961. When such reforms take place, it will be an increase in tax-free income to Rs.10 lakh and further relief.
Anticipated Reforms in Union Budget 2025 could finally see a transformation in India’s tax landscape to give financial respite to the middle-income group, increase economic activity with an enhanced consumption spend, but of course, these changes are contingent on final government pronouncements and finer provisions under reforms. Therefore, it would do well for the investors and the taxpayers to get hold of those changes carefully as a fine understatement would never suffice in complete realization.
