The middle class is eagerly awaiting Finance Minister Nirmala Sitharaman’s Union Budget 2025, set to be presented on February 1. This year’s budget may include much-needed adjustments to income tax slabs, which would help salaried taxpayers and stimulate the nation’s faltering economy after years of little to no tax relief.
Proposed Changes
Two significant changes are reportedly being considered by the government. First, income up to ₹10 lakh per year could be entirely tax-free. Second, for incomes between ₹15 lakh and ₹20 lakh, a new tax slab of 25% may be implemented. Currently, 30% tax is applied to income over ₹15 lakh. Taxpayers making up to ₹20 lakh a year may find their financial burden greatly reduced if these changes are put into effect.
A Win-Win Move for Taxpayers and the Economy
The government is reportedly prepared to absorb a revenue loss of ₹50,000 crore to ₹1 lakh crore to provide these tax benefits. In addition to providing relief to taxpayers, economists think that such a move will increase market demand. Increasing disposable income could help boost consumer spending and the economy, as the second quarter GDP growth hit a seven-quarter low of 5pc.
The Finance Minister used Section 87A to make income up to ₹7 lakh tax-free in the previous budget, but he forced taxpayers to choose the new tax system, which meant they would lose the majority of their deductions. A greater segment of the middle class may benefit from the new system’s potential increase in the tax-free limit to ₹10 lakh this year.
Expert Opinions
The prospect of a new 25 percent tax slab has been embraced by economists and tax experts. Akhilesh Ranjan, a PwC consultant and former member of the CBDT, pointed out that this would put more money in taxpayers’ pockets and promote increased consumer spending. In the same way, Professor Anil K. of IASCC. Sood argued that the current 30% tax on income that is just over ₹15 lakh is unjust and that a more equitable system might be established by lessening the burden on salaried people.
Budget 2025’s proposed tax reforms may provide the middle class with long-overdue relief and the financial flexibility they need to better budget their spending. For now, everyone is waiting for February 1 in the hopes that the government will fulfill its pledge to provide both psychological and financial support.
