Union Budget 2025: Here Are Expected Changes In Income Tax Slab

As the Union Budget 2025 approaches, discussions around income tax are intensifying. The Modi government's second budget is just days away, and taxpayers have high hopes. A significant focus this year is on the proposed new Income Tax Bill, which aims to replace the Income Tax Act of 1961. Sources suggest that this bill will be introduced later in the year after stakeholder consultations.

The government intends to simplify direct tax laws, making them more accessible for taxpayers. This potential new bill could dominate headlines during this year's budget announcement. Finance Minister Nirmala Sitharaman's plans are eagerly anticipated by experts and citizens alike.

Income Tax Relief Expectations

A tax expert anticipated tax relief measures while maintaining revenue balance. He suggests enhancing rebates for lower-income individuals and raising the basic exemption limit under both tax regimes to combat inflation's effects.

He also proposes increasing the turnover limit for presumptive taxation under Sections 44AD and 44ADA to help conserve taxpayer resources. Additionally, he advocates for a higher interest deduction limit on housing loans under Section 24(b), suggesting an increase from Rs 2 lakh to Rs 3 lakh.

Support for MSMEs and Homebuyers

Another finance expert expects further support for taxpayers and small businesses following last year's reforms. He predicts an increase in the income tax exemption limit to ₹3 lakhs and Section 80C limit to ₹2.5 lakhs, potentially benefiting over six crore taxpayers and boosting household savings by ₹25,000 crores annually.

He also foresees MSMEs saving an additional ₹5,000 crores, aiding their growth and sustainability. Meanwhile, real estate stakeholders hope for increased tax deductions on housing loan interest under Section 24(b) to stimulate sector growth.

Calls for Adjustments in Taxation

Former Central Board of Direct Taxes Chairman JB Mohapatra has urged the government to reduce taxes on bank deposit gains and adjust income tax exemption limits in line with inflation. He also recommends raising fixed deductions to better reflect current economic conditions.

An industrialist told media that he expects reduced personal income taxes or at least no additional burdens on individuals. He believes that increased disposable income can drive demand for quality products and align with national health goals by encouraging healthier food choices.

Real Estate Sector's Aspirations

The real estate industry is optimistic about budget provisions that could enhance its growth trajectory. Another finance expert suggested increasing the housing loan interest deduction limit under Section 24(b) to ₹5 lakh to meet homebuyers' aspirations amid changing market dynamics.

A balanced budget supporting corporate growth and consumer purchasing power is seen as crucial for sustained economic progress. Such measures could boost consumption while promoting investments in healthier lifestyle choices.