Budget 2025: Five Income Tax Changes to Anticipate from Nirmala Sitharaman's Speech
As the much-awaited Budget 2025 approaches, taxpayers eagerly anticipate potential income tax reforms, especially for salaried individuals. With rising inflation and evolving economic needs, Finance Minister Nirmala Sitharaman’s announcements could significantly impact taxpayers. Mumbai-based tax and investment expert Balwant Jain shared insights with Mint on five expected changes that might be part of the Modi 3.0 government’s second budget.
1. Income Tax Slab Revisions
The government may focus on enhancing the appeal of the new tax regime by introducing additional benefits and adjustments. One notable proposal is revising the income tax slab for the highest tax bracket. According to Balwant Jain, “To make the regime more progressive and aligned with the current economic conditions, it is suggested that the 30% tax rate be applied to income levels above ₹20 lakh, considering inflationary trends.”
Current Tax Slabs Under the New Regime:
· ₹0 - ₹3 lakh: Nil
· ₹3 - ₹7 lakh: 5% (on income exceeding ₹3 lakh)
· ₹7 - ₹10 lakh: 10% (on income exceeding ₹7 lakh)
· ₹10 - ₹12 lakh: 15% (on income exceeding ₹10 lakh)
· ₹12 - ₹15 lakh: 20% (on income exceeding ₹12 lakh)
· Above ₹15 lakh: 30% (on income exceeding ₹15 lakh)
2. Special Tax Slabs for Senior Citizens
Currently, the new tax regime offers uniform tax slabs irrespective of age. However, experts suggest introducing age-based differentiation.
For instance, senior citizens (aged 60 and above) could benefit from higher exemption limits or lower tax rates. In the old tax regime, senior citizens had a basic exemption limit of ₹3 lakh, while super senior citizens (aged 80 and above) enjoyed a higher limit of ₹5 lakh. Similar provisions in the new regime could significantly benefit elderly taxpayers.
3. Standard Deduction Adjustments
Salaried individuals and pensioners currently enjoy a flat standard deduction of ₹50,000 under the old tax regime and ₹75,000 under the new regime. Balwant Jain suggests linking the standard deduction to a proportion of an individual’s income, capped at ₹1 lakh.
This change would allow higher earners to receive greater relief while retaining benefits for lower-income groups. Such a move could increase the appeal of the new tax regime.
4. Gold Import Duty Changes
To address the trade deficit and curtail gold imports, the government may revise the import duty on gold.
“Domestically, there are concerns that the Indian government might increase the import duty on gold in the upcoming Union Budget to curb gold imports,” said Sugandha Sachdeva, Founder of SS WealthStreet. Such changes could impact domestic gold prices and create a divergence from international markets.
In the Union Budget 2024, the import tax on gold was reduced from 15% to 6%, effective from July 24, 2024. However, experts anticipate a possible upward revision this year.
Final Thoughts
Budget 2025 is shaping up to be a significant milestone in addressing taxpayers’ concerns and fostering economic growth. Whether through income tax slab adjustments, senior citizen benefits, or import duty revisions, these changes could mark a pivotal shift in India’s tax landscape. All eyes now turn to Finance Minister Nirmala Sitharaman’s speech, as taxpayers await reforms that could bring relief and opportunity in equal measure.
