Tax relief in 2025 budget? Middle-class taxpayer hopes soar ahead of February 1

With only two months left until the budget announcement, speculation has begun about what might and might not be included. The biggest discussion revolves around taxes for the middle class, particularly salaried individuals. 

Budget 2025

The Narendra Modi government is set to present the budget on February 1st. Speculation about the tax system has already begun. In the last budget, the middle class expressed some discontent regarding taxes. According to Finance Ministry sources, the upcoming budget proposal aims to boost demand for consumer goods amidst a sluggish economy and rising inflation.

Tax System

Sources suggest that the budget may further simplify the tax system for the middle class, potentially providing relief. 

Slabs under the new tax regime are as follows: Rs 0 to Rs 3,00,000: no tax;
Rs. 3,00,001 to Rs. 7,00,000:- 5 per cent tax,
Rs 7,00,001 to Rs 10,00,000: 10 per cent,
Rs. 10,00,001 to Rs. 12,00,000: 15 per cent,
Rs 12,00,001 to Rs 15,00,000: 20 per cent and
Above Rs 15,00,001: 30 per cent.

Two Tax Regimes

Currently, there are two tax regimes: the old and the new. The old regime offers deductions for rent, insurance, etc. The new regime offers lower tax rates but removes deductions for insurance and other items. It was implemented in 2020.

Government Actions

Sources say the extent of tax relief and other details will be finalized before the budget announcement. The Finance Ministry is reviewing the tax system for the middle class. Sources indicate that under Nirmala Sitharaman, the Finance Ministry aims to increase the number of taxpayers to boost revenue.

Potential Tax Reduction

Experts believe tax rates may be lowered to encourage more people to file taxes. However, the government hasn't made any official announcements.

If the central government reduces income tax rates, it would bring relief to the middle class, as the majority of salaried individuals in the country belong to this demographic.