Budget 2025: Will Finance Minister propose these Top Income Tax Relief in Union Budget?

While the Union Budget 2025 is expected to provide additional momentum to the streamlining of existing tax laws, there are increased expectations for economic reforms targeted at restoring declining consumption in response to rising living costs and high inflation.

Individual taxpayers are also quite interested in the Budget this time because they have a long list of personal tax announcements that they want to see.

Some of expectations FM should consider for proposal in Union Budget are as under:

Increase in Income Tax Rebate

The finance minister has made significant changes to the new income tax regime in order to attract taxpayers and create a default tax regime. A 100% tax rebate is available for taxable income up to Rs.7 lakh. This year, the rebate is expected to increase to Rs.10 lakh. This changes would bring much-needed relief to middle-income taxpayers while perhaps increasing spending and investment.

Increase in Deduction threshold under Section 80C and 80D

For more than a decade, the Rs1.5 lakh limit under Section 80C of the Act has remained intact. With the rising cost of living and inflation, the government may consider raising the cap to Rs.3 lakhs under the old tax regime. Similarly, the current limit under section 80D might be enhanced from Rs.25,000/ Rs.50,000 (where applicable) to higher limits, given that the cost of medical care and comprehensive insurance premiums have risen dramatically over the years. It is also possible that the new tax regime will allow such medical insurance premiums as a deduction.

Tax Benefits on Housing

To improve the real estate sector’s momentum, tax benefits for home buyers are likely to be increased. This could involve a higher deduction for home loan interest or principal repayment. Currently, the entire limit for claiming loss under the head income from house property is Rs.2 lakhs per annum. This limit should be reconsidered and increased to, say, Rs.3 lakhs annually, to provide additional momentum to the ‘housing for all’ campaign, as well as a proposal to evaluate the stated deduction under the new tax regime.

Simplifying TDS procedure for buyers purchasing Immovable Property from Non-resident Sellers

At present, if the property seller is a resident, buyers must subtract 1% of the consideration and file a challan-cum-statement, which is a quick and straightforward process. However, if the seller is a non-resident, the buyer must obtain a TAN for this one-time transaction, deduct tax at a higher rate, and file a TDS return, which is a complicated process. To streamline the procedure, the government should consider implementing challan-cum-statements for non-resident sellers in the same way that it does for resident sellers.

CONCLUSION

While the common man’s wish list is long, now is a tremendous chance for the government to set the tone for increasing economic growth by making policy announcements and addressing fundamental difficulties that the country faces. It will be an interesting budget to watch on February 1, 2025.