The upcoming budget is expected to bring relief to the low-income category, with tax cuts projected in the Rs.3 lakh - Rs.7 lakh tax slab under the new regime, according to sources.
Reetu | Dec 10, 2024 |
Will Budget 2025 provide Income Tax Relief? Finance Minister may announce a Tax Cut for this Tax Slab
The upcoming Budget, which will be presented by Finance Minister Nirmala Sitharaman in February 2025, is expected to bring relief to the low-income category, with tax cuts projected in the Rs.3 lakh – Rs.7 lakh tax slab under the new regime, according to sources.
According to the report, the government may raise the exemption level above Rs.3 lakh under the new regime.
While major relief is hoped for the lower-income group, no significant changes are currently planned for the higher tax slabs, according to reports. The final decision will be made closer to the budget.
In Budget 2024, Finance Minister Nirmala Sitharaman proposed a reduction in income tax slabs under the new tax regime for the current financial year 2024-25.
The proposed changes to the new tax regime are as follows:
1. Income tax slabs are reduced for incomes up to Rs.10 lakh.
2. The standard deduction amount for salaried and pensioners has increased to Rs.75,000 from Rs.50,000.
3. The standard deduction amount for family pensioners has been raised to Rs 25,000 from Rs.15,000.
4. The deduction for employer NPS contributions for private sector employees has increased from 10% to 14%.
The industry association CII has advised the government to keep to the budget deficit target of 4.9% of GDP for 2024-25 and 4.5% for 2025-26, warning that “overly aggressive targets” above these could harm India’s economic growth.
“Despite a slowing down global economy, India has been rising swiftly. Prudent budgeting for macroeconomic stability has been critical to this progress,” Chandrajit Banerjee, director general of the CII, said, commenting on recommendations for the upcoming Union Budget.
The CII also emphasized the announcement in the Union Budget 2024-25 to manage the budget deficit at levels that will help reduce the debt-to- GDP ratio.
In preparation for this, the upcoming Budget might lay out a glide path to reduce the central government’s debt to less than 50% of GDP in the medium term (by 2030-31), and below 40% of GDP in the long run, according to the CII.
The Confederation of Indian Industry argued that such an explicit target will have a favourable impact on India’s sovereign credit rating and, as a result, interest rates in the economy.
“To improve long-term financial planning, the government should consider implementing financial stability reporting. This might include releasing annual updates on financial risks under various stress scenarios and the prognosis for financial stability,” it stated.
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