New Delhi
Finance Minister Nirmala Sitharaman may present the country’s upcoming budget on February 1. Meanwhile, there is talk that the Central Government can announce big relaxation for the common people in this budget (Union Budget 2025). In the Union Budget 2025, people with annual income up to Rs 15 lakh can get the benefit of tax exemption. The announcement of tax exemption is expected to increase disposable income, which will increase consumption. Some media reports claim that the government is considering changes in the new income tax regime introduced in the financial year 2020-21, which has attracted more than 70 percent of the taxpayers due to its simple structure.
What is the current tax slab?
At present, under the new system, income up to Rs 3 lakh is tax free, while income between Rs 3 lakh to Rs 6 lakh is 5%, Rs 6-9 lakh is 10%, Rs 9-12 lakh is 15%, Tax is 20% on Rs 12-15 lakh and 30% on more than Rs 15 lakh. The standard deduction of Rs 75,000 ensures that income up to Rs 7.75 lakh is tax free. There will be no need to pay any tax if the annual income is up to Rs 7 lakh.
What can be the change in tax slab?
Reports suggest that the basic exemption limit may increase from Rs 3 lakh to Rs 4 lakh. Also, adjustments can be made in other slabs also. For example, the 5% slab may include income ranging from Rs 4 lakh to Rs 7 lakh, making this tax regime more beneficial for those with income up to Rs 14 lakh.
Why can you get exemption?
According to sources, the government’s focus is on reducing the burden on individuals earning Rs 13-14 lakh annually. Especially in urban areas where inflation has reduced purchasing power. The main objective of this change is to provide relief to urban taxpayers. These taxpayers face rising inflation and contribute significantly to the country’s economy. Experts believe that amending the tax slab by increasing the limit of Rs 1 lakh can reduce the tax burden to a great extent, which will encourage more spending.
Continuous increase in tax revenue
Personal tax collection has increased by 25% to Rs 7.41 lakh crore during April-November financial year 2025, putting the government in a strong position to implement these reforms. Unlike corporate taxes, personal taxes have consistently been above targets, filling the government coffers. Therefore, tax collection is also indicating for tax exemption.