Potential Tax Relief for Taxpayers Making Up to ₹15 Lakh in the Budget for 2025

On February 1, 2025, Finance Minister Nirmala Sitharaman is scheduled to deliver the Union Budget 2025.

Middle-class taxpayers are hoping for substantial income tax relief, particularly those making up to ₹15 lakh a year. The specifics of prospective tax reforms, their ramifications, and what taxpayers might anticipate from the next budget are covered in length in this article.

 

Relief from Income Taxes: A Benefit for Middle-Class Families

The core of India’s economy is its middle-class, salaried populace. This group looks forward to tax reforms each year in hopes of lessening their financial load.

The government is actively contemplating offering tax relief to people making up to ₹15 lakh annually, according to a Reuters report.

This program may contribute to economic growth and consumer spending stimulation.

Who Can Gain from This?

The following are the main advantages of implementing these reforms:

Families in the urban middle class are struggling with inflation and growing living expenses.

those on salaries who choose the new, simplified tax system.

Tax breaks may raise disposable income, which would stimulate consumer spending and contribute to economic expansion.

 

Existing Tax Structure Under Both the Old and New Regimes

2020 saw the introduction of a new tax regime.

Up to ₹3 lakh is tax-exempt.

₹3–7 lakh: 5% tax

10% tax is applied to ₹7–10 lakh.

10% tax is applied to ₹10–12 lakh.

A 20% tax is applied to ₹12-15 lakh.

Over 15 lakh rupees: 30% tax

 

Previous Tax System:

₹2.5 lakh and up are tax-exempt.

2.5–5 lakh ₹: 5% tax

₹5–10 lakh + 20% tax

Taxed at 30% on amounts beyond ₹10 lakh

While the new system streamlines rates but eliminates the majority of exemptions, taxpayers were able to take use of exemptions for house rent, insurance premiums, and other deductions under the previous regime.

 

Potential Modifications to the 2025 Budget

The government may concentrate on improving the attractiveness of the new tax system by:

raising the threshold for income tax exemptions.

lowering the tax rates in each band.

Introducing focused assistance programs for urban middle-class residents

The Union Budget 2025, proposed by Finance Minister Nirmala Sitharaman, has enormous potential to influence the financial situation of millions of middle-class taxpayers.

Watch for significant announcements that could redefine India’s income tax system on February 1, 2025.

Professional Views

According to Siddharth Maurya, the founder and managing director of Vibhavangal Anukulakara Private Limited, lowering personal income tax for individuals making up to ₹15 lakh per year will increase the spending power of the urban middle class.

He points out that these measures are in line with the government’s overarching objective of shifting to a growth model that is driven by consumption.

The Significance of Tax Relief

Promoting Economic Growth: Higher spending may result from more disposable income.

Reducing the burden of rising living expenses on middle-class families could help combat inflation.

Simplifying Tax Compliance: A move away from the previous method may be encouraged by the new tax regime’s improved benefits.

 

Important Takeaways

The planned improvements in Budget 2025 are expected to benefit taxpayers making up to ₹15 lakh.

Adoption of the new rule may be aided by improved alleviation measures.

These adjustments are meant to boost consumer demand and promote economic expansion.