Budget 2025: The Union Budget 2025 has generated significant buzz, particularly for its focus on easing the tax burden for the middle class. With a growing demand for tax reforms and relief, the government has introduced measures aimed at increasing disposable income and reducing financial stress for middle-income earners. This article explores the highlights of Budget 2025, focusing on tax relief for the middle class, along with actionable insights into its implications.
Key Highlights of Budget 2025 for the Middle Class
1. Revised Income Tax Slabs
In a move to boost savings and reduce financial strain, the government has revised income tax slabs under the new tax regime.
New Income Tax Slabs for FY 2025-26:
- Income up to Rs.3,00,000: Nil
- Rs.3,00,001 to Rs.6,00,000: 5%
- Rs.6,00,001 to Rs.12,00,000: 10%
- Rs.12,00,001 to Rs.15,00,000: 15%
- Above Rs.15,00,000: 30%
This change raises the zero-tax threshold to Rs.3,00,000 from the earlier Rs.2,50,000, offering greater relief to individuals in the lower income brackets.
2. Standard Deduction Increased
The standard deduction has been raised from Rs.50,000 to Rs.75,000 for salaried individuals and pensioners. This move directly impacts take-home salaries, allowing taxpayers to save more.
3. Increased Deductions Under Section 80C
To encourage long-term savings and investments, the deduction limit under Section 80C has been increased from Rs.1,50,000 to Rs.2,00,000. This includes investments in:
4. Home Loan Benefits
Homebuyers will now enjoy an enhanced deduction for home loan interest under Section 24(b). The limit has been increased from Rs.2,00,000 to Rs.3,00,000 for self-occupied properties, making homeownership more affordable.
5. Tax Relief for Women and Senior* Citizens
- A special rebate of Rs.50,000 has been introduced for women taxpayers under the new tax regime, encouraging financial independence.
- Senior* citizens now have a higher exemption limit of Rs.3,50,000, up from Rs.3,00,000.
How Tax Relief in Budget 2025 Impacts the Middle Class
Boost to Disposable Income
The revised income tax slabs and higher standard deduction will leave more money in the hands of taxpayers. This extra income can be channelled towards savings, investments, or consumption, thereby boosting economic growth.
Encouraging Home Ownership
By increasing the deduction limit for home loan interest, the government has made homeownership more accessible to middle-class families. This measure is expected to stimulate the real estate sector as well.
Promoting Savings and Investments
The enhanced Section 80C limit encourages individuals to invest in tax-saving instruments, fostering a culture of financial discipline.
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