Short Summary of Income Tax Budget 2025 Amendments

Short Summary of Income Tax Budget 2025 Amendments

The Union Budget 2025, presented by Finance Minister Nirmala Sitharaman, introduced several significant amendments to the income tax structure in India. These changes aim to provide relief to taxpayers, stimulate economic growth, and simplify the tax filing process. Detailed overview of the key amendments in the Income Tax Budget 2025.

Revised Income Tax Slabs

One of the most notable changes in the Budget 2025 is the revision of income tax slabs under the new tax regime. The new slabs are designed to provide substantial tax relief to the middle class and encourage higher consumption. The updated income tax slabs for the financial year 2025-26 are as follows:

These revised slabs aim to reduce the tax burden on individuals and promote disposable income, thereby boosting overall economic activity.

Standard Deduction and Rebate

The standard deduction for salaried employees has been increased to Rs.75,000, providing additional relief to taxpayers. Additionally, the rebate under Section 87A has been extended to individuals with an annual income of up to Rs.12 lakh. This means that individuals earning up to Rs.12 lakh will not have to pay any income tax.

Simplification of Tax Filing

The Budget 2025 also focuses on simplifying the tax filing process. The new income tax bill is drafted with clear and transparent language to ensure easy comprehension for both taxpayers and tax administrators. This move aims to eliminate ambiguity and make the tax filing process more user-friendly.

Rationalization of Deductions and Exemptions

The government has rationalized various deductions and exemptions to streamline the tax structure. While the old tax regime continues to offer multiple exemptions and deductions, the new tax regime provides lower tax rates with minimal exemptions. Taxpayers can choose between the two regimes based on their financial profile and preferences.

Incentives for Investments and Savings

To encourage investments and savings, the government has introduced several incentives. The deduction limit for investments under Section 80C remains at Rs.1,50,000, while the deduction for health insurance premiums under Section 80D has been retained. Additionally, the interest on home loans under Section 24(b) continues to be deductible up to Rs.2,00,000.

Focus on Digital Transactions

The Budget 2025 emphasizes the promotion of digital transactions to enhance transparency and reduce tax evasion. The government has proposed measures to incentivize digital payments and reduce the use of cash in business transactions.

Tax Benefits for Elders

Older citizens have received special attention in the Budget 2025. The basic exemption limit for Older citizens aged 60-80 years has been increased to Rs.3,00,000, while for super Older citizens (above 80 years), it has been raised to Rs.5,00,000. This move aims to provide financial relief to the older population.

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