Budget 2025: Finance Minister Nirmala Sitharaman is going to present Budget 2025 on 1 February, and this budget can be a game-changer for the middle class. After many years, big changes are expected in the income tax slabs, which will boost the budget of households and give a new boost to the economy.
The time for middle class relief has arrived
Middle class taxpayers have been waiting for a big tax relief for a long time, and Budget 2025 can fulfill this expectation. According to reports, the government is planning to increase the income tax exemption threshold and introduce new tax slabs.
These reforms can be very beneficial for salaried people whose annual income is up to ₹ 20 lakh.
Proposed Reforms: What’s New?
According to a Business Standard report, the government is considering two major options:
A proposal to make annual income up to ₹10 lakh completely tax-free.
Introducing a 25% tax slab on income between ₹15 lakh and ₹20 lakh, which is currently 30%.
If any of these two proposals is implemented, it will be a major change to the existing tax system. This could lead to a revenue loss of ₹50,000 crore to ₹1 lakh crore for the government, but it is prepared to take this risk for economic growth and public welfare.
Why was the previous tax system not enough?
In the 2023 budget, the tax-free income limit was raised to ₹7 lakh, but deductions had to be sacrificed. This was not enough for the salaried class.
Now, income up to ₹7.75 lakh is tax-free along with the standard deduction. The Budget 2025 proposal can provide relief to a broader audience by making income up to ₹10 lakh tax-free.
What does it mean for economic growth?
The impact of increasing the disposable income of the middle class is not just a populist move, but a strategic plan for economic growth. GDP growth fell to 5.4% in Q2 FY25, which is the lowest in the last 7 quarters. Boosting urban consumption has now become necessary.
Experts’ opinion:
Akhilesh Ranjan (PwC consultant and former CBDT member): 25% slab on income of ₹15-20 lakh can increase the spending capacity of the middle class.
Professor Anil K. Sood (IASCC): 30% tax rate above ₹15 lakh seems unfair, and he has asked the government to give relief without dismantling the existing incentives.
Budget 2025: A New Mod?
These reforms can redefine the financial planning of taxpayers and give a boost to India’s slow economy. By increasing tax exemptions and restructuring slabs, the government can bring convenience to the middle class and ensure their participation in economic recovery.
We are waiting for 1 February! It remains to be seen whether this budget will become a historic announcement or not.
