Budget 2025: The Union Budget 2025, scheduled to be presented by Finance Minister Nirmala Sitharaman on February 1, is eagerly awaited by taxpayers and the middle class. This budget may bring some special announcements to reduce personal financial burdens and boost economic growth. Let us take a look at five major proposals anticipated by economists and industry experts that may be impactful for taxpayers.
1. Reduction in Tax Rates for Middle-Income Families
The biggest demand of the middle class is that tax rates should be reduced for those people whose annual income is between Rs 15-20 lakh. As per the current rules, income above Rs 10 lakh is taxed at 30%, which is a big burden for the middle-income group, especially in the context of rising inflation. If the tax rate is reduced for this income bracket, it will strengthen the financial position of the middle class and leave them with more disposable income, which will boost consumption and economic activity.
2. Increase in Standard Deduction
Salaried individuals, who contribute a large part of the nation’s tax revenue, are expecting enhanced relief. Currently, the standard deduction is Rs 50,000 under the old tax regime and Rs 75,000 under the new regime. In view of the increasing living costs due to inflation, there is a demand to increase this deduction further. If the deduction is increased, the tax burden for salaried individuals will be reduced and financial flexibility will be provided.
3. Special Provisions for Senior Citizens
Senior citizens are also expecting substantial relief. According to the current system, income up to Rs 2.5 lakh under the old regime and Rs 3 lakh under the new regime is tax-free. Experts believe that this exemption limit should be revised and increased to Rs 7 lakh for the old regime and Rs 10 lakh for the new regime. By doing so, senior citizens, who are dependent on fixed incomes, will get financial security.
4. Enhanced Benefits for Home Loan Borrowers
Housing loans are an important part of financial planning. Now, taxpayers can claim a deduction of up to Rs 2 lakh under Section 24B for interest payments. It has been proposed to increase this limit to Rs 3 lakh, which will accommodate rising housing costs and interest rates. Also, there is talk of introducing a new category that will provide additional deductions for the principal repayment amount. These steps will incentivise homeownership and bring relief to taxpayers.
5. Increase in deduction for health insurance premiums
Medical expenses and health insurance premiums have become a significant component of household budgets. Now, individuals below 60 years of age can claim a deduction of up to Rs 25,000 under Section 80D, and senior citizens up to Rs 50,000. In view of rising healthcare costs, it is proposed to revise the limits to Rs 50,000 for individuals and Rs 75,000 for senior citizens. This revision will provide financial relief and encourage more people to invest in health insurance, which will ensure better preparedness for medical emergencies.
Broader Implications for the Economy
If these measures are implemented, it will have a cascading effect on the economy. More money in the hands of the middle class and senior citizens will increase consumer spending, which will boost demand in different sectors. Also, enhanced benefits of home loans and health insurance will increase investments in these areas, which will stimulate associated industries.
Conclusion
Budget 2025 holds significant promises for taxpayers and the middle class. With expectations of tax rate reductions, increased deductions and enhanced provisions for senior citizens, this budget has the potential to ease financial pressures and foster economic growth. Everyone will be watching the announcements by Finance Minister Nirmala Sitharaman on February 1 to see how these expectations translate into policies. The proposed changes can be a pivotal step to align the aspirations of millions of Indians.
