Budget 2025: Union Budget 2025 is coming, and there are a lot of expectations from the middle class. Taxpayers feel that this time there should be some reforms in the income tax system, which will reduce their financial burdens and increase economic growth. Experts have given some key recommendations which can bring significant changes. From reducing income tax rates to housing benefits, these are the top 10 income tax reforms that can be beneficial for the middle class
1) Revised Income Tax Slabs for Greater Relief
There is a demand to revise the income tax slabs, in which individual tax rates can be reduced. A higher exemption limit, which can go up to ₹ 10 lakh, can also be seen, which will help taxpayers fight against inflation and also increase their disposable income.
2) Home Loan Benefits Under the New Tax Regime
The middle class expects even more benefits for homebuyers in the new tax regime. Even if these benefits are a little less than before, they can still make homeownership accessible and provide relief to aspiring homeowners.
3) Increased Incentives for Homeowners
Experts recommend that the interest deduction limits for housing loans be increased under Section 24(b). A hike of ₹2 lakh to ₹3 lakh can be a game-changer, which will encourage more people to buy homes and also provide savings on taxes.
4) Boosting NPS Deductions
One popular recommendation is to increase the NPS deduction limit from ₹50,000 to ₹1,00,000. Also, making NPS withdrawals tax-free will encourage long-term savings and secure the financial future of middle-class families.
5) HRA Reforms for Tier-2 Cities
Taxmakers in Tier-2 cities like Hyderabad, Pune and Bengaluru may benefit from extending the 50% HRA exemption. This will be helpful for areas where rent is a major part of their income.
6) Expanded Deductions Under Section 80D
Looking at the health concerns, experts suggest that the tax deduction limits for health insurance premiums in Section 80D should be increased. A deduction of ₹50,000 for individuals and ₹1,00,000 for senior citizens can prove to be quite helpful.
7) Deferring TDS on Provident Fund Interest
To improve the cash flow of taxpayers, there is a proposal to defer TDS on Provident Fund interest of more than ₹2.5 lakh till withdrawal. This will help taxpayers keep more money in their income throughout the year.
8) Capital Gain Tax Reforms
Some changes are expected in the capital gain tax policies, which include giving equal taxation to Indian and international stocks. Experts also propose that Securities Transaction Tax (STT) should be removed, so that the tax burden of investors is reduced
9) Higher Exemption Limit for Senior Citizens
The exemption limit for senior citizens can be made more generous, which will reduce their financial pressures and help them manage their expenses better.
10) Increase in Section 80C Limit
The limit of section 80C has been the same since 2014. Now the time has come to revise it, so that middle-class families can invest in tax-saving instruments like PPF, FDs, and others and promote long-term savings.
As the date of Union Budget 2025 is approaching, these income tax reforms can make the financial landscape better for the middle class. This will promote savings, homeownership, and economic stability.
