Budget 2025: Finance Minister Nirmala Sitharaman will present a record eighth consecutive Budget tomorrow i.e. February 1, 2025. Sitharaman is expected to announce measures to shore up weakening economic growth and ease the burden on the middle class struggling with high prices. But all eyes will be on announcements related to income tax as it will provide immediate relief to salaried and middle-class taxpayers.
Here are some expected changes that may bring relief for common man –
Income-tax slab and rates: The threshold for an individual’s income tax liability has remained unchanged at Rs 2.5 lakh since 2014. There are reports that the FM may expand the basic exemption limit to Rs 5 lakh under the new tax regime. She may even provide some relief to taxpayers in the Rs 15-20 lakh bracket.
Standard deduction hike: The Finance Minister provided relief to salaried individuals in the last Budget by increasing the standard deduction limit to Rs 75,000 in the new tax regime. It is expected that she may further increase the limit in this Budget.
Health insurance deduction: As of now, deduction against health insurance premiums is allowed in the old tax regime only. It is expected that Nirmala Sitharaman may include it in the new regime.
National Pension System (NPS) deduction: Just like health insurance, deduction under the NPS is available in the old regime only. It is expected that the Finance Minister may provide the additional NPS deduction in the new regime.
Home loan deduction: Home loan deduction is not allowed in the new regime and therefore it is expected that the Finance Minister may allow it in this Budget. Also, there are expectations that the deduction limit in the old regime will be increased.
House rent allowance (HRA): Salaried people can’t claim HRA in the new tax regime. Considering the sharp increase in rents across cities, the government may consider allowing HRA exemption in the new regime.
