Income Tax Union Budget 2025

Income Tax Updates in the Union Budget 2025. Income Tax Union Budget 2025. income tax union budget 2025, budget, union budget 2025, new tax regime slabs.

Income Tax Union Budget 2025

The Union Budget for the fiscal year 2025-26, presented by the Finance Minister Nirmala Sitharaman on February 1, 2025, has brought significant changes to the income tax structure.

This budget aims to provide relief to taxpayers, encourage investment, and stimulate economic growth. Here’s a detailed breakdown of the key income tax updates and their implications.

Revision of Income Tax Slabs

The most anticipated change is the revision of income tax slabs. The Finance Minister announced new slabs to make the tax structure more progressive and equitable.

The new slabs are as follows:

Income Range (₹)Tax Rate
0 – 3,00,000Nil
3,00,001 – 6,00,0005%
6,00,001 – 9,00,00010%
9,00,001 – 12,00,00015%
12,00,001 – 15,00,00020%
Above 15,00,00025%

These new slabs are expected to benefit middle-class taxpayers by reducing their tax burden. The increased exemption limit from ₹2,50,000 to ₹3,00,000 is a welcome relief.

Standard Deduction

The standard deduction for salaried individuals has been increased from ₹50,000 to ₹75,000. This change will provide additional disposable income to employees and pensioners, helping them cope with inflation.

Section 80C Limit

The deduction limit under Section 80C of the Income Tax Act, which includes investments in PPF, EPF, NSC, and other specified instruments, has been increased from ₹1,50,000 to ₹2,00,000. This move aims to encourage savings and long-term investment among taxpayers.

Health Insurance Deduction

The deduction limit for health insurance premiums under Section 80D has been raised. For individuals below 60 years, the limit is now ₹35,000 (previously ₹25,000). For senior citizens, the limit has been increased to ₹60,000 (previously ₹50,000). This enhancement emphasizes the importance of health insurance in financial planning.

Home Loan Interest Deduction

To boost the real estate sector and make housing more affordable, the government has increased the deduction limit on home loan interest under Section 24(b) from ₹2,00,000 to ₹2,50,000. This change will provide significant relief to homebuyers, especially in urban areas.

Simplification of Tax Filing

The budget proposes the introduction of a new pre-filled income tax return (ITR) form for salaried individuals and pensioners. This form will auto-populate income details, reducing the complexity and time required for filing returns. It is expected to improve compliance and accuracy in tax reporting.

Senior Citizens’ Benefits

For senior citizens above 75 years of age, the government has proposed exempting them from filing income tax returns if they have only pension and interest income. This move aims to ease the compliance burden on elderly taxpayers.

Start-Up Incentives

To promote entrepreneurship, the government has extended the eligibility period for start-ups to claim tax holidays by one more year. Additionally, start-ups can now carry forward their losses for up to ten years, provided the original promoters hold a significant share in the company.

Capital Gains Tax

The government has rationalized the capital gains tax regime by introducing a flat 10% tax rate on long-term capital gains exceeding ₹1 lakh from the sale of listed securities. This measure aims to simplify the tax structure and encourage investment in the stock market.

Digital Payments Incentives

To boost digital transactions, the government has proposed a 2% reduction in the GST rate for businesses with an annual turnover of up to ₹10 crore that primarily use digital payment methods. This incentive aims to promote a cashless economy and improve transparency.

Agricultural Sector Support

The government has introduced a new scheme under Section 80C for farmers, allowing them to claim deductions on investments made in specified agricultural infrastructure bonds. This initiative seeks to provide financial support to the agricultural sector and encourage investments in rural development.

Corporate Tax Rate

For domestic companies with a turnover of up to ₹500 crore, the corporate tax rate has been reduced from 25% to 22%. This reduction is expected to stimulate business growth and investment in the economy.

Digital Nomad Visas

In a bid to attract global talent, the government has introduced a special visa category for digital nomads. Individuals working remotely for foreign employers can now apply for this visa, which comes with specific tax benefits and exemptions.

Environmental Tax Credits

To promote sustainability, the government has introduced tax credits for individuals and businesses investing in renewable energy projects. Taxpayers can now claim deductions for installing solar panels, wind turbines, and other eco-friendly technologies.

The Union Budget 2025 has introduced several significant changes to the income tax structure, aimed at providing relief to taxpayers, boosting investments, and fostering economic growth.

These measures are expected to improve the financial well-being of individuals and promote a more inclusive and progressive tax system.

As taxpayers, it is essential to stay informed about these updates and make the most of the available benefits.