Illustration showing a stamper with words 'Income Tax'. For representational purposes.
Credits: iStock Photo
Finance Minister Nirmala Sitharaman will present the 8th consecutive Union Budget on February 1, 2025. Reports suggest that the government is mulling over cutting income tax for those who are earning up to Rs 15 lakh a year in February's budget, in turn providing relief to the middle class.
The tax payers have pinned high hopes on the Union Budget FY 2025-26 documents and are keeping their fingers crossed regarding their expectations from the government's most important financial document of the year.
Personal Tax :
"Scrapping of the Old Regime totally and rationalising the Income Tax slabs under the new regime – It is a fact that today under the new tax regime, Income Tax has become simpler. Further an exemption of Rs.7 Lakhs means that taxpayers have to pay NIL tax on the same level of Income where they were earlier paying tax. Hence, the Government should consider and make the new regime as the only regime as the Income Tax Act goes for a comprehensive review on February 1, 2025," said Vivek Jalan, Partner Tax Connect Advisory Services LLP - a multidisciplinary PAN India consulting firm.
"However, they must also consider easing out the tax rate in the new regime considering the Cost of Inflation of approx. 6% pa and the impact on the present value of money," noted Jalan.
"It is thus expected that the basis exemption/ rebate be extended to Rs.9 Lakhs for putting in more money in the hands of the middle class. Further, for the established taxpayers with an income of over Rs.15 Lakhs, transition to the new scheme would involve a financial hit. It is expected that the Government would also compensate them. Hence there may be a new slab in the new regime of say Rs.15 Lakhs - Rs.18 Lakhs with a tax rate of 25 per cent", added Jalan.
"This would mean more disposable income in the hands of people and a push to consumption which would consequently push the GDP of the country,"said Jalan.
Corporate Tax :
"Substantially revamping complex, multiple and redundant TDS provisions leading to confusion and litigation for taxpayers. Also, percentage of deduction in some cases is prohibitive – As of now there are 71 Sections under TDS/TCS; Rates of TDS/TCS is still high inspite of rationalisation in last budget; Also there is overlap between TCS and TDS provisions.," said Jalan.
"A complete overhaul of TDS/TCS provisions have been represented and is expected in Union Budget 2025 as a part of “Substantially revamping of Income Tax Act” as announced by FM in her last budget speech. It is expected that there may be a single comprehensive Schedule of Rates of TDS (just Like the Customs Tariff Act) with Schedule Notes.
Issuance of TDS/TCS certificates may be withdrawn for Ease of compliances, which will help more than 10 Lakh tax-deductors and Taxpayers. Ease of compliances will certainly help bring improve organised sector." said Jalan.
Union Budget 2025 | Nirmala Sitharaman, who continues to be Finance Minister, will present her record 8th Union Budget this time. While inflation has burnt a hole in the pockets of 'aam janata', reports suggest there might be a tax relief for those making up to Rs 15 lakh per year. Track the latest coverage, live news, in-depth opinions, and analysis only on Deccan Herald. Also follow us on WhatsApp, LinkedIn, X, Facebook, YouTube, and Instagram.