
Direct Tax
The Union Budget is a critical annual financial statement outlining the government’s revenue and expenditure for the coming fiscal year. Expectations from the Union Budget 2025 will depend on the prevailing economic conditions, government priorities, and sectoral needs. But here we are talking only about Direct Tax where stakeholders may have expectations:
1. Changes in Income Tax for Individuals
- Revised Tax Slabs:
Possible revision of tax slabs to increase the disposable income of individuals, especially for the middle class. For example:- Raising the income threshold for no tax liability (currently ₹2.5 lakh under the old regime and ₹3 lakh under the new regime).
- Adjusting higher income slabs to reduce the burden on the salaried class.
- Standard Deduction:
Enhancement in the standard deduction (currently ₹50,000) to account for inflation. - New Tax Regime:
Further rationalization or incentivization of the new tax regime to encourage its adoption by more taxpayers.
2. Relief for Senior Citizens
- Higher Exemption Limit:
Increasing the exemption limit for senior citizens (currently ₹3 lakh) and super senior citizens (₹5 lakh) to support their financial security. - Enhanced Deduction for Medical Expenses:
Allowing higher deductions under Section 80D for health insurance premiums and out-of-pocket medical expenses.
3. Incentives for Homebuyers
- Housing Loan Interest Deduction:
Increasing the deduction limit under Section 24(b) for housing loan interest (currently ₹2 lakh). - Affordable Housing:
Extending benefits under Section 80EEA for affordable housing projects.
4. Tax Benefits for Investments
- Higher Section 80C Limit:
Raising the limit for deductions under Section 80C (currently ₹1.5 lakh) to encourage savings and investments. - Section 80CCD:
Increasing deductions for contributions to the National Pension System (NPS).
5. Simplification for Small Businesses and Professionals
- Presumptive Taxation:
Raising the turnover limit for presumptive taxation under Section 44AD and Section 44ADA to benefit small businesses and professionals. - Startups:
Extending the tax holiday for startups and providing additional deductions for research and innovation expenses.
6. Capital Gains Tax Reforms
- Simplification of Structure:
Unification of holding periods and tax rates across asset classes like real estate, equities, and debt to remove complexities. - Relief for Small Investors:
Enhanced exemption limits under Section 54 (real estate) and Section 54EC (long-term capital gains bonds).
7. Focus on Digital and Green Economy
- Digital Payments:
Tax incentives for individuals and businesses adopting digital payment methods. - Green Investments:
Introduction of tax benefits for investments in renewable energy projects and electric vehicles.
8. Addressing Inflation and Compliance
- Indexed Deductions:
Linking certain deductions (like Section 80C) to inflation to maintain their real value over time. - Simplification of Filing:
Streamlining tax filing processes to reduce compliance burdens, including enhanced pre-filled returns.
9. Corporate Tax and Dividend Tax
- For SMEs and MSMEs:
Lower corporate tax rates or a special tax slab for smaller enterprises to encourage growth. - Dividend Distribution Tax (DDT):
Revisiting tax structures for dividends to make them more investor-friendly.
These changes aim to boost compliance, ease the tax burden, and align the system with India’s economic goals. Let me know if you’d like a deep dive into any specific provision!
for more information you may contact to the administrator on Mb No 8700461745
What a wonderful article!
I look forward for more beneficial income-tax-rates for lower and middle-class people. Further GST should be more simplified and tax rates should be reduced.