Prime Minister Narendra Modi’s call for Goddess Lakshmi’s blessings for the poor and middle class has sparked speculation that
Union Budget 2025 will lower the income tax burden on individual taxpayers.
“I pray that Goddess Lakshmi showers the poor, middle class with blessings. It is a matter of great pride that India completed 75 years as a democratic nation. India has established itself well on the global pedestal…This is the first complete budget of my third term. I can confidently say that in 2047, when India will complete 100 years of Independence, India will fulfil its aim of Viksit Bharat and this budget will give new energy and hope to the nation,” PM Modi said while addressing the media outside Parliament on Budget eve.
Every year, salaried taxpayers eagerly await the Budget for potential income tax rate cuts, revisions, and other measures to alleviate their tax burden. Any adjustments to income tax slabs and rates are expected to occur primarily under the new income tax regime, as the government has been promoting its adoption.
According to a Times of India report, citing government data, 72% of taxpayers have made the switch to this new framework.
The Union Budget 2025 arrives at a time when GDP growth has slowed to a two-year low of 5.4%, with calls for income tax rate cuts seen as a potential way to stimulate consumption in the economy.
The clamour for liberalising tax slabs, reducing tax rates and hiking standard deduction, among other measures, is growing and remains to be seen if Finance Minister Sitharaman’s Bahikhata unveils tax sops for the middle-class taxpayers.
According to Money Control, citing some reports, the government may consider raising the basic exemption limit under the new tax regime from Rs 3 lakh to Rs 10 lakh.
There is also speculation that a new 25 per cent tax slab could be introduced for incomes between Rs 15 lakh and Rs 20 lakh. Currently, individuals earning over Rs 15 lakh are taxed at a rate of 30 per cent. If Budget 2025 introduces this new slab, the 30 per cent rate would then apply to incomes exceeding Rs 20 lakh, added the report.
Tax experts believe the basic exemption limit should be increased to at least Rs 5 lakh, if not Rs 10 lakh. Unlike a tax rebate, raising the basic exemption limit would reduce tax liability across all income brackets.
According to the report, both taxpayers and income tax consultants agree that rising inflation and increasing household expenses warrant an increase in the standard deduction.
Currently set at Rs 75,000 under the new tax regime, there are calls to raise it to at least Rs 1 lakh or more. The finance minister had previously kept the standard deduction under the old regime at Rs 50,000, and it is unlikely she will revise it on February 1.
With inputs from agencies
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PM Modi’s Goddess Lakshmi remark sparks hopes for income tax relief for middle class
