On July 23, 2024, Finance Minister Nirmala Sitharaman announced a significant relief for the middle class in the budget for the financial year 2024-25.
The government increased the standard deduction limit from Rs 50,000 to Rs 75,000, which will provide tax relief under the New Tax Regime.
However, many salaried individuals are hoping for relief under the Old Tax Regime as well.
As the government prepares for the 2025 budget, there are ongoing discussions about possible measures to further support the middle class.
Expected Changes in the 2025 Budget
The 2025 budget will be presented on February 1, 2025, and it will be Finance Minister Sitharaman’s eighth budget.
Reports suggest that there could be additional tax relief for the salaried class, which makes up the largest group of income taxpayers in the country.
One possible change is an increase in the standard deduction limit under the New Tax Regime. Currently, this limit is Rs 75,000, but the government might raise it to Rs 1 lakh.
Additionally, people earning up to Rs 7 lakh annually do not have to pay any tax under the New Tax Regime.
Focus on the New Tax Regime
It seems that the government will continue to focus on the New Tax Regime, and tax relief is expected to be available mainly under this system.
The Finance Ministry has made it clear that the Old Tax Regime may not receive any significant relief.
For example, in the 2023-24 financial year, around 8 crore income tax returns were filed.
Of these, 2.79 crore returns were from individuals earning between Rs 5 lakh and Rs 10 lakh annually, and another 89 lakh returns came from individuals earning between Rs 10 lakh
and Rs 20 lakh. This suggests that tax relief will likely target these taxpayers in the upcoming budget.
