Budget 2025: Can tax relief be on the horizon for middle-class taxpayers? | Mint

The Union Budget 2025 is just around the corner, and taxpayers are keeping a close watch. Over the years, the middle class has shouldered a big part of the tax burden, with individual tax collections doubling from ₹4.8 lakh crore in FY21 to ₹10.4 lakh crore in FY24. This year, many are hoping for much-needed relief. Here’s why this budget is special and what people are expecting.

1. Updating tax slabs to ease the burden

For many, the current tax system feels outdated. Right now, income above ₹15 lakh is taxed at 30%, and this threshold hasn’t changed for years.

Taxpayers are hoping for a new, fairer structure like:

• No tax on income up to ₹5 lakh (currently ₹3 lakh).
• 10% tax on ₹5–10 lakh.
• 20% tax on ₹10–20 lakh.
• 30% tax on income over ₹20 lakh.

This change would make a big difference. For example, someone earning ₹25 lakh a year could save over ₹1.5 lakh in taxes under this new structure compared to the current one. It’s a step that could give middle-class taxpayers some breathing room.

2. Higher deductions for savings and investments

Many taxpayers feel that current deduction limits no longer match the rising cost of living. Here’s what’s expected:

• Section 80C: Increasing the limit from ₹1.5 lakh to ₹2.5 lakh to encourage savings in PPF, ELSS, and tax-saving FDs.
• Section 80D: Raising health insurance deductions to ₹50,000 for individuals and ₹1 lakh for senior citizens.
• Home loan interest: Increasing the deduction limit from ₹2 lakh to ₹3 lakh to make buying a home more affordable.

These changes could put more money back in people’s pockets and encourage long-term financial planning.

3. Focus on senior citizens

Senior citizens often have unique financial needs, and this year’s budget is expected to provide them with additional support. Higher exemption limits and bigger tax benefits for healthcare and savings are on the cards.

4. Support for key sectors

This year, the government is also expected to focus on specific industries to drive growth:

• Real estate: Tax benefits for homebuyers, GST rationalisation for under-construction properties, and affordable housing incentives could give this sector a much-needed boost.
• Healthcare: Lowering GST and import duties on medical equipment to make treatments more affordable.
• Manufacturing: Extending the 15% concessional tax rate for new manufacturing units to promote Make-in-India initiatives.

5. Simplifying taxes for everyone

Filing taxes can feel like a headache, especially with the current TDS system that has too many slabs and rates. The budget might simplify this by cutting down the number of TDS categories, making it easier for everyone to comply.

Final thought

Budget 2025 is more than just numbers on a page—it’s about making life easier for taxpayers while supporting economic growth. The middle class, in particular, is looking forward to changes that could reduce their tax burden and increase savings.

If the government delivers on these expectations, this budget could bring meaningful changes to people’s lives, making it easier to save, spend, and plan for the future. This year, the focus isn’t just on what taxpayers owe—it’s on how the system can work better for everyone.

Chakravarthy V., Cofounder & Executive Director, Prime Wealth Finserv Pvt. Ltd.