Budget 2025: Five income tax changes that you can expect in Nirmala Sitharaman’s speech | Mint

As Finance Minister Nirmala Sitharaman prepares for Budget 2025 announcements, several anticipated income tax reforms may impact salaried people. The upcoming budget may include reforms to aid taxpayers, especially given rising inflation and financial restrictions. In a telephone conversation with Mint, Mumbai-based tax and investment expert Balwant Jain listed five crucial tax changes salaried individuals can expect from Modi 3.0’s second budget.

5 income tax changes that you can expect in Budget 2025

1)Income tax slab rate

The government may further promote the new tax regime by offering additional benefits to make it more attractive to taxpayers.

There are speculations that the government may change the income tax slab under the new tax system. “To make the regime more progressive and more in line with the state of the economy, it is suggested that the 30% tax rate be applied to income levels up to ₹20 lakh, keeping in view the inflation”, said tax expert Balwant Jain.

• ₹0- ₹3 lakh – Nil: If your annual income is between ₹zero and ₹300,000, you don’t pay any income tax.
• ₹3-7 lakh – 5%: If your income is between ₹300,001 and ₹700,000, you pay 5% tax on the amount exceeding ₹300,000.
• ₹7-10 lakh – 10%: If your income is between ₹700,001 and ₹1,000,000, you pay 10% tax on the amount exceeding ₹700,000.
• ₹10-12 lakh – 15%: If your income is between ₹1,000,001 and ₹1,200,000, you pay 15% tax on the amount exceeding ₹1,000,000.
• 12-15 lakh – 20%: If your income is between ₹1,200,001 and ₹1,500,000, you pay 20% tax on the amount exceeding ₹1,200,000.
• Above ₹15 lakh – 30%: If your income is above ₹1,500,000, you pay 30% tax on the amount exceeding ₹1,500,000.

2) Special tax slabs for senior citizens under the new regime

The new tax slabs are uniform for all taxpayers, regardless of age. “However, the government should introduce a differentiated tax system under the new regime, particularly for senior citizens. For example, senior citizens (aged 60 and above) could be given a higher exemption limit or lower tax rates, making the tax system more favourable for them,” said Balwant Jain.

In the old tax regime, the basic exemption limit for senior citizens was ₹3 lakh; for super senior citizens, it was ₹5 lakh.

3) Standard deduction

There is also talk of increasing the standard deduction for salaried individuals.

Tax expert Balwant Jain has recommended that the standard deduction be linked to a particular proportion of an individual’s income, with a maximum cap of ₹1 lakh, regardless of the tax system chosen. This would enable salary-based adjustments to the standard deduction, giving higher earners more support.

4) Import duty on gold

The government might increase the import duty on gold to address concerns about the trade deficit and reduce excessive imports.

“Domestically, there are concerns that the Indian government might increase the import duty on gold in the upcoming Union Budget to curb gold imports and address the trade deficit. Such a move could lead to price adjustments and potential divergence from international markets,” said Sugandha Sachdeva, Founder of SS WealthStreet.

5) Section 80 C deduction

The Section 80C deduction limit, which has seen minimal increases over the years, is a topic of discussion among tax experts. In 2003, the maximum deduction under Section 80C was ₹1 lakh. In 2014, the limit was increased to ₹1.5 lakh to provide some relief, but this increase has not been sufficient to keep pace with inflation.

“With the rising cost of living and the increasing financial burden on taxpayers, the Section 80C limit should be raised further, and it could be increased to ₹3.5 lakh to better align with the current economic conditions,” added Jain.

Income tax benefit for home loan EMIs

He added that housing loan interest deductions should not be combined under Section 80C but should be given a separate, higher deduction limit.

They are included under Section 80C cap of ₹1.5 lakh, which includes other deductions for investments like PPF, ELSS, and life insurance premiums.

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Disclaimer: The views and recommendations made above are those of individual analysts, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.