Image Source : PTI FM Nirmala Sitharaman with her budget team at Parliament.
Union Finance Minister Nirmala Sitharaman is all set to present to the Union Budget 2025 at 11 am. This time, she might announce some major changes to the new income tax regime in the Budget 2025 to make it more attractive for individual taxpayers. First introduced in 2020, the new income tax regime has gone through several changes over the years to make it more attractive for taxpayters. And while the changes have led to increased adoption, experts suggest that there is scope to make it more attractive.
What key changes taxpayers can expect?
Hike in basic exemption limit
One of the key changes could be an increase in the basic exemption limit from Rs 3,00,000 to Rs 3,50,000. If the Centre approves it , this would provide relief to individuals by boosting disposable income, which, in turn, could support consumption.
Big boost in NPS
Currently, the employer’s contribution to the National Pension System (NPS) is tax-exempt under the new regime, however, an individual’s contribution does not qualify for any exemption. This could change in Budget 2025 with the government extending the benefit to personal NPS contributions as well.
Big rebate under Section 87A
The rebate under Section 87A which is now applicable to incomes up to Rs 7 lakh, may be extended to Rs 8 lakh, which will give taxpayers more room before higher tax rates apply.
Apart from this, the government could introduce a new tax slab, levying 25% on incomes between Rs 15 lakh and Rs 18 lakh, while keeping the 30% rate for incomes above Rs 18 lakh.
This time, Finance Minister Nirmala Sitharaman will present her eighth consecutive Budget on Saturday and will deliver it shortly from a digital tablet enclosed in a traditional ‘bahi-khata’ style pouch.Sitharaman, India’s first full-time woman Finance Minister, broke away from the colonial tradition of carrying a Budget briefcase in July 2019, opting instead for a traditional ‘bahi-khata’, to carry the Union Budget papers.
She continued this custom the following year, and in the pandemic-affected 2021, she replaced the traditional papers with a digital tablet to carry her speech and other Budget documents. This tradition continues on Saturday.
She was appointed as the finance minister when Modi swept to power again in the 2019 election and presented her maiden Budget on July 5, 2019. She used a red cloth folder enclosed with a string and emblazoned with the national emblem to carry the Budget documents.
Earlier, finance ministers in different governments, including her predecessors in the Modi government – Arun Jaitley and Piyush Goyal- used the standard Budget briefcase.
