
The last budget laid out a framework for a $5 trillion economy by 2024-25, and Budget 2026 builds on this with great acumen. The Economic Survey had spoken about entrepreneurship as a strategy to fuel productivity growth and wealth creation.
The Budget for 2025, presented on Saturday by finance minister Nirmala Sitharaman continues the government’s efforts to propel India’s economic growth, foster inclusive development and enhance overall welfare of its citizens. In line with the government’s commitment to address the woes of the middle class, the Budget has proposed some key reforms which will go long way in uplifting household sentiments and enhancing spending power of rapidly growing middle-income population. With this objective and to give boost to the new tax regime, the tax slabs have been proposed to be widened. Further, the income threshold for rebate under Section 87A has been raised from Rs 7 lakh to Rs 12 lakh. Due to this proposed hike, salaried taxpayers with an income of up to Rs 12.75 lakh (excluding special income like capital gains) will benefit from tax rebate, ensuring that they pay no tax after considering the standard deduction of Rs 75,000. This will mean a taxpayer in the new regime earning Rs 12.75 lakh will receive a tax benefit of Rs 83,200 with the proposed slabs, which is 100% of the tax payable under the tax slabs in the new regime under the current law.
For taxpayers opting for old tax regime, they will now need to evaluate the benefits available to them, based on exemptions/deductions available with them. For example, a taxpayer with an income of Rs 24.75 lakh would be at par in the new tax regime with the old regime should the exemptions availed is Rs 8.5 lakh under old tax regime. It provides for rise in salary threshold to tax certain perquisites including overseas medical treatment, which is yet to be notified. It will be interesting to see the impact of the same on the salaried class.
The Budget proposes to raise the number of past years for which updated tax returns can be filed from two years to four years. This extension provides taxpayers with additional time to correct any errors. While there will be a progressive increase in penalties for late filings (60% for returns submitted between 24 and 36 months, and 70% for those submitted between 36 and 48 months), this measure can still be seen as a major step forward as it encourages voluntary compliance to reduce litigation.
To ease the financial burden, the relaxation of tax collected at source threshold from Rs 7 lakh to Rs 10 lakh is another welcome move. The amendment in the provision to consider the annual value of the property occupied by the owner for own residence or non-occupation, due to any reason as ‘NIL’, should go a long way for taxpayers.
Divya Baweja
Partner with Deloitte Touche Tohmatsu India LLP