Indian Union Budget 2025

 In the 2025 Union Budget, India's Finance Minister Nirmala Sitharaman introduced significant changes to the income tax structure, affecting both the old and new tax regimes. These adjustments aim to simplify the tax system and provide relief to taxpayers.

Old Tax Regime:

The old tax regime continues to offer various exemptions and deductions, such as those under Section 80C (up to ₹1.5 lakh), Section 80D (medical insurance premiums), and housing loan interest. However, the tax slabs remain unchanged:

• Income up to ₹2.5 lakh: Nil
• ₹2.5 lakh to ₹5 lakh: 5%
• ₹5 lakh to ₹10 lakh: 20%
• Above ₹10 lakh: 30%

New Tax Regime:

The new tax regime has been revised to make it more attractive:

• Income up to ₹4 lakh: Nil
• ₹4 lakh to ₹8 lakh: 5%
• ₹8 lakh to ₹12 lakh: 10%
• ₹12 lakh to ₹16 lakh: 15%
• Above ₹16 lakh: 20%

Additionally, the basic exemption limit has been increased to ₹4 lakh from the previous ₹3 lakh. The standard deduction of ₹50,000, previously available only under the old regime, is now extended to the new regime. Furthermore, the highest tax rate of 30% now applies to incomes above ₹24 lakh, up from the previous threshold of ₹15 lakh.

Comparison:

The old tax regime benefits individuals who can claim multiple deductions and exemptions, making it suitable for those with significant investments in tax-saving instruments. In contrast, the new tax regime offers lower tax rates with no exemptions or deductions, simplifying the tax filing process. Taxpayers must evaluate their financial situations to determine which regime offers greater tax savings.

Impact:

The revised new tax regime is expected to increase disposable incomes, thereby enhancing consumption, savings, and investments in the economy. The government anticipates that 75% of taxpayers will opt for the new system in the fiscal year 2024-25.

My view:

In media, there is huge propoganda is going that there is "No Tax upto 12 lakhs." Technically it may valid, but we have to mind some other points too. This changes made only on New Tax regime, not on old regime. In new regime itself, basic exemption is not 12 lakhs, it just 4 lakhs. When your income across a certain level, you have to pay tax from 4 lakhs itself.  

In 2008 recession period, I was a kid, but still I remember that Indians savings habbit only saves our country from that huge recession. Old Tax regime system was build to encourage people to save. For that we can get tax exemption. But after introducing New tax regime, people's thought about savings was changed and from this budget it will develop further.