Currently, under the new tax regime, the income tax slabs for the financial year 2024-25 (assessment year 2025-26) are structured as follows:
- Income up to ₹3 lakh: No tax
- ₹3 lakh to ₹7 lakh: 5%
- ₹7 lakh to ₹10 lakh: 10%
- ₹10 lakh to ₹12 lakh: 15%
- ₹12 lakh to ₹15 lakh: 20%
- Above ₹15 lakh: 30%
([Economic Times](https://m.economictimes.com/wealth/income-tax-slabs?utm_source=chatgpt.com))
The proposed restructuring would significantly alter this framework, potentially exempting a larger portion of the population from income tax and adjusting the tax liabilities for higher income brackets. These changes are anticipated to increase disposable income for middle-class taxpayers, thereby boosting consumer spending and contributing to economic expansion.
Finance Minister Nirmala Sitharaman is expected to present the Union Budget 2025-26 on February 1, 2025, continuing the tradition of unveiling the budget on the first day of February. While the date has not been officially confirmed, it aligns with the government's customary schedule. ([ClearTax](https://cleartax.in/s/budget-2025-expectations-income-tax?utm_source=chatgpt.com))
In the previous budget, the government made the new tax regime more attractive by introducing standard deductions, raising the basic exemption limit, and increasing the tax rebate under Section 87A for taxable incomes up to ₹7 lakh. These measures were aimed at simplifying the tax system and providing relief to individual taxpayers. ([Economic Times](https://m.economictimes.com/wealth/income-tax-slabs?utm_source=chatgpt.com))
The current discussions suggest a continuation of this approach, with a focus on making the tax regime more equitable and growth-oriented. By potentially exempting incomes up to ₹10 lakh and introducing a 25% tax slab for certain higher-income groups, the government seeks to balance the objectives of revenue generation and taxpayer relief.
Tax experts have noted that such reforms could lead to a more progressive tax system, where the tax burden is more evenly distributed across different income groups. However, they also caution that the government must carefully assess the fiscal implications of these changes to ensure that revenue targets are met without compromising essential public services.
The proposed tax reforms are part of a broader strategy to enhance economic resilience and foster sustainable growth. By increasing the disposable income of middle-class consumers, the government aims to stimulate demand in various sectors, thereby encouraging investment and job creation.
As the budget announcement approaches, stakeholders from various sectors are keenly awaiting the final decisions on these proposals. The government's commitment to tax reforms reflects its responsiveness to the evolving economic landscape and the needs of its citizens.