Budget 2025 income tax: From income tax slab & rate changes to hike in standard deduction, exemption limits - top 10 expectations of salaried taxpayers

Budget 2025 income tax expectations: What will the income tax slabs and income tax rates after Union Budget 2025? Will FM Nirmala Sitharaman raise the standard deduction further under the new income tax regime and include popular exemptions like Section 80C, HRA, Section 80D? With the new income tax regime becoming the default tax regime, tax experts believe that no major changes in the old tax regime should be expected. Any rationalisation in income tax slabs, rates and changes in basic exemption limit, rebate etc. can only be expected under the new income tax regime. With that in mind, we take a look at the top 10 income tax expectations of salaried taxpayers and common man from Budget 2025:

Budget 2025 Income Tax Rates & Slabs: The latest income tax slabs under the new income tax regime for FY 2024-25 announced by FM Sitharaman in Budget 2024 were aimed at lowering the tax burden of the common man. With that in mind, experts expect further rationalisation of income tax slabs and rates, with particular focus on shifting the 30% tax slab to income levels above Rs 20 lakh instead of Rs 15 lakh at present. (AI image)

Budget 2025 income tax expectations: Standard deduction under the new income tax regime was hiked to Rs 75,000 from Rs 50,000 last year. Experts are of the view that in the absence of major tax exemptions and deductions in the new tax regime, FM Sitharaman should hike standard deduction further to at least Rs 1 lakh to encourage switch to the new regime. (AI image)

Budget 2025 income tax expectations: Experts predict that due to the government's focus on promoting the new tax regime, the old income tax regime might remain unchanged. Currently, the new tax regime offers a basic exemption threshold of Rs 3 lakh. There are expectations that this threshold could be raised to Rs 5 lakh, which would allow individuals greater disposable income for consumption or savings, consequently stimulating economic growth. (Image source: Freepik)

Budget 2025 income tax expectations: Currently, individuals with taxable income up to Rs 7 lakh are eligible for a complete tax rebate. This fiscal year, there are anticipations of the rebate threshold being raised to Rs 10 lakh. Such a revision under the new income tax regime would offer substantial financial relief to middle-income taxpayers, feel experts. (AI image)

Budget 2025 income tax expectations: Experts advocate for inclusion of the Section 80C exemption under the new income tax regime to encourage savings. Currently the Section 80C exemption limit of up to Rs 1.5 lakh is available under the old income tax regime. (AI image)

Budget 2025 income tax expectations: Tax experts believe that to encourage National Pension System (NPS) adoption, the government should consider making it an EEE product (Exempt-Exempt-Exempt). Additionally, they see a case to include the additional tax benefit of Rs 50,000 for NPS under the old tax regime in the new tax regime as well. (AI image)

Budget 2025 income tax expectations: The House Rent Allowance (HRA) exemption calculation should be revised to include prominent tier 2 cities alongside existing metropolitan areas. Cities such as Hyderabad, Pune, Bengaluru, Ahmedabad and Gurgaon merit an increase in HRA exemption from the current 40% to 50% of basic salary, say experts. (AI image)

Budget 2025 income tax expectations: Talking about the importance of health insurance amidst rising healthcare costs, experts say that FM Sitharaman should allow for the Section 80D exemption towards health insurance premium under the new income tax regime. (Image source: Freepik)

Budget 2025 income tax expectations: With an intent to promote charity and encourage savings with banks, tax experts say the government should consider allowing Section 80G and Section 80TTA benefits under the new income tax regime. (AI image)

Budget 2025 Housing Tax Breaks: Tax experts say the government might enhance tax advantages for property purchasers. Such benefits could encompass higher deductions on housing loan interest or principal payments. At present, individuals can claim losses under income from house property only up to Rs 2 lakhs annually. This ceiling requires revision and could be elevated to Rs 3 lakhs per year, which would strengthen the 'housing for all' programme. (AI image)

Budget 2025 income tax expectations: Tax experts are of the view that while the government is working to simplify and streamline the process of Income Tax Return (ITR) filing, more still needs to be done to make the online tax filing process smooth, especially with regards to Annual Information Statement (AIS) and pre-filled ITR forms. (AI image)