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  1. Budget 2025 may expand 20% tax slab and standard deduction in new regime, phase-out old regime: Reports

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Budget 2025 may expand 20% tax slab and standard deduction in new regime, phase-out old regime: Reports

Upstox

3 min read | Updated on January 17, 2025, 16:12 IST

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SUMMARY

Ahead of Budget 2025, the government is looking at two options to provide tax relief under the new tax regime. The first option being considered is to increase the standard deduction limit from ₹75,000. The second option is to adjust the tax slabs in the new tax regime, according to media reports.

inome tax slabs and rates change in budget 2025

The decision being mulled by the government revolves around making the new tax regime more rewarding. Representational image

Income tax slab and rate changes expected in Union Budget 2025-26: In the run-up to Budget 2025, some media reports are speculating that the government may make the new tax regime more attractive for individual taxpayers while outlining a roadmap for phasing out the old tax regime.
According to a report by The Financial Express (FE), Finance Minister Nirmala Sitharaman may announce the gradual phasing out of the old tax regime over the next few years.
The FE report, quoting sources, further said the government will not announce any changes in the old tax regime in Budget 2025.

However, the tax slabs and rates in the new tax regime may be tweaked further to provide more relief to taxpayers.

Meanwhile, CNBC-TV18 reported on Friday (January 17, 2024) that the central government is considering a plan to provide tax relief to taxpayers, which would boost consumption and "stimulate economic activity".

As per the CNBCTV-18 report, the government is looking to make the new tax regime more rewarding.

The report says the government is looking at two options to provide tax relief under the new tax regime. The first option being considered is to increase the standard deduction limit under the new tax regime for salaried taxpayers. While such a move will provide immediate relief to salaried employees filing their taxes under the new regime, the report did not say the extent to which the standard deduction limit may be raised.

The second option being considered by the government is to adjust the tax slabs in the new tax regime, according to the CNBC-TV18 report. It said the government may expand the 20% tax slab under the new regime to include individuals earning up to ₹18 lakh or ₹20 lakh annually. Additionally, the 30% tax bracket may be imposed on incomes above ₹18 lakh or ₹20 lakh.

Upstox wasn’t able to independently verify both the reports by CNBC-TV18 and FE.

The final decision of the government will be known only on February 1, 2025, when the finance minister will present her budget speech before the parliament.

In the run-up to the budget, however, several tax experts and industry bodies are expecting that the government would revise the tax slab and rates under the new regime to put more money in the hands of taxpayers. This is in line with the government’s efforts to make the new tax regime more attractive with every budget since its introduction in 2020.

Recently EY India said it is expecting the government to increase the basic exemption limit from ₹3 lakh to ₹5 lakh in the new tax regime and also reduce tax rates. Such a decision would provide more disposable income in the hands of taxpayers.
Recently, ICAI proposed that the government should link the standard deduction provision under the new tax regime to inflation.

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Upstox
Upstox News Desk is a team of journalists who passionately cover stock markets, economy, commodities, latest business trends, and personal finance.

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