Will income up to Rs 10 lakh be tax free? Taxpayers may get a gift in Budget 2025 

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By

Sweta Mitra

Only a few days remain until the general budget presentation. Finance Minister Nirmala Sitharaman is set to unveil the country’s budget on February 1. Taxpayers are eagerly anticipating this budget, as they have long been advocating for an increase in tax-free income.

 

With rising inflation, the current tax-free income threshold has not kept pace. Currently, income up to Rs 7.75 lakh is entirely tax-free, but many are calling for this limit to be raised to Rs 10 lakh in the upcoming budget.

 

Those earning up to Rs 20 lakh are also hoping for some tax relief. Reports suggest that the government is considering two options: one is to make income up to Rs 10 lakh tax-free, and the other is to introduce a new tax slab of 25% for individuals earning between Rs 15 and 20 lakh.

 

This exemption will only be applicable to individuals opting for the new tax regime. Currently, there is no tax on income up to Rs 7.75 lakh, along with a standard deduction of Rs 75,000. Additionally, a tax rate of 30% is applied to income exceeding Rs 15 lakh.

 

If the central government implements this relief for taxpayers, it could result in a revenue loss ranging from Rs 50,000 crore to Rs 1 lakh crore. In the 2023 budget, the Modi government also provided tax relief to taxpayers by raising the tax exemption limit under section 87A to Rs 7 lakh for those who selected the new tax regime.

 

Boosting consumption

Experts suggest that if the government aims to enhance GDP growth through increased consumption, it should consider providing income tax relief. Introducing a tax slab of 25% for income between Rs 15 lakh and Rs 20 lakh would allow individuals to retain more money, thereby stimulating consumption.



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