In this news, new tax code, or DTC, and old and new regime changes would be clarified. With the Budget 2025, people have high expectations even though the 2024 budget has upset all individuals. Additionally, all the common person are eagerly waiting for the budget 2025 with the hope of reducing their financial burden and giving them relief.
Prior, Smt. Nirmala Sitaraman announced an alteration regarding the current (Old) Income Tax Act, Along with 22 smaller groups of CBDT (Central Board Direct Taxes) set together and intensionally seeking out, how income tax could be changed. (According to the sources).
There are two main categories related to income tax department are below-the-line:
1. Income Tax Old Regime
Initially, Financial Minister Smt. Nirmala Sitaraman declared once in the 2024/25 budget that current tax rules should be changed in order to easily understand and adapt as well as to shorten the Income Tax Act of 1961 which is too long, and cut the 60%.
What is the Act of 1961?
The Act of 1961 is the main legal framework for taxation in India, and it covers various taxes and how taxes are imposed on businesses, individuals, MSMEs, and other entities.
Moreover, this act of 1961 considered cautious taxes such as Personal income tax, Wealth tax, Securities transaction tax, Gift tax, Taxes on capital gains, and Corporate tax.
2. New Regime of Income Tax
- In a new rule of income tax, people are expecting to have more tax-free limits of ₹10,00,000. So that people would have benefited financially. They could have more money on their hands and spend on their needs.
- Moreover, it could be also spent on economic growth and the future of the country.
- According to NDTV, the new regime comes with a 5% tax on LIC (Life Insurance Corporation of India) and Mutual funds investments. It is also said that a 15% tax on dividends is paid by the companies to the investors.
- A new rule comes intending to calculate taxes and fill returns more easily, simultaneously changes would be Eliminating the financial year (FY) and the assessment year (AY).
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Image Source: Clear Tax
Shefali Mundra, a tax expert at ClearTax said, “The govt should lower the income tax rates for individuals earning up to ₹15 lakh annually. This can increase the overall disposable income and boost consumption,” (Source: Live Mint).
A 25% tax-free rate would be easy for middle-income earners and as of now system has tax rates are 5%, 10%, 15%, 20%, and 30%and increasing the income limit for the 30% tax rate from ₹15 lakh to ₹20 lakh. (Quoted by Live Mint).
Deepashree Shetty, Partner, Global Employer Services, Tax & Regulatory Services, BDO India said, “There is a strong expectation that the government will focus on improving taxpayers’ savings by introducing reforms such as a unified tax regime and enhanced deductions. In light of these complexities, the upcoming Budget should focus on simplifying the tax structure for individual taxpayers by consolidating the current dual regimes into a single, cohesive tax framework,”
Aakash Uppal, Partner & Leader (North & East), Corporate Tax at BDO India, said, “The government is expected to further enhance the new tax regime by increasing the basic exemption limit, adjusting tax slabs, and raising the standard deduction. Additionally, there is speculation that the Government may introduce a sunset clause for the old tax regime, gradually phasing it out in favour of the new system,”
Aakash Uppal, Partner & Leader (North & East), Corporate Tax at BDO India, suggested that there is a strong expectation that the exemption limit for Long-Term Capital Gains (LTCG) on equities, currently set at ₹1.25 lakh, may be increased to ₹2 lakh or higher, which would allow investors to retain a more significant portion of their returns “The holding period for new assets under section 54 of the Act remains three years, which could be rationalized and brought down to 24 months,”
President Droupadi Murmu will address a joint parliamentary session on January 31 to start the budget session, which will end on February 13. The Economic Survey will be shown on 31 January 2025.
All of the above information regarding the income tax budget 2025 is truly written based on various sources, if you have any doubt regarding this please contact us.