[Opinion] Middle Class Cheers Budget 2025 Changes

Rohit Garg & Priyanka Jain – [2025] 171 taxmann.com 610 (Article)

The Union Budget 2025, presented by Finance Minister Nirmala Sitaraman brought significant reforms for personal taxpayers. With changes in the personal tax rates, increase in rebate and increase in the TDS thresholds, the budget seems to have got the middle class much more relief than what was expected in the budget. The changes proposed in the budget are effective from financial year 2025-26 i.e. 1 April 2025 whereby the taxpayers will be left with more money in their hands which will boost economic growth of the country and also prevent another major issue of brain drain to tax heavens or developed nations.

While earning INR 1 lac per month is an aspiration for majority of the Indian population, the Budget provides rebate to taxpayers from complete waiver of income tax in case the total income does not exceed INR 12 lacs per annum there by providing relief to a large section of the population. While the existing rebate threshold stands at INR 7 lacs per annum, the budget proposal increasing the rebate has lightened up the eyes of many.

The government has also been aiming to rationalise and simplify the tax system and do away with the vast range of exemptions and deductions spread across various provisions of the Income Tax Act, 1961. The new regime was introduced in budget 2020 by insertion of section 115BAC which provided attractive slab rates for the taxpayers if the yare ready to forego various specified deductions available under the Act. In order to make the new regime attractive for the taxpayers who are availing deductions under old regime, slab rates under the new regime were revised and made more attractive since then time and again.

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