Budget 2025: Sector-wise Expectations from Union Budget

Union Budget 2025: With the Union Budget 2025 just around the corner, discussions about income tax slabs are heating up. This will be the second full budget of the Modi 3.0 government, and taxpayers have high expectations. A key highlight this year is the proposed new Income Tax Bill, which could replace the Income Tax Act of 1961.

Taxpayers are hoping for significant relief in this budget. The government is considering raising the income tax exemption limit and simplifying tax laws to account for inflation. Experts are also calling for higher exemptions for lower-income groups, an increase in the Section 80C limit, and better relief on housing loans.

Proposed Changes to the Income Tax Act

Sources indicate that the new Income Tax Bill may be introduced later this year after consultations with relevant stakeholders. The government's goal is to simplify direct tax laws and make them easier for taxpayers to understand. Both experts and the public are eagerly awaiting the schemes that Finance Minister Nirmala Sitharaman might include in this budget.

Hopes for Income Tax Relief

Tax experts have suggested the possibility of income tax relief in the upcoming budget. They recommend increasing exemptions for lower-income groups and raising the basic exemption limit under both tax regimes to help people cope with inflation.

• Section 44AD and 44ADA: Amendments to Sections 44AD and 44ADA aim to raise the turnover limit for presumptive taxation, making it easier for small businesses and professionals.
• Exemption on interest on housing loan: The limit for claiming interest exemption on housing loans under Section 24(b) is proposed to increase from ₹2 lakh to ₹3 lakh.

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Relief for MSMEs and Home Buyers:

Experts anticipate more support for small businesses and taxpayers in the upcoming budget.

Income taxpayers expect Nirmala Sitharaman to make changes in the tax limit for them:

• Income tax Exemption Limit: The basic exemption limit for income tax could rise to ₹3 lakh, providing relief to taxpayers.
• Section 80C Limit: Tax exemption on investments under Section 80C may be increased to ₹2.5 lakh.

Simplifying TDS in Union Budget 2025

The Income Tax Act established Tax Deducted at Source (TDS) measures to record taxpayers' transactional footprints and guarantee a steady flow of money for the government. However, frequent changes to TDS laws and their widening scope over the years have created major compliance challenges, increased legal disputes, and caused confusion for taxpayers.

The Union Budget 2025 offers a significant chance to simplify and expedite TDS and TCS regulations, improving clarity, lowering conflict, and creating an atmosphere that is more conducive to business. 

Benefits of Proposed Changes:

Over 6 crore taxpayers could save a total of ₹25,000 crore annually.

The MSME sector may gain additional savings of ₹5,000 crore, boosting financial stability for small businesses.