Union Budget 2025-26 Expectations: Tax Relief, and More

As we look forward to the Union Budget 2025-26, several expectations have emerged based on the current budget’s outcomes and the evolving economic landscape:

1. Continued Focus on Social Welfare:

• There is an expectation for further expansion of welfare schemes targeting the poor, women, and farmers. Enhanced allocations for PM-KISAN and PM Awas Yojana are anticipated.
• Increased support for particularly vulnerable tribal groups (PVTG) and artisans under PM-JANMAN and PM-Vishwakarma Yojana.

1. Boost to Infrastructure and Employment:

• The government is expected to continue its focus on infrastructure development, with increased allocations for railways, highways, and urban infrastructure.
• Emphasis on creating more employment opportunities through skill development programs and support for MSMEs.

1. Green Energy and Climate Initiatives:

• With the global push towards sustainability, the budget is likely to introduce more incentives for renewable energy projects, including solar, wind, and bioenergy.
• Further investments in electric vehicle (EV) infrastructure and incentives for EV adoption are expected.

1. Tax Reforms and Ease of Doing Business:

• Simplification of the GST regime and further reduction in compliance burdens for businesses are anticipated.
• Potential tax incentives for startups and investments in emerging sectors like deep-tech and AI.

1. Healthcare and Education:

• Increased allocations for healthcare infrastructure, especially in rural areas, and expansion of the Ayushman Bharat scheme.
• Focus on improving the quality of education and increasing access to higher education, particularly in STEM fields.

Social Media Analysis: Summary of Expectations

A quick analysis of social media platforms reveals a mix of optimism and specific demands for the Union Budget 2025-26:

• Twitter: Users are advocating for more robust climate action policies, including higher allocations for renewable energy and stricter regulations on carbon emissions. There is also a call for increased support for farmers and rural development.
• LinkedIn: Professionals and business leaders are emphasizing the need for further tax reforms and incentives for startups. There is a strong demand for policies that promote innovation and ease of doing business.
• Facebook: Discussions are centered around social welfare schemes, with many users calling for increased pensions for the elderly and better healthcare facilities in rural areas. There is also a push for more affordable housing projects.
• Instagram: Younger audiences are highlighting the need for more job opportunities and skill development programs. There is also a growing interest in sustainable living, with calls for more government support for eco-friendly initiatives.

Personal Income Tax Expectations: Will the Slabs Be Revised in 2025-26?

One of the most eagerly awaited aspects of every Union Budget is the announcement of changes to personal income tax slabs. Over the years, taxpayers have been hoping for significant reforms to simplify the tax structure, reduce the tax burden, and increase disposable income. As we look ahead to the Union Budget 2025-26, let’s revisit the expectations from previous years and analyze what taxpayers might anticipate this time.

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Current Income Tax Slabs (2024-25)

As of the Interim Budget 2024-25, the government retained the existing tax slabs without any changes. The current income tax structure for individuals under the new tax regime (which is the default option) is as follows:

• Up to ₹3 lakh: No tax
• ₹3-6 lakh: 5%
• ₹6-9 lakh: 10%
• ₹9-12 lakh: 15%
• ₹12-15 lakh: 20%
• Above ₹15 lakh: 30%

While the new tax regime offers lower rates, it comes with the removal of most deductions and exemptions, such as HRA, LTA, and Section 80C benefits. The old tax regime, which allows for these deductions, continues to coexist but with higher tax rates.

Expectations from Previous Years

Over the past few years, taxpayers have consistently hoped for the following changes in the personal income tax structure:

1. Increase in Basic Exemption Limit:

• The basic exemption limit has remained at ₹2.5 lakh under the old regime for many years. Taxpayers have been demanding an increase in this limit to ₹5 lakh to account for inflation and rising living costs.
• Under the new regime, the exemption limit is ₹3 lakh, but there is a growing demand to raise it further to ₹5 lakh to provide relief to middle-income earners.

1. Revision of Tax Slabs:

• Many taxpayers feel that the current slabs are not aligned with the rising cost of living. There is a demand to widen the tax slabs to reduce the tax burden on middle-class families.
• For instance, the 20% tax slab (₹12-15 lakh) is considered too narrow, and taxpayers have suggested expanding it to ₹12-20 lakh.

1. Higher Deductions Under Section 80C:

• The Section 80C deduction limit of ₹1.5 lakh has remained unchanged for nearly a decade. Taxpayers have been urging the government to increase this limit to ₹2.5 lakh or more to encourage savings and investments.

1. Reintroduction of Standard Deduction in the New Regime:

• The old tax regime offers a standard deduction of ₹50,000, which is not available under the new regime. Taxpayers have been asking for the inclusion of this deduction in the new regime to make it more attractive.

1. Tax Relief for Senior Citizens:

• Senior citizens have been seeking higher exemption limits and lower tax rates, especially in light of rising healthcare costs and inflation.

Expectations for Union Budget 2025-26

Based on the demands from previous years and the current economic scenario, here’s what taxpayers might expect in the Union Budget 2025-26:

1. Increase in Basic Exemption Limit:

• There is a strong possibility that the government may increase the basic exemption limit to ₹5 lakh under both the old and new tax regimes. This would provide significant relief to low- and middle-income taxpayers.

1. Widening of Tax Slabs:

• The government may consider widening the tax slabs, especially for middle-income groups. For example, the 20% tax slab could be expanded to ₹12-20 lakh, reducing the tax burden on individuals earning up to ₹20 lakh.

1. Higher Deduction Limits:

• To promote savings and investments, the government may increase the Section 80C deduction limit from ₹1.5 lakh to ₹2.5 lakh. This would encourage taxpayers to invest more in instruments like PPF, ELSS, and life insurance.

1. Standard Deduction in the New Regime:

• To make the new tax regime more appealing, the government may introduce a standard deduction of ₹50,000, similar to the old regime. This would provide some relief to salaried individuals.

1. Tax Relief for Senior Citizens:

• Senior citizens may see an increase in their exemption limits or lower tax rates, especially for those above 80 years of age. This would help them cope with rising healthcare and living expenses.

1. Simplification of Tax Regimes:

• There is a growing demand to merge the old and new tax regimes into a single, simplified structure that offers lower tax rates while retaining key deductions. This would reduce confusion and make tax compliance easier.

Social Media Buzz: What Taxpayers Are Saying

A quick scan of social media platforms reveals that taxpayers are vocal about their expectations for personal income tax reforms:

• Twitter: Many users are demanding an increase in the basic exemption limit and higher deductions under Section 80C. Hashtags like #TaxRelief2025 and #MiddleClassFirst are trending.
• LinkedIn: Professionals are discussing the need for a simplified tax structure that balances lower tax rates with essential deductions. There is also a call for tax incentives for remote workers and freelancers.
• Facebook: Middle-class families are sharing their struggles with rising inflation and hoping for tax relief in the form of higher exemption limits and wider tax slabs.
• Instagram: Younger taxpayers are advocating for tax breaks on investments in mutual funds and startups, as well as incentives for sustainable living.

Conclusion

The Union Budget 2025-26 presents an opportunity for the government to address long-standing demands for personal income tax reforms. With rising inflation and economic challenges, taxpayers are hoping for significant relief in the form of higher exemption limits, wider tax slabs, and increased deductions. Whether the government will meet these expectations remains to be seen, but one thing is clear: the middle class is eagerly awaiting a budget that prioritizes their financial well-being.

Stay tuned for more updates as we approach the Union Budget 2025-26!