Budget 2025 Income Tax Expectations: Will salaried earners up to Rs 15 lakh get tax relief? Read what experts expect

Budget 2025 Income Tax Expectations: Within a few hours from now, Finance Minister Nirmala Sitharaman is set to deliver her 8th consecutive budget speech on Saturday, February 1, 2025.

She made some significant changes in the new tax regime in her previous budget presentation in July 2024 when she increased tax slabs to 6.

For this year, experts expect her to decrease income tax rates for taxpayers in up to the Rs 30 lakh annual income bracket. Here's what experts expect from her.

Ashish Agrawal, Partner, Dhruva Advisors, says that middle-class taxpayers are experiencing reduced disposable income due to high taxes, inflation, and rising living expenses.

He further says that revisions to tax slabs and deductions under Section 80C have not been updated for many years and are due for revision in line with inflation rates. 

"The tax-free income threshold should be increased to Rs 10 lakh, with a 10 per cent rate for income up to Rs 20 lakh, a 20 per cent rate for income up to Rs 30 lakh, and a 30 per cent rate for incomes above Rs 30 lakh."

He also expects the government to increase the Section 80C deduction limit to Rs 5 lakh

"The standard deduction for salaried individuals can be based as a percentage of salary, say 10 per cent or 20 per cent. Likewise, higher exemption limits should be set for senior and super senior citizens."

In its report, SBI Research expects the rationalisation of tax slabs from the Finance Minister. "For individuals earning between Rs 10 lakh and Rs 15 lakh annually, the tax rate should be reduced from 20 per cent to 15 per cent.

Nandita Tripathi, partner, Deloitte India, expects the government to create a separate section for home loan repayment with a combined maximum deduction of up to Rs 5 lakh for both principal and interest components.

"Currently, the repayment of the principal component of home loans is eligible for tax deduction under Section 80C. In contrast, the repayment of interest component of up to Rs 2 lakh qualifies for tax deduction under Section 24(b)," she says.

"However, with multiple investment options, small savings instruments, insurance policies, pension plans, etc., crowding Section 80C, many home loan borrowers remain bereft of availing tax deductions on their entire home loan principal repayments. Similarly, the upper cap on Section 24(b) becomes inadequate for many home loan borrowers, especially in the initial years of their home loan tenure.

"Hence, there should be a separate section for home loan repayment with a combined maximum deduction of up to Rs 5 lakh for both principal and interest components. This would boost home buyers’ sentiments and, thereby, increase demand in the housing industry," says Nandita.