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Budget 2025: Key Highlights and Tax Relief for Middle-Class Taxpayers

Union Finance Minister Nirmala Sitharaman has unveiled the much-anticipated Budget 2025, presenting a new income tax bill aimed at simplifying the tax system for the benefit of taxpayers. The new bill, which will be tabled in Parliament next week, seeks to reduce complexity, improve understanding, and minimize litigation. Among the key announcements, the Finance Minister highlighted significant tax relief measures aimed primarily at the middle class.


Income Tax Reforms and Relief for Taxpayers

In a move to alleviate the tax burden on individuals, Sitharaman proposed a substantial relaxation in the income tax structure. The income of up to Rs 12 lakh will now be exempt from taxes, offering relief to a significant portion of the working population. Additionally, the Finance Minister revealed an increase in the filing limit for Income Tax Returns (ITR) from two to four years, easing compliance for taxpayers.

The government is also considering a relaxation in income tax slabs for individuals, especially for those earning up to Rs 15 lakh annually. There are expectations for tax deductions on home loan interest repayments, aimed at incentivizing homeownership and making housing more affordable. First-time homebuyers could particularly benefit from these proposed measures.

TDS and TCS Threshold Limits Raised

In line with its efforts to simplify taxation, the Finance Minister also announced an increase in the threshold for Tax Deducted at Source (TDS) and Tax Collected at Source (TCS). The TCS limit on overseas remittance under the Liberalized Remittance Scheme (LRS) has been raised from Rs 7 lakh to Rs 10 lakh. Additionally, the TDS threshold on rent has been hiked to Rs 6 lakh.

Focus on Housing and Infrastructure

The Budget also included provisions aimed at addressing housing and infrastructure challenges. Sitharaman confirmed that over 50,000 dwelling units in stressed housing projects have been completed under the SWAMIH 2 Investment Fund, with keys handed over to homebuyers. Another 40,000 units are expected to be completed in 2025, with the government allocating Rs 15,000 crore to this goal.

Customs Duty Waiver for Life-Saving Drugs

In a major relief for patients, the Finance Minister announced that customs duties on 36 life-saving medicines, including cancer drugs, would be completely waived. This move is expected to significantly reduce the cost of treatment for individuals suffering from serious illnesses.

Focus on Gig Workers and Social Security

A noteworthy inclusion in Budget 2025 is the introduction of a social security scheme for gig workers. This initiative aims to provide financial stability and protection for workers in the gig economy, addressing a growing segment of the workforce.

Sustainability and Green Energy Initiatives

In line with India's commitment to sustainability and the transition to greener energy, the Budget includes ambitious targets, such as achieving 100 GW of nuclear energy by 2047 and the expansion of the UDAN scheme to cover 120 additional destinations, benefitting over 4 crore passengers. The government is also extending the Jal Jeevan Mission until 2028, furthering its commitment to water conservation and access for rural areas.

Other Key Announcements

Other major announcements in Budget 2025 include the establishment of three Centres of Excellence in Artificial Intelligence (AI) for education, a focus on improving agricultural productivity, and initiatives aimed at supporting the MSME sector. The government is also enhancing Kisan Credit Cards (KCC) loan limits to benefit millions of farmers, fishermen, and dairy farmers across the country.

Budget 2025 presents a comprehensive roadmap to address pressing issues such as tax reform, housing affordability, healthcare access, and green energy transition, while also aiming to stimulate economic growth and self-reliance. With a focus on middle-class relief, tax simplification, and targeted support for key sectors, this Budget seeks to lay the foundation for sustained growth and equitable development in the coming years.

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