Budget 2025 Expectations: Rs 10 Lakh Tax Rebate, Rs 2.5 Lakh Mutual Fund LTCG Exemption
As Budget 2025 approaches, taxpayers and the business community are eagerly anticipating reforms aimed at enhancing financial relief and simplifying the tax system. According to CA Anuj Garg, Director – Taxation at AHSG & Co LLP, the upcoming budget is expected to focus on providing much-needed relief to individual taxpayers, possibly through revisions in income tax slabs and deductions. Additionally, the government may introduce measures to boost the growth of start-ups, fostering innovation and entrepreneurship in India. These reforms could play a crucial role in addressing financial challenges, promoting economic growth, and streamlining compliance requirements.
Raising the Minimum Slab Rate for Taxpayers
CA Anuj Garg has proposed raising the minimum slab rate for individual taxpayers under the new tax regime as a key reform. Currently, individuals with an annual income of up to ₹3 lakh are exempt from paying income tax. However, Garg recommends increasing this limit to ₹5 lakh, which would provide significant relief to middle-income taxpayers. This measure, he suggests, could enhance disposable income, stimulate consumption, and contribute to boosting overall economic activity.
Currently, taxpayers with income up to Rs. 7.5 lakh who opt for the new tax regime enjoy a 100% rebate. Garg advocates raising this rebate limit to Rs. 10 lakh, extending this benefit to a larger section of the population and enhancing disposable income for lower and middle-income earners.
Under the current provisions of the new tax regime, taxpayers with an income of up to ₹7.5 lakh benefit from a 100% rebate. CA Anuj Garg recommends increasing this rebate limit to ₹10 lakh, which would extend the tax benefit to a larger segment of the population. This change, he suggests, would significantly enhance disposable income for lower- and middle-income earners, thereby promoting higher spending and contributing to economic growth.
Extension of Sunset Clause for Start-ups
CA Anuj Garg, a strong advocate for India’s start-up ecosystem, has called for an extension of the sunset clause under Section 80-IAC of the Income Tax Act, which provides eligible start-ups with a 100% deduction on profits for three consecutive years during the first ten years of their operation. Currently, this benefit is available to start-ups incorporated between April 1, 2016, and March 31, 2025. Garg suggests extending the incorporation period for these businesses, enabling continued support and aligning with Prime Minister Narendra Modi’s vision of fostering innovation and entrepreneurship.
These proposed changes aim not only to offer financial relief to individual taxpayers but also to stimulate investment and create a more inclusive economic environment. As the government focuses on inclusive growth and innovation, Garg hopes that Budget 2025 will lay the foundation for a more efficient and tax-friendly India, helping both taxpayers and the start-up community thrive.