Comparison of Income Tax in new budget

The proposed changes in the 2025 tax regime offer several benefits to salaried employees who pay income tax. Here’s an overview of the advantages:

1. Increased Tax-Free Threshold
Benefit: The increase in the tax-free threshold to ₹10,00,000 means that a significant portion of the income for many salaried individuals will not be subjected to any tax. This is particularly beneficial for middle-income earners, allowing them to retain more of their earnings.

2. Reduced Tax Burden
Benefit: With the restructuring of tax slabs, individuals earning more than the tax-free threshold will also benefit. The higher thresholds for higher tax rates mean that a larger portion of income is taxed at a lower rate, thus reducing the overall tax burden.

3. Encouragement for Savings and Investments
Benefit: By allowing more income to remain untaxed or taxed at lower rates, employees have more disposable income, which they can use to save or invest. This can lead to better financial planning and security.

4. Streamlined Tax Filing
Benefit: Proposals to simplify the income tax filing process, such as improved online systems and pre-filled forms, reduce the time and effort required to comply with tax regulations. This makes the tax filing experience less daunting and more efficient for taxpayers.

5. Greater Equity
Benefit: The revised tax slabs are designed to be more equitable, reducing the tax burden on lower and middle-income groups proportionally more than on higher-income groups. This approach aims to address income inequality and distribute the tax liability more fairly among different income levels.

6. Boost to Consumer Spending
Benefit: By reducing the tax paid by the majority of taxpayers, there is likely to be an increase in consumer spending. This can stimulate economic growth as increased spending can lead to higher demand for goods and services.

7. Support for Specific Expenses
Benefit: Provisions for higher deductions related to health insurance premiums, housing loans, and education fees help reduce taxable income further. These specific deductions encourage and support significant personal expenditures, providing financial relief.