As India prepares for the 2025-26 Union Budget, Jayant Sinha, former BJP MP and financial market expert, has suggested offering tax exemptions to individuals earning up to Rs 10 lakh annually.
Speaking on Aaj Tak’s ‘Jayant Sinha ki Class’ show, he argued that the middle class should be freed from paying taxes. He believes increasing the tax exemption limit to Rs 10 lakh would better match the financial challenges faced by middle-income groups in India.
Income Tax Union Budget 2025: Proposal to Increase Tax Exemption Limit to Rs 10 Lakh
Under the current tax regime, the basic exemption limit is Rs 3 lakh. However, Sinha suggests this limit is too low, considering the rising cost of living. He proposes increasing it to Rs 10 lakh, which would reduce the financial burden on middle-class families and simplify the tax filing process.
Income Tax Budget 2025: Need to Revise Tax Exemption Limit
Critics argue that the current Rs 3 lakh exemption limit no longer reflects the reality of rising inflation and living expenses. Raising this limit would allow salaried individuals to keep more of their income and make the tax system simpler for them.
How the Proposal Can Benefit Middle-Class Taxpayers
Sinha’s proposal aims to directly benefit middle-income earners by reducing their overall tax burden. He also suggests offering more deductions on expenses like health insurance, life insurance premiums, and home loan interest, giving middle-class families more financial relief.
SBI’s Tax Reform Proposals for Budget 2025
In line with Sinha’s views, the State Bank of India (SBI) has proposed several tax reforms in its report titled ‘Prelude to Union Budget 2025-26.’ One key suggestion is to lower the tax rate for individuals earning between Rs 10-15 lakh annually to a uniform 15% instead of the current 20%.
SBI’s Proposals for Fair and Simplified Taxation in Budget 2025
The SBI recommends simplifying the tax structure by implementing a flat 15% tax rate for those earning between Rs 10-15 lakh. This would create a fairer system and allow these taxpayers to retain more of their income.
SBI’s Proposal for Increased NPS and Insurance Deduction Limits in Budget 2025
The SBI also suggests increasing the deduction limits for the National Pension System (NPS) and medical insurance. They propose raising the NPS contribution limit from Rs 50,000 to Rs 1 lakh, and the medical insurance deduction from Rs 25,000 to Rs 50,000. These changes would offer more tax-saving opportunities and encourage people to save for retirement and invest in their health.
Budget 2025: SBI Proposes 15% Flat Tax on FD Interest for Simplicity and Clarity
Currently, fixed deposit (FD) interest is taxed based on income tax slabs, ranging from 5% to 30%. The SBI proposes simplifying this by introducing a flat 15% tax rate on FD interest, regardless of the FD’s maturity period. This would bring clarity and consistency to the taxation process.
Budget 2025 Tax Cuts: Long-Term Benefits and Economic Growth
While these reforms could lead to a revenue loss of around Rs 10,408 crore for the government, experts believe the long-term benefits, like increased consumer spending and better tax compliance, would outweigh this initial loss.
How Tax Reforms Could Drive Economic Growth
Tax experts believe that these proposed tax cuts could stimulate economic growth. By reducing taxes and increasing disposable income, the government would encourage more spending, which could benefit businesses and help boost the overall economy.
Budget 2025: Will Tax Cuts and Exemptions Benefit the Middle Class
As Finance Minister Nirmala Sitharaman prepares to present Budget 2025 on February 1, there is widespread expectation that it will focus on relieving the middle class. Many hope the final budget will include tax cuts, higher exemptions, and more deductions.
How Budget 2025 Tax Reforms Could Boost Disposable Income for the Middle Class
Experts predict that the tax reforms in Budget 2025 will lead to higher disposable income for middle-class families. This would improve financial security, encourage more savings, and contribute to the growth of the economy.