When Did The Government Last Announce Income Tax Relief For The Middle Class? Find Out Here

The last significant revision in India’s income tax slabs was made in the Union Budget 2023, presented on February 1, 2023, by Finance Minister Nirmala Sitharaman. This marked the first major relief in tax slabs since 2014, bringing much-needed respite to the middle class.

Key Changes in Tax Slabs (Budget 2023)

New Tax Regime Revamp:

• The basic exemption limit was raised from Rs 2.5 lakh to Rs 3 lakh.
• Revised tax slabs under the New Tax Regime:
  • Income Range:
    • Rs 0 – Rs 3 lakh: 0% (Tax-free)
    • Rs 3 – Rs 6 lakh: 5%
    • Rs 6 – Rs 9 lakh: 10%
    • Rs 9 – Rs 12 lakh: 15%
    • Rs 12 – Rs 15 lakh: 20%
    • Above Rs 15 lakh: 30%
• A Standard Deduction of Rs 50,000 was introduced in the New Tax Regime for salaried individuals and pensioners.

Tax Rebate Limit (Section 87A) Increased:

• The rebate limit under the New Regime was hiked from Rs 5 lakh to Rs 7 lakh, meaning individuals earning up to Rs 7 lakh paid zero tax.
• Under the Old Regime, the rebate remained at Rs 5 lakh.

Previous Tax Relief Before Budget 2023

The last major tax relief before Budget 2023 was in 2014, when the basic exemption limit was raised from Rs 2 lakh to Rs 2.5 lakh under Arun Jaitley’s first Budget in the Modi government.

Will Budget 2025 Bring More Tax Relief?

As the Union Budget 2025 approaches, there are speculations that it may further revise tax slabs, increase the rebate limit, or enhance the standard deduction to provide relief to the middle class. Many experts expect the government to align the New Tax Regime further with taxpayer expectations to encourage higher adoption.

Speculated Changes in Budget 2025:

• Increase in the basic exemption limit from Rs 3 lakh to Rs 5 lakh.
• Introduction of a new 25% tax rate for income levels between Rs 15 lakh and Rs 18 lakh.
• Enhanced standard deduction for salaried individuals and pensioners.
• Potential alignment of the New Tax Regime with taxpayer expectations to boost adoption.

The government is likely to focus on supporting the middle class, boosting consumption, and stimulating economic growth amid slowing GDP growth. Additionally, there may be measures to support women’s participation in the workforce by allowing daycare expenses as an exemption up to a certain limit.

As the day of the budget announcement nears, the middle class eagerly awaits potential tax relief measures that could ease their financial burden and enhance their purchasing power.