Union Budget 2025: Key Highlights for Salaried Taxpayers, Senior Citizens, and Investors
6 February, 2025
Synopsis
- Finance Minister Nirmala Sitharaman's Budget 2025 presented significant changes for taxpayers.
- Tax-free income up to ₹12 lakh (₹12.75 lakh for salaried employees with standard deduction).
The Union Budget 2025, presented by Finance Minister Nirmala Sitharaman, has introduced a wave of reforms aimed at simplifying taxes and providing significant relief to taxpayers. It focuses on creating an inclusive financial environment, benefiting salaried individuals, senior citizens, and investors alike. Let’s break down these updates.
For Salaried Taxpayers
The Budget 2025 brings a sigh of relief for salaried taxpayers by introducing the following key changes:
1. Income Tax Exemptions:
> Income up to ₹12 lakh is now tax-free under the new tax regime.
> For salaried employees, this limit increases to ₹12.75 lakh, due to the standard deduction.
2. New Tax Slabs: The updated tax slabs under the new tax regime offer simplified and progressive rates:
New Tax Slabs under New Tax Regime | |
Income Range | Tax Rate |
₹0-4 lakh | Nil |
₹4-8 lakh | 5% |
₹8-12 lakh | 10% |
₹12-16 lakh | 15% |
₹16-20 lakh | 20% |
₹20-24 lakh | 25% |
Above ₹24 lakh | 30% |
3. Increased Savings: Individuals earning ₹12 lakh annually will save ₹60,000 while, higher-income individuals, like those earning ₹25 lakh, stand to save ₹1.1 lakh.
Key Points:
Income Tax nil* up to annual income of ₹12 lakh
Income Tax nil* up to annual income of ₹12.75 lakh for salaried employees due to standard deduction
Annual Income (₹) | Present Tax (₹) | Proposed Tax (₹) | Saving (₹) | Rebate (₹) | Total Saving (₹) | Tax after Rebate (₹) |
8 lakh | 30,000 | 20,000 | 10,000 | 20,000 | 30,000 | 0 |
9 lakh | 40,000 | 30,000 | 10,000 | 30,000 | 40,000 | 0 |
10 lakh | 50,000 | 40,000 | 10,000 | 40,000 | 50,000 | 0 |
11 lakh | 65,000 | 50,000 | 15,000 | 50,000 | 65,000 | 0 |
12 lakh | 80,000 | 60,000 | 20,000 | 60,000 | 80,000 | 0 |
16 lakh | 1,70,000 | 1,20,000 | 50,000 | 0 | 50,000 | 1,20,000 |
20 lakh | 2,90,000 | 2,00,000 | 90,000 | 0 | 90,000 | 2,00,000 |
24 lakh | 4,10,000 | 3,00,000 | 1,10,000 | 0 | 1,10,000 | 3,00,000 |
50 lakh | 11,90,000 | 10,80,000 | 1,10,000 | 0 | 1,10,000 | 10,80,000 |
*Applicable under New Tax Regime
For Senior Citizens
Senior citizens are among the biggest beneficiaries of Budget 2025. The changes aim to ease financial burdens and improve cash flow for retirees:
1. Higher TDS Thresholds:
> The TDS limit on fixed deposit interest has been raised from ₹50,000 to ₹1 lakh annually.
> For rental income, the annual TDS threshold has increased from ₹2.4 lakh to ₹6 lakh.
2. Simplified National Savings Scheme (NSS) Withdrawals:
> Withdrawals from NSS accounts after August 29, 2024, are now exempt from taxes. This change ensures better liquidity for retirees relying on NSS for financial stability.
3. Better Cash Flow: These measures ensure that senior citizens retain more income, reducing their compliance burden while boosting their financial security.
For Investors
The Budget encourages long-term financial planning and investments through several reforms:
1. Encouraging Disposable Income:
> With increased income tax exemptions, more disposable income is expected to flow into savings and investments.
> Savvy investors may redirect these additional funds into instruments like mutual funds, retirement plans, or ULIPs.
2. Debt Mutual Fund Taxation:
> Despite expectations for indexation benefits on debt investments, these were not reinstated.
3. Support for Long-Term Objectives:
> The increase in disposable income is expected to aid in achieving long-term financial objectives such as education, retirement, and homeownership.
The Union Budget 2025 is a game-changer, prioritising financial inclusion and stability. It simplifies tax compliance, reduces tax liabilities for individuals, and provides relief for senior citizens. The measures collectively aim to stimulate economic growth by empowering taxpayers to spend, save, and invest wisely. This Budget represents not just policy reform but a step toward a more inclusive, simplified, and efficient tax system.
*Disclaimer: Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances.