Budget 2025: From Tax Slabs To Deductions, How The New Income Tax Regime Can Be Revised

The existing threshold for 30 per cent income tax has been unchanged since 2020, however, the Cost Inflation index has climbed 21 per cent during the same period. ABP Live AI

Hiking this limit for the 30 per cent tax slab from Rs 15 lakh to Rs 18 lakh would help middle-income individuals avoid being pushed into the highest tax bracket. ABP Live AI

However, simply raising the tax-free income limits also puts the tax burden disproportionately on the higher-income groups. Therefore, a detailed adjustment is needed across tax brackets at all income levels. ABP Live AI

In addition to tax slabs, deductions are also needed in the new tax regime. A lack of this has discouraged long-term savings and left individuals more vulnerable to economic shocks. ABP Live AI

In order to ensure equity across income levels, a flat deduction should be levied at Rs 15 lakh. This limit will help middle and upper-middle-income households and also prevent large deductions for high-income individuals. ABP Live AI

These changes will not only boost financial stability but also help increase the amount of disposable income and discipline in households. ABP Live AI