Union Finance Minister Nirmala Sitharaman will unveil the Union Budget 2025 on February 1, 2025, at 11:00 AM. The upcoming Union Budget may bring major reforms in income taxation, with experts predicting a range of proposals. These changes may include tax rate cuts or a comprehensive revamp of the taxation system, aimed at boosting consumer spending, streamlining the tax structure, and driving economic growth.

Budget 2025: What May Change In Income Tax?

Changes Under Section 80D: A proposal is underway to increase tax deduction limits under Section 80D to Rs 50,000 for individuals and Rs 1,00,000 for senior citizens. Additionally, there’s a plan to include Section 80D in the new tax regime, making it more beneficial for taxpayers.

Home Loan Interest Deduction Limit To Rise: To boost homeownership, the government might raise the deduction limit on home loan interest under Section 24(b) from Rs 2 lakh to Rs 3 lakh.

Section 80C Set To Revamp: The government may increase the deduction limit under Section 80C from Rs 1.5 lakh to Rs 2 lakh, marking the first revision since 2014.

Lower Corporate Taxes For New Manufacturing Firms: The government may extend the 15% reduced corporate tax rate to new manufacturing companies that start operations after March 31, 2024, to continue attracting investments and driving growth. Furthermore, to support the growth of Global Capability Centers (GCCs) in India, the government is considering offering them a reduced 15% corporate tax rate, encouraging expansion and job creation.

PLI For R&D: To boost private investment in research and development (R&D), a new incentive is proposed, offering extra tax deductions for R&D expenses.

Tax Slabs Changes: The government may consider changing tax slabs to benefit individual taxpayers, especially middle-income earners, by increasing their disposable income. The government may increase the basic exemption limit from Rs 3 lakhs to Rs 5 lakhs under the new tax regime, providing more relief to taxpayers.