NEW DELHI: The run-up to Budget 2025 has raised expectations of the middle class that the government is likely to give some relief on the personal taxation space. The aim would be to give a boost to private consumption, which has been lagging for quite some time.
The tax sops in the personal income tax space can be in the form of change in basic exemption limit, tweaks in the tax slab rates as well as an increase in the standard deductions. Apart from that a few other changes are also likely in respect of certain compliances to make the life of individual taxpayers easier. We list out some of the likely changes in the budget:
Higher exemption limit: Currently, income up to R3 lakh is not taxed if the total income is R7 lakh or more under the new tax regime. The government might increase the exemption limit to R5 lakh, which means any income between R 5 lakh and R7 lakh would be taxed at 5%. Currently, income between R3 and R7 lakh is taxed at 5%.
Higher standard deduction: At present, the standard deduction is R75,000 under the new tax regime. This could be increased to R1 lakh, if the government is not considering raising the exemption limit. Standard deduction is the amount that is deducted directly from the income of an individual to arrive at the taxable income. It must be noted that taxpayers opting for the old tax regime can avail standard deduction of only R50,000.