The Union Budget 2025, presented by Finance Minister Nirmala Sitharaman, introduces significant reforms aimed at stimulating economic growth and providing substantial relief to the middle class. A key highlight is the restructuring of personal income tax slabs, designed to increase disposable income for middle-class families, thereby boosting consumption and savings. Union Budget 2025: Tax Relief and Economic Growth – A Boon for India's Middle Class
Revised Income Tax Slabs: A Boon for the Middle Class The budget proposes a new tax regime with revised income tax slabs, offering considerable relief to taxpayers. The new structure is as follows:
| Income Range (₹) | Tax Rate (%) |
|---|
| 0 - 4,00,000 | 0 |
| 4,00,001 - 8,00,000 | 5 |
| 8,00,001 - 12,00,000 | 10 |
| 12,00,001 - 16,00,000 | 15 |
| 16,00,001 - 20,00,000 | 20 |
| 20,00,001 - 24,00,000 | 25 |
| Above 24,00,000 | 30 |
In contrast, the old tax regime had different slabs and rates, which included various exemptions and deductions. The new regime simplifies the tax structure, making it more straightforward for taxpayers.
Impact on Middle-Class Taxpayers Under the new tax regime, individuals earning up to ₹4,00,000 are exempt from paying any income tax. This change is expected to leave more money in the hands of the middle class, thereby boosting household consumption, savings, and investment.
For instance, a taxpayer with an annual income of ₹10,00,000 would now fall under the 10% tax bracket, resulting in a tax liability of ₹60,000 (calculated as 5% of ₹4,00,000 plus 10% of ₹2,00,000). Previously, under the old tax regime, the same individual might have faced a higher tax rate, depending on applicable deductions and exemptions.
Encouraging Adoption of the New Tax Regime The government anticipates that the simplified structure will encourage more taxpayers to adopt the new tax regime. It is projected that 75% of taxpayers will file under this system in the fiscal year 2024-25.
Additional Benefits and Measures Beyond tax relief, the budget introduces measures to support various sectors and demographics:
- Agriculture: A high-yield crop program targeting 17 million farmers aims to boost agricultural productivity and income.
- Gig Economy Workers: Plans to formalize gig economy workers will improve their access to healthcare and welfare initiatives, providing a safety net for this growing segment of the workforce.
- Infrastructure and Energy: Investments are directed towards startups, innovation, tourism, infrastructure development, and the energy sector, including a notable Nuclear Energy Mission to achieve 100 GW of nuclear power by 2047.
Conclusion The Union Budget 2025 reflects the government's commitment to revitalizing the economy by empowering the middle class and investing in key sectors. The revised income tax slabs are poised to enhance disposable incomes, thereby stimulating consumption and fostering economic growth. As these measures take effect, the middle class stands to benefit significantly, marking a positive step towards a more prosperous future.
