Budget 2025: These measures could bring big relief to the middle class!

The Indian government has introduced several tax reforms in recent budgets to simplify the tax structure and provide relief to taxpayers. Here's an overview of the key changes:

Revised Income Tax Slabs:

In the 2024 Union Budget, the income tax slabs under the new tax regime were adjusted as follows:

Nil Tax Rate: Income up to ₹3 lakh

5% Tax Rate: Income from ₹3 lakh to ₹7 lakh

10% Tax Rate: Income from ₹7 lakh to ₹10 lakh

15% Tax Rate: Income from ₹10 lakh to ₹12 lakh

20% Tax Rate: Income from ₹12 lakh to ₹15 lakh

30% Tax Rate: Income above ₹15 lakh

Additionally, the standard deduction was increased from ₹50,000 to ₹75,000. With these changes, individuals earning up to ₹7.75 lakh annually are effectively exempt from income tax after accounting for the standard deduction.

Abolition of Angel Tax:

The government has abolished the "angel tax," which was previously levied on investments received by unlisted companies exceeding the fair market value of their shares. This move is expected to benefit startups and early-stage companies by encouraging investment.

Changes in Capital Gains Tax:

The capital gains tax structure has been revised:

Short-Term Capital Gains (STCG): The tax rate on short-term capital gains from shares, mutual funds, and real estate has been increased from 15% to 20%.

Long-Term Capital Gains (LTCG): The tax rate on long-term capital gains has been set at 12.5%, with the exemption limit raised from ₹1 lakh to ₹1.25 lakh.

These adjustments aim to streamline the tax system and enhance revenue.

Reduction in Tax Deducted at Source (TDS) Rates:

To simplify compliance, the government has proposed reducing TDS rates for various payments:

Insurance Commission, Life Insurance Policy Payments, Rent, and Brokerage: TDS rate reduced from 5% to 2%.

E-commerce Transactions: TDS rate on payments made by e-commerce operators to participants reduced from 1% to 0.1%.

These changes are intended to ease the tax burden and promote ease of doing business.

These reforms reflect the government's ongoing efforts to create a more taxpayer-friendly environment and stimulate economic growth.