Tax Relief and Deductions: What Individual Taxpayers Are Hoping For in Budget 2025

08 Jan Tax Relief and Deductions: What Individual Taxpayers Are Hoping For in Budget 2025

As the Union Budget 2025 draws closer, individual taxpayers are eagerly anticipating significant tax relief, particularly in areas of deductions and slab relaxations. Scheduled for February 1, 2025, the budget has prompted widespread expectations of adjustments to income tax structures that will ease the financial burden on middle-class taxpayers, particularly in light of inflation and rising living costs. Many are hoping that the government will provide relief through reforms to key areas, including income tax slabs, Section 80C deductions, home loan benefits, healthcare expenses, and more. Check our latest blog on Retirement Planning.

A major area of interest lies in the revision of income tax slabs. Many taxpayers are expecting the government to raise the threshold for lower tax brackets, which would provide some much-needed relief to middle-income earners. Such adjustments would increase disposable income and could potentially stimulate consumer spending, benefiting the economy overall. Economic Times has reported that several industry bodies are also pushing for this revision, advocating that it would bring relief to salaried individuals.

Additionally, attention is on the Section 80C deductions, with a growing demand for increasing the ₹1.5 lakh limit. Given the rising cost of living, inflationary pressures, and household expenses, many believe that the current cap is outdated and inadequate. An increase in the limit could encourage more investments in tax-saving instruments like Public Provident Fund (PPF), National Savings Certificates (NSC), and life insurance policies, which would benefit individuals while promoting a culture of savings. This sentiment has been echoed by financial analysts at CNBC TV18, who have highlighted the demand for increased Section 80C limits ahead of the budget.

Homeownership remains a key financial goal for many, and taxpayers are hoping for enhanced tax benefits on home loans. The deduction limits under Section 24 for interest paid on home loans have not kept pace with rising property prices, and there is a widespread expectation that the government will increase these limits to provide relief to both existing and potential homebuyers. First-time homebuyers, in particular, stand to benefit from such reforms. Business Standard has noted the real estate sector’s hopes for more favorable tax treatment to drive growth in affordable housing.

With medical costs rising dramatically post-pandemic, there is also a strong case for increasing Section 80D deductions on health insurance premiums. Currently, taxpayers can claim deductions for health insurance payments, but the ceiling remains low relative to actual costs, especially for families. Increasing the deduction limit would encourage more individuals to secure adequate health coverage. Mint has reported that many experts are expecting a focus on healthcare in this year’s budget, particularly in light of the pandemic’s lingering economic impact.

Educational expenses represent another financial challenge for many households, and calls for tax deductions on education-related expenses have grown louder. Taxpayers are requesting new provisions or the expansion of existing limits to account for tuition fees, student loans, and other education-related expenses. The rising cost of education has made this an urgent issue for many families. This sentiment is supported by Hindustan Times, which notes that middle-class taxpayers are particularly burdened by education expenses and are hoping for relief in the upcoming budget.

Further demands center around retirement savings, with calls for increased tax benefits for contributions to pension schemes such as the National Pension System (NPS) and other retirement-focused investment plans. As financial security post-retirement becomes an increasing concern, taxpayers are urging the government to provide more attractive incentives to save for the future. Increasing the tax deduction limits for retirement savings could lead to greater participation in such schemes. According to The Hindu Business Line, expanding these benefits would align with the government’s long-term objectives for inclusive financial security.

As we look forward to the Union Budget 2025, it is clear that individual taxpayers are hoping for substantive changes that will provide relief in key financial areas. By adjusting tax slabs, raising deduction limits, and enhancing benefits across sectors such as homeownership, healthcare, education, and retirement savings, the government could ease financial pressures on individuals while simultaneously stimulating economic growth. The upcoming announcement on February 1 will determine the extent to which these expectations are met.

For ongoing updates on the Union Budget 2025 and tax-related news, check out trusted sources like Moneycontrol, Business Standard, and CNBC TV18, which are closely tracking developments as they unfold. Check our latest post here on Retirement Planning.