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Every Budget season, the most-asked question remains the same - does it have anything for the salaried class? With Finance Minister Nirmala Sitharaman set to present Budget 2025-26 on February 1, the salaried class is again looking out if the government has any plans to reduce their financial burden.
Economists have suggested that the government this time offer a higher tax exemption limit and an increased standard deduction under the new tax regime, which would benefit a lot of taxpayers. In the last Budget, the standard deduction was increased to Rs 75,000 from Rs 50,000 while the exemption limit stands at Rs 3 lakh under the new regime.
The economists also hinted at tax benefits for electric vehicles, boosting the housing sector, and easing the purchase and sale of real estate by Non-Residential Indians (NRIs).
Deepika Mathur, Director at Deloitte India, said that if the government plans to offer any relief to the salaried class at all, it may benefit only those under the new regime.
"I really do not expect any changes in the old tax regime. However, I do expect a further increase in the standard deduction in the new tax regime. Whatever changes will happen, whether an increase in standard deduction or a change in tax rate or slab if at all or enhancement of basic exemption limit, I expect for it to happen in the new tax regime," she told News Agency.
The new regime simplifies tax filing and offers lower tax rates, but unlike the old regime, it does not offer deductions. On the other hand, the old regime offers a slew of deductions but also comes with higher rates.
With inflation eating away the worth of money, consumers are also keen on efforts that would increase the purchasing powers of the middle class.
Weighing in, Sanchita Mukherji, Senior Business Economist and Managing Partner at 'Talk The Walk', pointed out that salaried individuals are taxed disproportionately.
"In India, the middle-class salaried individuals pay a disproportionately high personal income tax as salaries are taxed far more easily than any other kind of income. The complaint is that the middle class, which first pays tax from income, are taxed again while spending post-tax income and capital gains from the sale of shares and property," she said.
Another key challenge that Ms Mathur believes the government should address in this year's Budget is facilitating tax payments from overseas bank accounts.
"There are a lot of people who are overseas, they are foreign nationals, Indians or Non-Resident Indians, who may have worked in the past or are overseas and have investment income in India. The payments can be made for taxes only from an Indian bank account. Sometimes that's a challenge, so tax payments should be facilitated from overseas bank accounts because the government is concerned with having the tax payout without many compliance issues. Therefore, it should not be relevant where the payment is coming from, whether it is an Indian bank account or an overseas bank account," she said.
While these are proposed measures, the spotlight is on whether February 1 will transform the taxation landscape in India altogether or will the middle class be left craving for more change.