Budget 2025: Taxpayers expect big changes in the old tax regime, will they get any relief?

Union Budget 2025 Expectations: Under the old tax system, benefits like section 80C and 80D are available. Under 80C, deduction of up to Rs 1.5 lakh is available on investments like PPF, life insurance premium and home loan repayment.

Income Tax Budget 2025 Expectations: This time it is expected that the old tax system will be improved, so that those who choose it get more benefits.

Budget 2025: Finance Minister Nirmala Sitharaman will present the Union Budget 2025 on February 1. In this budget, the salaried class is expected to get relief in the old tax regime. A new tax system was implemented in the budget presented last year, which emphasized simplicity.

However, despite this, many people still prefer the old system because it offers many deductions and exemptions. Under the old tax system, benefits like Section 80C and 80D are available. Under 80C, deduction of up to Rs 1.5 lakh is available on investments like PPF, life insurance premium and home loan repayment.

What are the expectations of taxpayers?

Demand for change in HRA

In metro cities like Delhi, Mumbai, Chennai and Kolkata, the HRA exemption is 50% of the basic salary, while in other cities it is limited to 40%. Keeping in mind the fast growing cities like Bengaluru, Hyderabad, Pune and Gurgaon, there is a demand to increase the HRA limit to 50% here too.

Deduction on savings and FD

At present, deduction is available only on savings account interest under Section 80TTA. There is a demand to extend it and apply it to term deposits as well. Also, it has been suggested to increase this limit to Rs 50,000 so that people can be encouraged to save.

Expectation of change in tax slab

There has been no change in the tax slabs in the old tax system for the last few years. In this system, the benefit of many deductions like house rent allowance, home loan interest and health insurance premium is available. On the other hand, the new tax system has the benefit of lower tax rates.

Demand to increase 80C limit

Under section 80C, a limit of Rs 1.5 lakh was fixed in 2014-15. It is being suggested to increase it to Rs 3 lakh so that people can save more.

Old vs new tax system

In the last few years, the government has promoted the new tax system. In 2023-24, 72% of taxpayers adopted the new system. It was made the default option in the budget last year, but the old system remained available as an option.

This time it is expected that the old tax system will be improved, so that those who choose it get more benefits. Now it remains to be seen what special announcements are made for taxpayers in the budget on February 1.