The income other than from capital gains up to Rs. 12,00,000 is not taxable due to rebate under the income tax. This is the key highlight of the Budget 2025 with regards to Income Tax. This is welcome step taken by the Government. The idea behind this is to boost the consumption. The economic survey indicated the necessity of boosting the consumptions. The government taken step to boost consumption by increasing the tax-free income up to 12,00,000. But we need to take note that tax payers’ portion is only 3% to 5% of the total population. By increasing the limit of tax-free income to 12,00,000 would not necessarily boost the consumption. For successful economic or fiscal policy which need to be covered with larger population. The 5% population consumption may not increase the overall consumption in real terms. However, for the tax payer increase in limit is welcome step.
Further, one more important step announced in the budget is to simply the Direct Tax Laws. This is another welcome step taken by the Government. The present income tax laws required the simplification. Next week the government presenting the bill for Income Tax Laws to simplify it. This will increase the clarity on most of the provisions of the Income Tax Laws and reduce litigation.