IT-BT Budget Round Table 2025: Unprecedented budget tax reliefs to help 99% of tax payers, say experts

The tax rebates and rationalisation of the income tax slabs offered in the budget FY2025-26 by Finance Minister Nirmala Sitharaman are expected to help 99% of the income tax taxpayers in the country.

The minister, who tabled the union budget for the next financial year in the Parliament on 1 February, has brought down the income tax burden on a large section of the salaried taxpayers in India by raising the income tax slabs and offering a major rebate on incomes up to Rs 12.75 lakh a year. She also announced that a new IT bill will be tabled in the Parliament next week. These measures, say tax experts, to not only bring down the effective tax paid by most but the upcoming IT bill will reduce complications for the common taxpayers.
 
According to tax expert Ved Jain, the move is expected to further accelerate the migration of salaried taxpayers towards the new regime. “The number of people filing income tax is set to grow to 10 crore from some 8.5 crore. While the number of actual taxpayers may remain lower for the next 2-3 years that number will grow as well” as economic prosperity will lift people’s income levels, he says at the India Today-Business Today Budget Roundtable 2025.
 
“Such big tax relief has not been given earlier in any budget. This was possible due the unprecedented rise in personal tax collection in recent years,” adds Jain, who has close to 40 years of experience in the field.
 
Rakesh Nangia, Founder & Managing Partner at Nangia & Co says that in India currently out of the 8.5 crore income taxpayers, some 5.5 crore or 65% does not actually pay tax but only file the returns. According to him, the economic growth and, consequently, rising income levels in recent years have led to the expansion of middle-income taxpayers.
 
However, reducing complications in tax compliance by cutting down on the required details during various types of tax filings in the need of the hour, says Nangia. “Today there are 298 sections of the existing IT Act and numerous subsections. A new IT Act will make rules easy,” he says.
 
Jain concurs. “The current act consists of 800 pages. Given the fact the FM today said that she aims to cut the size by half, we expect the new act to comprise some 400 pages,” he says.
 
Pratik Jain, Partner, PwC India expects the government to introduce some tangible methods to reduce tax litigations or disputes in the new act. “While GST collection may have come down a bit in the past 5-6 months compared to what the government expected it to be” renewed boost to economic activities will help it achieve 14.5% growth in tax collection in the next financial year, he explains.