Budget 2025: Taxpayer Expectations and Proposals
As the Union Budget 2025 approaches, individual and salaried taxpayers are voicing their expectations. A recent pre-budget survey conducted by Grant Thornton Bharat reveals that many taxpayers are eager for changes in the income tax regime. The survey highlights a strong desire for lower personal tax rates and increased exemption thresholds. With Finance Minister Nirmala Sitharaman set to present the budget on February 1, 2025, the findings of this survey provide valuable insights into the priorities of taxpayers across the country.
Demand for Lower Personal Tax Rates
The survey conducted by Grant Thornton Bharat indicates that 57% of participants are advocating for reduced personal income tax rates. This reflects a widespread sentiment among taxpayers who seek to enhance their disposable income. The current economic climate has prompted many individuals to look for ways to maximize their earnings. Lower tax rates could provide the financial relief that many are seeking.
In addition to lower rates, 25% of respondents support raising the exemption thresholds. This would allow taxpayers to retain more of their income before taxes are applied. The acceptance of the new income tax regime is notable, with 72% of taxpayers opting for it over the old system. However, to make this new regime more appealing, 46% of participants suggest that the government should consider lowering tax rates further.
This push for lower rates and higher exemptions is not just about immediate financial relief; it is also about fostering a more conducive environment for economic growth. By allowing individuals to keep more of their earnings, the government could stimulate consumer spending, which is crucial for economic recovery.
Increased Benefits Under the Old Tax Regime
Despite the shift towards the new income tax regime, a significant portion of taxpayers—63%—still desires increased benefits under the old system. This indicates that many individuals remain attached to the traditional tax framework, perhaps due to its familiarity or perceived advantages. Respondents are calling for specific enhancements, such as improved provisions for the National Pension Scheme (NPS) and greater tax benefits for electric vehicles (EVs).
The demand for better NPS provisions is particularly noteworthy. Taxpayers are looking for increased tax deduction limits and more flexible withdrawal rules. These changes could encourage more individuals to save for retirement, which is essential for long-term financial security. Additionally, the push for tax benefits related to EVs aligns with global trends towards sustainability and environmental responsibility. Tax incentives could promote the adoption of cleaner transportation options, benefiting both the economy and the environment.
Streamlined Tax Filing and Compliance
Another significant finding from the survey is the call for a more streamlined tax filing and compliance process. About 38% of participants support enabling tax payments through foreign banking institutions. This change would simplify compliance for Non-Resident Indians (NRIs) and make it easier for them to manage their tax obligations from abroad.
Moreover, taxpayers are advocating for improvements in tax refund processes, particularly for those living overseas. Implementing e-verification systems that send One-Time Passwords (OTPs) to international mobile numbers could enhance security and efficiency. These changes would not only ease the burden on taxpayers but also improve the overall tax administration system.
Additionally, the survey reveals that 56% of respondents favor raising the income threshold for tax filing obligations. This adjustment would alleviate the tax burden on smaller taxpayers, allowing them to focus on their financial well-being without the stress of compliance.
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