As the Union Budget 2025 approaches, taxpayers are eagerly anticipating potential reforms in the income tax structure. Finance Minister Nirmala Sitharaman is set to present this crucial budget on February 1, which holds particular significance as it will shape the financial policies of the Modi government. Among the key expectations are revised tax slabs and increased exemptions, particularly for senior citizens.
Taxpayers are hopeful for updates in tax slabs to ease the financial burden on individuals. Experts predict an increase in deduction limits under various sections:
These revisions would benefit both individuals and senior citizens, enhancing their financial stability.
Section 80TTA of the Income Tax Act, 1961, allows individuals and Hindu Undivided Families (HUFs) to claim a deduction of up to ₹10,000 on interest earned from savings accounts in banks, co-operative banks, or post offices. However, this benefit excludes interest from fixed deposits or recurring deposits (RDs).
Introduced in the 2012-13 financial year, the ₹10,000 limit under Section 80TTA has remained unchanged for over a decade. Many believe it is time for an upward revision to keep pace with inflation and current financial realities.
Unlike Section 80TTA, Section 80TTB focuses on senior citizens, offering deductions for interest income from savings, fixed, and recurring deposits. Currently, senior citizens can claim tax exemptions up to ₹50,000, which applies to:
However, interest earned from bonds and debentures does not qualify for this deduction.
Given the rising cost of healthcare and living, experts recommend doubling the Section 80TTB limit to ₹1 lakh. This adjustment would address the potential impact of reduced interest rates due to RBI’s expected repo rate cuts.
To incentivize the transition to the new tax regime, there is growing demand for deductions under Sections 80TTA and 80TTB to be included in it. Currently, these benefits are exclusive to the old tax regime, which discourages many taxpayers from switching.
The Union Budget 2025 is poised to introduce significant reforms that could bring much-needed relief to taxpayers, especially senior citizens. By revising tax slabs and enhancing deduction limits, the government could ease financial pressures and encourage savings and investments. With February 1 around the corner, all eyes are on the Finance Minister for these much-anticipated changes.