No Changes in Old Tax Regime Slabs, Minimal Tweaks in New Regime Expected from Budget 2025: KPMG
KPMG experts weigh in on the expectations for the upcoming Budget 2025, suggesting that the old tax regime slabs are likely to remain unchanged, while minimal adjustments might be made to the new regime.
Tax SlabsBudget 2025KpmgNew Tax RegimeOld Tax RegimeReal Estate NewsJan 30, 2025
According to their analysis, there is a strong possibility that the tax slabs under the old tax regime will remain unchanged.
However, the new tax regime may see some minimal tweaks to make it more attractive and aligned with the current economic conditions.
The old tax regime, which allows for a higher tax exemption limit but includes a higher tax rate, has been a popular choice for many taxpayers.
This regime offers several deductions and exemptions under sections like 80C, 80D, and others.
KPMG experts believe that the government is unlikely to make any significant changes to these slabs, as they provide a stable and predictable tax structure for a large number of individuals.
On the other hand, the new tax regime, introduced in the Budget 2020, offers lower tax rates but with fewer deductions and exemptions.
While this regime has not gained widespread acceptance, KPMG suggests that the government might introduce minor adjustments to make it more appealing.
These could include an increase in the standard deduction, a slight reduction in tax rates, or the reintroduction of a few popular deductions.
Information on KPMG
KPMG is a global network of professional firms providing Audit, Tax, and Advisory services.
The firm operates in 147 countries and territories, with over 236,000 professionals.
KPMG in India is a leading professional services firm, offering a wide range of services to help clients navigate complex business challenges and achieve their strategic objectives.
The firm's tax experts are renowned for their deep understanding of the Indian tax landscape and their ability to provide insightful guidance on tax planning and compliance.
Why the Government Might Opt for Minimal Changes
The Indian economy has been facing several challenges, including a slowdown in consumer spending and a rise in unemployment.
In such a scenario, the government is cautious about making any drastic changes to the tax structure, which could further burden taxpayers.
Instead, minimal tweaks to the new tax regime could help make it more attractive without causing significant disruption.
Potential Changes in the New Tax Regime
1.
Increase in Standard Deduction The government might increase the standard deduction from the current Rs 50,000 to a higher amount.
This would provide some relief to taxpayers who opt for the new regime.
2.
Reduction in Tax Rates A slight reduction in tax rates, particularly in the lower income brackets, could make the new regime more appealing to a broader segment of taxpayers.
3.
Reintroduction of Key Deductions The government might consider reintroducing some popular deductions, such as those for home loans or health insurance, to make the new regime more attractive.
4.
Simplification of Tax Slabs Simplifying the tax slabs and making them more straightforward could also encourage more taxpayers to opt for the new regime.
5.
Incentives for Long-Term Investments Introducing incentives for long-term investments, such as equity or mutual funds, could be another way to make the new regime more appealing.
Conclusion
While the old tax regime is expected to remain stable, the new tax regime might see some minor adjustments in the upcoming Budget 2025.
These changes are likely aimed at making the new regime more attractive to taxpayers and encouraging its adoption.
However, the government will be careful to ensure that these changes do not adversely affect the overall economic stability and fiscal health of the country.
KPMG's analysis provides valuable insights into the possible direction of the upcoming budget, helping taxpayers and businesses prepare for the changes ahead.
Frequently Asked Questions
What is the old tax regime?
The old tax regime allows for a higher tax exemption limit but includes higher tax rates. It offers several deductions and exemptions under sections like 80C, 80D, and others.
What is the new tax regime?
The new tax regime, introduced in the Budget 2020, offers lower tax rates but with fewer deductions and exemptions. It aims to simplify the tax structure and reduce the tax burden for many taxpayers.
What changes are expected in the new tax regime in Budget 2025?
KPMG expects minimal tweaks to the new tax regime, such as an increase in the standard deduction, a slight reduction in tax rates, or the reintroduction of some popular deductions.
Why might the government opt for minimal changes to the tax structure?
The government is cautious about making drastic changes to the tax structure due to the current economic challenges, including a slowdown in consumer spending and a rise in unemployment.
What is KPMG's role in tax analysis?
KPMG is a leading professional services firm that provides insights and guidance on tax planning and compliance. Their experts have a deep understanding of the Indian tax landscape and are renowned for their analytical capabilities.
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