Income Tax Relief - What It Means for You and Can You Expect it in the 2025 Budget

Now that inflation is on a rise and the cost of living has gone up to unprecedented levels than many had previously imagined, the salaried people across the country are expecting an income tax relief for the upcoming Union Budget 2025 in order to reduce the financial burden brought across them this past year which in turn is expected to be a significant exemption of their woes as diligent taxpayers.

Source - Newsx

But how does this process work out especially for those who are unaware of the Income Tax System of our country. For that, let’s find out, shall we?

Income Tax Relief - A Simple Introduction

In simple terms, income tax relief refers to the various practices or measures implemented by the government in order to reduce the financial burden of taxes on both salaried individuals and establishments (companies).

It can involve several provisions such as lowering the amount of tax owed, providing refunds and exempt certain types of income from taxation. However, the main goal of this is to maintain financial equity within the tax system in the sense that one of its merits can include us knowing the value of ownership of a company.

Interesting, isn’t it? I can bet you one of the interesting facts about tax relief is that it can take place in many forms such as credits, deductions, exemptions and rebates. 

Calculation of Income Tax Relief

Some of the most commonly-asked questions from people in general regarding the topic of income taxation are How much is income tax relief? or How is income tax deduction calculated?.

For these types of questions, we must know that there is no single answer for these questions and that various factors come in place regarding the calculation of income tax relief such as individual income, deductions depending on eligible expenses or investments as per tax laws, applicable rebates etc. 

The first step to calculate the income tax relief being calculating your gross taxable income by summing up all sources of income available. Then we begin identifying and subtracting applicable deductions and exemptions such as those for home loans, medical expenses etc., to reduce the taxable income.

Finally, we will apply tax credits or rebates in order to lower the current tax liability such as energy tax credits, child tax credits etc.

For example, let us say your gross income is ₹11,00,000 and the amount you claim in deduction is ₹3,00,000 then the taxable income will come around ₹8,00,000 even though your final tax pay can further be reduced through credits or rebates.

Who is Eligible for Income Tax Relief?

For the financial year 2024-25, individuals with a taxable income up to Rs 7 lakh can be eligible for a full tax rebate under Section 87A resulting in no tax liability. For those who want to go for the old tax regime, individuals earning up to Rs 5 lakh can claim a rebate of up to Rs 12,500 which can also lead to no tax due.

Even though senior citizens aged between 60 and 80 have a higher exemption limit of Rs 3 lakh but super senior citizens above 80 years can benefit from an exemption of up to Rs 5 lakh.

On the other hand, the revised standard deduction for salaried employees is now Rs 75,000, further enhancing tax relief opportunities. Overall, taxpayers need to assess their income levels and choose the regime that maximizes their eligibility for relief. 

Expectations from 2025 Budget

As of now, changes are expected which can improve taxpayer convenience as much as possible. The normal deadline for filing income tax returns (ITR) for the financial year 2023-24 was July 31, 2024, but the Bombay High Court has directed an extension for taxpayers eligible for the Section 87A rebate, allowing them to file until January 15, 2025.

The revised tax slabs will have to provide significant relief to lower-income brackets even though specific details on further modifications and adjustments on these slabs are expected to go well considering the nature of the government constantly redefining tax regulations.

Overall, we can expect these changes to reflect a positive trend towards providing a lot of flexibility and support for honest and diligent taxpayers in terms of managing their obligations as much as possible.

Written By Shashank S

This article has been authored exclusively by the writer and is being presented on Eat My News, which serves as a platform for the community to voice their perspectives. As an entity, Eat My News cannot be held liable for the content or its accuracy. The views expressed in this article solely pertain to the author or writer. For further queries about the article or its content you can contact on this email address - shashanksmithamanya@gmail.com