New Delhi [India], February 2 (ANI): The new tax structure announced in the Union Budget 2025-26 is expected to benefit around 5.65 crore taxpayers who fall under the income slab of Rs 4 lakh and above.
According to a report by the State Bank of India (SBI), these taxpayers will collectively save approximately Rs 1 lakh crore in taxes. The report highlighted that individuals earning between Rs 8 lakh and Rs 12 lakh per annum will gain the most from these changes.
It said “The new tax structure would benefit approximately of total 5.65 crore taxpayers (above Rs 4 lakh tax slab) with total tax savings amounting to majestic approx. Rs 1 lakh crore”.
The SBI report further estimated that this tax savings will lead to a significant increase in consumption. Using a marginal propensity to consume (MPC) of 0.7, the report predicts that the additional disposable income will boost consumption by Rs 3.3 lakh crore.
This increase in spending is expected to stimulate economic activity, contributing to a more dynamic and sustainable economy. Higher consumption levels will drive demand across various sectors, potentially leading to job creation and overall economic well-being.
Apart from the tax relief, the budget also introduced an important change in the income tax return filing process. The government has extended the time limit for filing updated income tax returns (ITR-U) from 24 months to 48 months. This change is aimed at giving taxpayers more time to voluntarily update their income details and pay any additional tax owed.
In her budget speech, Finance Minister Nirmala Sitharaman stated that “nearly 90 lakh taxpayers voluntarily updated their incomes by paying additional tax. Taking this trust further, I now propose to extend the time limit to file updated returns for any assessment year.”
To increase consumption, Government had increased ‘Nil tax’ slab from Rs 2.5 lakh in 2014 to Rs 7 lakh in 2023. However, Government had continued to have 2-tax regime and left on the taxpayer to choose as per his/her income and deductions.
However, the report noted that around 78 per cent of the returned filled under the Individual Income Tax (IT) are under the new tax regime. The Government has now proposed a big income tax relief bonanza in the Union Budget 2025-26 in the new tax regime
With these measures, the government hopes to simplify taxation, encourage voluntary compliance, and boost economic growth through increased consumption and investment. (ANI)
