Budget 2025: The country’s new budget is going to be presented on 1 February 2025. Before that, once again there is speculation that the government can announce the closure of old tax regime in the new budget? In fact, the government introduced the new tax regime in 2020, in which tax rates have been kept low, but most of it does not get the benefit of tax deduction and exemption. Since the introduction of new tax regime, the government has also tried to make it better and more attractive from year to year. But the old tax regime has not been roughly given new relief. In such a situation, this question is important for many people whether the government can really take steps like closing the old tax regime in Budget 2025 (Union Budget 2025)?
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The popularity of new tax regime has increased
The new tax regime, which was implemented in 2020, did not get much support in the beginning. But in the last four budgets, the government took several steps to make it simple and attractive. This includes provisions such as changes in tax slabs, increase in basic exemption limit and giving benefits of standard deduction. Due to these changes, the popularity of the new tax regime increased and a large number of taxpayers adopted it.
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The purpose of new tax regime
The government aims to make the tax system easier and reduce the dependence of taxpayers on investment options that make tax saving system easier. Under this effort, the new tax regime was made a default option from 2023-24. According to the Finance Ministry data, 72% taxpayers have adopted the new tax regime in 2023-24. But among those who choose New Tax Reseam, there are also a large number of people who do not have to pay any tax while filing returns. But among the people who really have to pay tax, a large number of taxpayers are still on the old regime. Because in the old tax system, they not only can save tax, but also save and invest for their future responsibilities due to tax incentives.
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Benefits of old tax regime
In the old tax regime, taxpayers get a tax exemption on investing in many investment options like Life Insurance, Health Insurance, PPF, NPS, ELSS and assets like house property. Apart from this, tax exemption is also available on many expenses like house rent, children’s education, treatment of diseases, LTA. Therefore, it is more beneficial for taxpayers whose large part of the income goes into these expenses or investment. This is the reason that those people still remain in the old tax reset.
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What is bottleneck in stopping old tax regime
If the old tax regime that is given above is completely closed, then it will not affect those who get tax benefits only under this scheme. Due to their investment, sectors like real estate, insurance and mutual funds can also suffer losses. Due to LTA, the tour and travel industry gets business. Apart from this, investment in the government’s tax -saving small savings schemes can also be affected. It can also have a bad effect on the overall renovation rate of the economy. In addition, the taxpayers who are paying old home loans, or filling the premium of insurance may increase their problems. Keeping in mind all these reasons, in the budget 2025, the chances of completely abolishing the old tax regime are less. Yes, if the government really wants to move towards a single tax regime, then there can be any indication towards taking step-by-step steps in a long time. And while doing so, it will not be surprising even if it is announced to add some new tax exemption to the new tax regime by adding some new tax exemption.
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What can happen in budget 2025?
There may be some big announcements for taxpayers in budget 2025. It may be that steps may be taken to make the new tax regime easier and attractive instead of completely eliminating the old tax regime, so that more and more taxpayers start adopting it and gradually the importance of old tax regime will be reduced. But at the moment, the chances of the closure of the old tax regime in one stroke seem to be low.