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1. Revised Income Tax Slabs
The government has introduced major tax reforms to provide relief to salaried professionals:
- Income up to ₹12 lakh – 0% Tax (Under New Tax Regime)
- ₹12,00,001 – ₹20,00,000 – 10% Tax
- Above ₹20,00,000 – 20% Tax
This will significantly increase disposable income, helping individuals save and invest more.
2. Standard Deduction Increased to ₹75,000
The Standard Deduction for salaried employees has been increased from ₹50,000 to ₹75,000, reducing taxable income and providing more financial relief.
3. Enhanced Section 80C and 80D Benefits
- 80C Limit Increased: The deduction limit for tax-saving investments like EPF, PPF, and ELSS has been increased to ₹2,00,000.
- 80D Health Insurance Deduction: The maximum deduction for health insurance premiums has been raised, promoting better financial security.
4. Home Loan Interest Deduction Expanded
Salaried employees planning to buy a house can now claim up to ₹3,00,000 as a deduction on home loan interest under Section 24(b), making homeownership more affordable.
5. Increased Employer Contribution to EPF
To boost retirement savings, employer contributions to Employees’ Provident Fund (EPF) have been increased from 12% to 14%.
6. Work-from-Home Allowance Introduced
Recognizing the shift towards remote work, a new work-from-home allowance has been introduced to cover expenses like internet, electricity, and home office setup.
7. Simplified ITR Filing for Salaried Employees
- Auto-filled ITR forms will now include salary details, deductions, and tax credits, reducing tax filing hassles.
- The time limit to file updated income tax returns has been extended to four years.
Conclusion: A Budget Designed for Salaried Professionals
The Budget 2025 offers substantial tax relief and savings opportunities for salaried individuals. Higher deductions, simplified tax compliance, and additional allowances make this budget employee-friendly, ensuring better financial stability and long-term wealth creation.