Budget 2025: One reason Sitharaman can afford to give income tax benefits

Finance Minister Nirmala Sitharaman on Saturday announced major tax benefits for the middle class, with positive tax collections likely being one of the reasons for her to arrive at such a decision.

The Union Budget 2025 on Saturday pegged gross tax receipts of Rs 42.70 lakh crore for the next fiscal, an 11 per cent growth over the revised estimates for the current year.

The revised estimates for the current fiscal has pegged gross tax revenues at Rs 38.44 lakh crore, higher than Rs 38.40 lakh crore provided in the Budget Estimates (BE).

In the current fiscal, income from corporate taxes will lag budget estimates, while that from personal tax is projected to be higher than BE.

Personal income tax is projected at Rs 12.57 lakh crore, while corporate tax is at Rs 9.80 lakh crore.

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As per Budget data, personal income tax collections are projected to grow by 14.4 per cent to Rs 14.38 lakh crore in the 2025-26 fiscal beginning April 1.

Corporate taxes are projected to grow by 10.4 per cent to Rs 10.82 lakh crore in FY26.

GST revenue is estimated to increase 11 per cent to Rs 11.78 lakh crore (including Central GST and compensation cess).

The FY26 Budget pegged miscellaneous capital receipts (including disinvestment and asset monetisation) of Rs 47,000 crore, higher than Rs 33,000 crore in the revised estimates for the current fiscal.

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Sitharaman on Saturday unveiled a series of tax reforms aimed at benefiting both individuals and businesses. Key proposals included a new tax regime, rationalisation of TDS and TCS, and measures to enhance ease of doing business.

The government introduced a “nil tax” slab for incomes up to Rs 12 lakh (Rs 12.75 lakh for salaried taxpayers after a standard deduction of Rs 75,000). This new structure is designed to reduce the tax burden on the middle class, increasing disposable income to stimulate household consumption, savings, and investment.

Additionally, Sitharaman announced that the tax deduction limit on interest for senior citizens will double from Rs 50,000 to Rs 1 lakh.

The annual TDS limit on rent will rise from Rs 2.40 lakh to Rs 6 lakh, and the threshold for tax on remittances under the RBI’s Liberalized Remittance Scheme will increase from Rs 7 lakh to Rs 10 lakh.

With inputs from agencies