The government is preparing to enhance the appeal of the New Tax Regime (NTR) in the upcoming Budget 2025 by potentially introducing new exemptions to attract taxpayers.
Here’s what to expect from the proposed updates:
1. EPF May Become Mandatory in the New Tax Regime
To promote wider adoption of the New Tax Regime, the government is considering making Employees’ Provident Fund (EPF) contributions mandatory for all income groups. Currently, EPF contributions enjoy tax benefits under Section 80C of the old tax regime, with exemptions of up to ₹1.5 lakh. However, it remains uncertain whether similar benefits will be introduced under a new section or as an additional exemption in the NTR.
Key Highlights:
EPF could open new avenues for savings under the New Tax Regime.
Mandatory contributions will ensure secure retirement planning for employees.
2. Budget 2025 to Focus on Middle-Class Relief
The government aims to ease the financial burden on salaried individuals and taxpayers by:
Announcing new tax exemptions.
Providing more savings opportunities to increase disposable income.
3. What Are the Current New Tax Regime Exemptions?
Recent updates to the New Tax Regime include:
Basic exemption limit: Raised from 2.5 lakh to 3 lakh.
Tax rebate threshold: Increased from 5 lakh to 7 lakh.
Standard deduction: ₹50,000 for salaried individuals, making income up to 7.5 lakh tax-free.
4. Current Tax Slabs Under the New Regime
Income Slabs
Tax Rate
0-3 lakh
0% (Tax-Free)
3 lakh – 6 lakh
5% 6 lakh – 9 lakh 10%
9 lakh – 12 lakh 15%
12 lakh-15 lakh20%
Above 15 lakh 30%
Note: Changes or relaxations in these slabs are expected in
Budget 2025.
5. Why the New Tax Regime Faces Challenges
Despite its simplicity, the New Tax Regime has some limitations
Lacks popular exemptions like Section 80C, HRA, and 80D. Fewer saving incentives compared to the old tax system.
Proposed Solution:
The government plans to address these concerns by including EPF and similar investments in the New Tax Regime to encourage savings alongside spending.
6. Secure Savings with EPF – A Game-Changer?
Making EPF mandatory for all taxpayers could significantly benefit salaried individuals. It ensures:
Guaranteed returns and secure retirement savings.
Tax benefits in line with the old system, if implemented in the New Regime.
Stay tuned for Budget 2025 updates to see how these changes can impact your finances. The government’s efforts to simplify and enrich the New Tax Regime could make it a preferred choice for taxpayers.