Union Finance Minister Nirmala Sitharaman is set to present the Union Budget 2025 today, marking her eighth consecutive Budget presentation, including the interim Budget last year.
Over the years, several significant tax-related reforms have been implemented. In 2020, for instance, a new tax regime was introduced to simplify tax filing, while 2024 saw major changes in the capital gains tax structure. Below is an overview of some of the key reforms introduced in previous budgets that have had a notable impact on individual taxpayers.
Union Budget: 10 major tax reforms from recent Budgets
1. Introduction of the new tax regime (Budget 2020): The government introduced an optional tax regime offering lower tax rates while removing specific deductions to simplify taxation.
2. New tax regime becomes default (Budget 2023): The new regime was made the default tax structure, although taxpayers were given the choice to continue with the old system if they preferred.
3. Capital gains tax adjustments (Budget 2024):
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>Short-term capital gains (STCG): The tax rate on specific short-term financial assets was raised from 15 per cent to 20 per cent.
>Long-term capital gains (LTCG): A uniform 12.5 per cent tax rate was introduced for both financial and non-financial assets, replacing the previous 20 per cent rate. Additionally, the exemption threshold for capital gains on certain listed assets increased from Rs 1 lakh to Rs 1.25 lakh annually.
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4. Revised timeframe for assessment reopening (Budget 2021): The period for reopening income tax assessments was reduced from six years to three years. In cases of suspected tax evasion involving Rs 50 lakh or more, assessments could still be reopened for up to 10 years.
5. Higher standard deduction (Budget 2024): The standard deduction for salaried employees under the new tax regime was increased from Rs 50,000 to Rs 75,000. Additionally, the deduction on family pensions was raised from Rs 15,000 to Rs 25,000.
6. Revised tax slabs (Budget 2024): New slab rates under the restructured tax regime were introduced:
>No tax on income up to Rs 3 lakh
>5 per cent tax on income between Rs 3-7 lakh
>10 per cent tax on income between Rs 7-10 lakh
>15 per cent tax for Rs 10-12 lakh
>20 per cent tax for Rs 12-15 lakh
>30 per cent tax for income above Rs 15 lakh
7. Higher rebate limit (Budget 2023): The tax rebate threshold was raised from Rs 5 lakh to Rs 7 lakh under the new tax regime.
8. Reduction in the surcharge for high-income earners (Budget 2023): The highest surcharge on incomes exceeding Rs 5 crore was lowered from 37 per cent to 25 per cent under the new tax framework.
9. Updated income tax return provision: A new rule was introduced allowing taxpayers to submit an updated income tax return within two years of the end of the relevant assessment year to correct errors.
10. Tax on cryptocurrency and digital assets (Budget 2022): The government imposed a 30 per cent tax on earnings from virtual digital assets, alongside a 1 per cent TDS on transactions involving these assets.
