Budget 2025 Expectations Updates: Will Government Merge Old and New Tax Regimes?

The Union Budget 2025 is set to be presented on 1st February 2025. The country’s vast population awaiting the budget announcements kept making several debates on income tax regimes. One of these debates is that the government is likely to merge the old tax regime with the new one. But the Finance Minister, Smt Nirmala Sitharaman, had not marked any of such claims for the union budget 2025-2026. 

Experts’ viewpoints or debates might help you understand what this budget will bring to us. Scroll to explore what experts say about merging the old and new tax regimes. 

Everyone is seeking potential relief in the upcoming union budget 2025-2026. This relief also includes a tax break for people earning up to Rs 15 lakh per annum and a rise in the standard deduction under the new tax regime. Experts denied getting significant changes in taxation from the old tax regime. They said that it would be risky to scrap the old tax regime altogether. 

To eliminate such risk from the Indian economy, they predict that the government might merge the old and new tax regimes. 

What is New Tax Regime?

The government announced a new tax regime in the union budget 2020, in which concessional tax rates with reduced deductions and exemptions were announced. The primary aim of the Indian government for this tax regime was to simplify the taxation system. It enhanced participation in tax compliance. 

Kumarmangalam Vijay, Partner at JSA Advocates & Solicitors, claimed that the new tax regime has simplified the taxation process and aimed to let individuals not make forced investments or donations to save their taxes. Moreover, it also encourages cash availability at the disposal time. 

According to the recent updates, more than 67% of taxpayers chose the new tax regime. The merging of old and new tax regimes might benefit the government as well as taxpayers in the Indian economy. 

Furthermore, Kumarmangalam Vijay has also highlighted some of its challenges. He claimed that this merger in the union budget 2025-2026 would bring additional compliance burdens for the taxpayers and also for the income tax department. He also said that simplifying the taxation process should not come at the expense of taxpayer benefits. 

From another perspective, Subhash Chand Aggarwal, the Chairman and MD of SMC Global Securities Ltd., says that the old tax regime charges higher taxes but also gives exemptions and deduction benefits to key taxpayers. Whereas the new tax regime is the opposite. If the government merge both of these taxes, it would simplify the tax structure but may also impact the taxpayers who are not investing enough to claim deductions under the old tax regime. Aggarwal also mentioned the flexibility of both regimes that allows individuals to choose on the basis of their income levels and financial objectives. 

Experts have highlighted the need for simplified tax procedures but say that two different regimes allow individuals to make informed decisions on their investment and spending. 

As we’re heading to February 2025, when the union budget 2025-2026 will be presented, the government will focus on simplifying the tax process, whether it will announce a merger or not. Experts recommended taxpayers monitor both regimes’ options and consider their income levels and long-term financial objectives. 

Key Takeaways

• The union budget 2025-2026 will be presented on 1st February 2025 with a focus on simplifying tax procedures. 
• More than 67% of taxpayers have opted for the new tax regime, which includes a more simplified tax administration. 
• Kumarmangalam Vijay predicted that the merger of old and new tax regimes will simplify the tax process but may increase compliance burdens. 
• Subhash Chand Aggarwal believes that the merger will simplify the tax process but may impact the taxpayers of the old regime. 
• The government has a significant focus on prioritising simplification in tax administration and may create a balance between simplification and maintaining flexibility for taxpayers. 

FAQs on Union Budget 2025 Expectations

1. What is the date of the budget 2025?

Ans. The union budget 2025-2026 is set to be presented on 1st February 2025. Finance Minister, Smt. Nirmala Sitharaman will announce the budget on this date and make significant claims on upcoming tax reforms. 1st February has been the standard date for the union budget for recent years. However, the exact date will be announced by the government of India closer to the time.  

2. What is the union budget 2025-2026?

Ans. The union budget 2025-2026 is the summarised version of the annual financial statement of the Indian government, inclusive of a detailed plan on expenses and revenue generation of government during the fiscal year. Budget 2025 is set to be presented on 1st February 2025 by the Finance Minister, Smt Nirmala Sitharaman. 

3. What to expect from budget 2025?

Ans. With the union budget 2025-2026, the government aims to take several measures to balance the simplification of tax administration and maintain flexibility for taxpayers. You can expect changes in tax reforms, economic growth initiatives, simplified tax process, and tax relief from budget 2025. Evaluate your financial goals, income level, and standard deductions to be ready for the coming tax reforms. 

4. Who will announce the budget in 2025?

Ans. Finance Minister of India, Smt Nirmala Sitharaman, will announce the union budget 2025-2026. She has been the finance minister since 2019 and presented the union budgets from 2020 to 2024. She will present the union budget 2025-2026 on 1st February 2025. 

5. Will the old and new tax regimes be merged in budget 2025?

Ans. As per the experts’ debates, it is possible for old and new tax regimes to be merged in the union budget 2025-2026. But it totally depends on the government of India whether to merge these regimes or to continue with the existing taxation process. The merger of old and new tax regimes would simplify the tax administration but also impact the participants of old tax regimes. 

Disclaimer: For clarity on the aforementioned claims and predictions, one should have a close eye on Finance Minister Smt Nirmala Sitharaman’s announcements on the tax reforms.