Facing the new income tax regime soon Budget 2025 is stirring up the talk on possible tax exemptions, in particular, among individual taxpayers. A deeper analysis of the government’s trends in revenues shows that, at least in the context of the ongoing fiscal year, there is potential for recalibrating, seeing as tax collection has been unprecedented.
Tax Revenues on Track to Exceed Estimates
As of January 12, 2025, the government has already collected ₹20.64 lakh crore in direct taxes, achieving 93.5% of its annual target of ₹22.07 lakh crore with nearly three months still to go.
The clear winner has been the Securities Transaction Tax (STT), which has exceeded expectations because of a booming stock market. STT libraries have gone up to ₹44,000 crores (significantly more than the anticipated ₹37,000 crores for the year).
Corporate tax revenue has also been good, and 95% of the collected budgeted ₹10.2 crores have already been made available, with a remaining ₹48,000 crore deficit to be resolved. With the standard end-of-year tax settlements, experts predict that this target will not only be achieved but also perhaps surpassed.
On the other hand, the personal income tax collections have reached up to 90.88% of the full-year target and so far more than 1 lakh crore remains to be collected. Analysts predict that this discontinuity will be filled by the time the individuals submit their returns, thereby supporting a revenue surplus.
What Lowered Income Tax Means for Taxpayers in Budget 2025?
Due to the very significant tax collection data, there has been a growing discussion about the possibility of the government adding relaxation to the income tax slabs, or increasing the deductions under the new tax regime. Any such relief would boost disposable incomes, spurring consumer spending and economic growth.
Notably, the government’s decision will depend, on a larger, fiscal issue, such as global economic uncertainty. Experts warn that although relief is available, policymakers may choose fiscal consolidation over rapid tax reform.
Expert Take on Fiscal Resilience
Grant Thornton Bharat Partner, Akhilesh Chandna, notes that the Indian tax revenue trend indicates a strong economy, powered by increasing wages, solid corporate profits, and active markets. He highlights the need to sustain such growth in the context of global issues.
As the final numbers of revenue will be released by the Budget on February 1, now everyone’s gaze is fixed on whether Finance Minister Nirmala Sitharaman will use this revenue strength to provide tax breaks for the citizens.