Taxpayers Demand Personal Tax Relief In Budget 2025-26

As the Union Budget 2025-26 approaches, individual taxpayers are urging the government to ease the personal tax burden to enhance disposable incomes. Finance Minister Nirmala Sitharaman will present the budget on February 1, but a pre-budget survey by consulting firm Grant Thornton Bharat sheds light on taxpayer priorities.

The survey found that 57% of respondents are advocating for lower tax rates, while 25% prefer higher exemption limits. These demands highlight the widespread need for relief in personal taxation.

The simplified new personal tax regime has gained traction, with 72% of taxpayers adopting it, leaving only 28% in the old tax regime. Despite its popularity, there is room for improvement.

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According to the survey, 46% of taxpayers suggest lowering tax rates under the new regime, while 26% want higher exemption limits to enhance its appeal.

Old Tax Regime Still Relevant

Although the government has hinted at phasing out the old tax regime, it remains significant for many taxpayers. The survey reveals that 63% of respondents want an increase in incentives under the old system, reflecting its continued relevance.

Focus on Simplified Tax Compliance

With growing digitalisation, taxpayers are pushing for more efficient tax filing and compliance systems. The survey highlights the following key demands:

• Easier Tax Payments for NRIs: 38% of respondents want the option to make tax payments through foreign banks and operationalise refunds to overseas accounts.
• Income Threshold Revisions: 56% call for higher income thresholds for tax filing, reducing the burden on small taxpayers.
• Updated Returns Flexibility: 32% advocate for a reduction in additional tax on updated returns, while 12% seek an extension for filing revised ITRs.

These measures would ease compliance burdens, particularly for those living abroad.

Maximising Compliance Through Incentives

When asked about steps to improve compliance, 53% of respondents called for more flexible withdrawal rules and increased tax exemptions under the National Pension Scheme (NPS). These changes would encourage greater participation and secure long-term financial stability.

Tax Incentives For Electric Vehicles

Taxpayers are also pushing for the reintroduction of tax benefits for electric vehicles (EVs). The government previously provided deductions for interest on EV loans, applicable only to loans sanctioned between April 1, 2019, and March 31, 2023. Reviving such incentives could accelerate EV adoption, promoting environmental sustainability.

As taxpayers express their expectations, all eyes are on the upcoming budget to see if these demands translate into meaningful policy changes.