SBI report estimates Rs 1 lakh crore in tax savings, increased consumption, and economic growth under revised tax regime.
New Delhi, February 2 – The Union Budget 2025-26 is set to provide significant tax relief to 5.65 crore taxpayers falling under the Rs 4 lakh and above income bracket, according to a State Bank of India (SBI) report. The new tax structure is expected to save taxpayers approximately Rs 1 lakh crore, with maximum benefits going to those earning between Rs 8 lakh and Rs 12 lakh per annum.
“The new tax structure would benefit approximately 5.65 crore taxpayers, with total tax savings amounting to Rs 1 lakh crore,” the SBI report stated.
Higher Disposable Income to Boost Consumption
The massive tax savings are expected to increase consumer spending, driving economic growth. Using a marginal propensity to consume (MPC) of 0.7, the SBI report estimates that the additional disposable income could boost consumption by Rs 3.3 lakh crore.
This rise in spending is likely to stimulate demand across various sectors, generate employment opportunities, and contribute to overall economic prosperity.
Major Changes in Income Tax Filing
Apart from tax relief, the government has introduced a key reform in the income tax return filing process. The deadline for filing updated income tax returns (ITR-U) has been extended from 24 months to 48 months, allowing taxpayers more time to voluntarily update their income details and pay any additional tax owed.
Finance Minister Nirmala Sitharaman, in her budget speech, highlighted the success of voluntary tax compliance:
“Nearly 90 lakh taxpayers voluntarily updated their incomes by paying additional tax. Taking this trust further, I now propose to extend the time limit for filing updated returns for any assessment year.”
Rise of the New Tax Regime
To encourage tax compliance and increase disposable income, the government has progressively raised the ‘Nil tax’ slab from Rs 2.5 lakh in 2014 to Rs 7 lakh in 2023.
However, the government has continued with a dual tax regime, allowing taxpayers to choose between the old and new tax structures based on their income and deductions.
The SBI report noted that 78% of individual tax returns filed are now under the new tax regime, signaling growing acceptance of the simplified system.
Government’s Vision: Simplified Taxation & Economic Growth
With these reforms, the government aims to simplify taxation, encourage voluntary compliance, and spur economic growth by increasing consumption and investment. The Union Budget 2025-26 sets the stage for a stronger, more consumer-driven economy, ensuring greater financial flexibility for taxpayers.
Union Budget 2025, Income Tax Relief, SBI Report, Taxpayers Benefit, Economic Growth, Consumption Boost, Tax Filing, New Tax Regime, India Budget, Finance Ministry