Budget 2025: From new tax regime to crypto tax – 10 key reforms for taxpayers in the past five budgets

Union Finance Minister Nirmala Sitharaman will present Union Budget 2025 tomorrow, her eighth in a row including the interim Budget last year.

Year after year, a number of key reforms have been introduced for the taxpayers. In 2020, for instance, a new tax regime was introduced for taxpayers and in 2024, capital gain structure was revamped. We give a lowdown on the key reforms which were introduced by the FM in the past few years.

These are some of the key reforms introduced which impacted the individual taxpayers in a significant way.

10 Key reforms introduced in past few Budgets

I. New income tax regime:TheFM announced the new tax regime in Budget 2020 as an optional regime. This was done to simplify the tax system where in concessional tax rates were offered while removing the benefits of certain deductions.

II. New regime becomes default: In Budget 2023, the new tax regime became a default regime. This means all taxpayers are meant to file their tax return as per the new regime, however they were also given the option of filing return under the old regime as well.

III. Capital gains tax reforms: Budget 2024 saw a range of changes with regards to capital gains which are described below:

A. STCG (Short term capital gains): In Budget 2024, tax rate on short term gains was raised to 20 percent from 15 percent earlier on specified financial assets.

B. LTCG: Also in Budget 2024, a tax rate of 12.5 percent was introduced on long term gains on all financial and non-financial assets (instead of 20 per cent earlier). The limit of exemption of capital gains on certain listed financial assets was raised from ₹ 1 lakh to ₹ 1.25 lakh per year.

IV. Re-opening of assessment: In Budget 2021,FM reduced the time-limit for re-opening of assessment to 3 years from 6 years. In serious tax evasion cases too, only where there is evidence of concealment of income of `50 lakh or more in a year, the assessment was allowed to be re-opened up to 10 years.

V. Standard deduction: The FM raised the standard deduction from ₹50,000 to ₹75,000 for salaried employees for those following the new tax regime in Budget 2024. Ms Sitharaman also raised the deduction on family pension from ₹15,000 to ₹25,000 for those following the new tax regime the same year.

VI. New Slab rates: Budget 2024 introduced the new tax slab for those following the new tax regime. Now there is no tax for those earning up to ₹3 lakh. Between ₹3-7 lakh, tax is 5 percent. Between 7-10 lakh, tax rate is 10 percent, tax rate is 10 percent.

For those earning between 10-12 lakh, the rate of tax is 15 percent, 20 percent for income between 12-15 lakh and 30 percent for above ₹15 lakh.

VII. Rebate upto ₹7 lakh: Income limit for rebate of income tax increased from ₹5 lakh to ₹7 lakh in the new regime in Budget 2023.

VIII. Surcharge on highest income: Highest surcharge rate on income above ₹5 crore was reduced from 37 percent to 25 percent under the new regime in Budget 2023.

IX. Updated return: A new provision of updated return was introduced to allow taxpayers to file ITR (updated) return within two years from the end of the relevant assessment year for rectifying mistakes in the tax returns.

X. Tax on Crypto assets: Government introduced 30 percent tax on virtual digital assets in Budget 2022. TDS of 1 percent was also introduced on transfer of these assets.

(The list is indicative and not exhaustive)