What Can We Expect in Union Budget 2025? – Finance Minister Nirmala Sitharaman is all set to present the Union Budget for 2025 in Parliament on February 1. This will mark the second full budget under the Modi Government 3.0. The Finance Minister typically begins her budget speech around 11:00 AM, and it lasts for about 1.5 to 2 hours.The history of income tax in India offers an interesting perspective on how the financial relationship between the government and the public has evolved over the years. From 1947 onwards, the income tax system has gone through multiple reforms, including changes in tax rates and the introduction of various exemptions. Let’s take a look at how income tax in India has evolved from 1947 to 2025.
India’s First Budget and Early Tax Policies
India’s very first budget was presented on November 16, 1947, by the Finance Minister at the time, R.K. Shanmukham Chetty. Back then, the income tax exemption limit was ₹1,500, which meant that any income up to this amount was tax-free. The budget was mainly focused on reviewing the country’s economic situation and outlining a roadmap for India’s future growth. In 1955, income tax laws began to distinguish between married and unmarried individuals. Married individuals could earn up to ₹2,000 without being taxed, while unmarried individuals had a tax-free limit of ₹1,000. This period also saw the income tax rates reach historical heights, with the highest rate standing at 85%. With surcharges, it could rise as high as 97.75%. In simple terms, for every ₹100 earned, only ₹2.25 was kept by the individual, while the rest went to the government.
Modi Government’s Tax Reforms
In 2020, the Modi Government introduced a new tax regime that simplified the tax slabs while eliminating many exemptions and deductions. The idea was to make the process of tax filing simpler and more transparent for the public. Then, in the 2023-24 budget, the government made this new tax system the default option. Under the new regime, individuals earning up to ₹7 lakh a year are exempt from paying any income tax. For salaried employees, after adding the standard deduction, this threshold increases to ₹7.75 lakh.
What’s Next in the World of Income Tax?
As Budget 2025 approaches, it’ll be interesting to see what changes are in store. Will there be further simplifications to the tax structure, or will the government introduce new measures to benefit taxpayers? The story of income tax in India, from its humble beginnings to its present-day structure, reflects much about the country’s growth, challenges, and how policies have shifted to meet the needs of the people.
