Union Budget 2025 Expectations

Finance Minister Nirmala Sitharaman is set to present the Union Budget 2025 on February 1, 2025. In anticipation, Assocham has submitted a pre-Budget memorandum advocating for the rationalization of surcharge rates on salaried individuals to bring parity with professionals.

Current Surcharge Rates

The existing surcharge rates on salaried individuals are as follows:

• Income more than Rs 50 lakh but not exceeding Rs 1 crore: 10%
• Income more than Rs 1 crore but not exceeding Rs 2 crore: 15%
• Income more than Rs 2 crore but not exceeding Rs 5 crore: 25%
• Income more than Rs 5 crore: 37%

Proposed Changes

Assocham suggests increasing the threshold for surcharge by 50% to ensure fairness between salaried individuals and professionals. The proposed rates are:

• Income more than Rs 75 lakh but not exceeding Rs 1.5 crore: 10%
• Income more than Rs 1.5 crore but not exceeding Rs 3 crore: 15%
• Income more than Rs 3 crore but not exceeding Rs 5 crore: 25%
• Income more than Rs 5 crore: 37%

This adjustment aims to protect revenue while promoting a more equitable tax structure.

Background and Rationale

The Finance Act 2023 introduced changes to presumptive taxation for professionals, increasing the eligibility limit for opting presumptive taxation from Rs 50 lakh to Rs 75 lakh. This move was designed to ease compliance and encourage the digital economy. However, the surcharge threshold remains at Rs 50 lakh, highlighting the need for adjustment to align with the new presumptive taxation limits.