As the Budget 2025 approaches, discussions intensify regarding the future of India's income tax regime and the specific needs of salaried employees concerning tax deductions. With the current tax structure dividing taxpayers between the old and new regimes, the demand for certain deduction-related relief is becoming increasingly pertinent.

The new Income-Tax (I-T) regime, established from the financial year 2020-21, presents a simplified system with lower tax rates but limits on deductions and exemptions. Under this regime, unless opted otherwise, individual taxpayers benefit from concessional slab rates on incomes up to Rs 15 lakh, as noted in an article by Indiatimes. Despite its advantages, the new regime has been criticized for its exclusion of significant deductions, such as those related to medical insurance premiums under Section 80D and disability-related deductions under Section 80U. Tax experts argue that these deductions are essential to address rising healthcare costs and support individuals with disabilities.

On the other hand, salaried employees must navigate the tax filing process based on their chosen regime. Employers require documentation of tax-saving investments and expenses to enable employees to reduce their tax liability through exemptions when opting for the old tax regime. This was highlighted in a related article also by Indiatimes. According to experts, those who select the new tax regime do not need to provide proofs as most exemptions and deductions are not applicable.

For employees who have chosen the old tax regime, tax-saving documentation is required for various claims, such as House Rent Allowance and contributions to pension funds. Examples include providing landlords' PAN details for HRA claims or receipts for health insurance premium deductions under Section 80D. A maximum deduction of Rs 1.5 lakh can be claimed under Section 80C, encompassing investments like PPF and life insurance premiums.

The Statistics from the CBDT indicate that a significant majority, about 72%, of taxpayers have opted for the new tax regime, making knowledge of both structures critical as employers navigate their TDS (Tax Deducted at Source) calculations. Taxpayers have until July 31, 2025, to file their returns, making it critical to retain comprehensive documentation to address any queries from tax authorities.

In conclusion, as Budget 2025 looms, calls for the reinstatement of crucial deductions under the new regime are growing louder. Tax professionals stress the importance of maintaining an equitable tax system, allowing for individualized support through deduction options to cater to unique financial situations. This ongoing dialogue will shape the landscape for future taxpayers navigating through India's complex tax systems.