Kolkata: The seven-day period starting from 1 February 2025 marks a rare occasion when two financially momentous events take place—both of immense significance to the common taxpayer. These are Budget 2025 and the RBI’s interest rate cut decision. While one allows you to pay less income tax, the other trims EMIs on any loan you may have taken.
The Union Budget has redefined income tax slabs and rates, while the RBI’s 25-basis-point rate cut has more or less ensured that all banks will lower interest rates on loans. This, in turn, will reduce EMIs, as most people take loans on floating rates—rates of interest that rise and fall with those set by the central bank. Thus, almost everyone stands to benefit from lower EMIs on home loans, auto loans, and personal loans.
Budget 2025: How Much Income Tax Relief Per Year?
Finance Minister Nirmala Sitharaman has changed income tax rates and slabs with the sole objective of putting extra cash in taxpayers’ hands so that they either spend to boost consumption or invest, potentially directing funds into productive sectors of the economy. According to reports, EY has calculated the impact of the revised tax structure on taxpayers’ wallets and provided the following savings estimates:
- Rs 83,200 if you earn Rs 12.75 lakh/year
- Rs 32,500 if you earn Rs 15 lakh/year
- Rs 40,300 if you earn Rs 16 lakh/year
- Rs 85,800 if you earn Rs 20 lakh/year
- Rs 1,14,400 if you earn Rs 24.75 lakh/year or Rs 25 lakh/year
What If You Choose PPF to Invest the Extra Cash?
The Public Provident Fund (PPF) enjoys the highest degree of safety among all fixed-return instruments in the country, making it an attractive long-term investment. The maturity period is 15 years, and the current interest rate is 7.1%—one of the highest available, considering the peace of mind it offers and the substantial corpus it helps build.
For example, imagine how much you could accumulate in 15 years if you invest Rs 80,000 annually in a PPF account. Assuming the interest rate remains at 7.1%, your PPF account will grow to Rs 21,69,712 (Rs 21.69 lakh). Most importantly, this amount remains unaffected by market conditions and requires no additional effort beyond the initial commitment to saving.
A Key Point to Note: You can automate your PPF investments by setting up ECS instructions to transfer a fixed amount every month. Simply calculate the additional take-home salary you receive and direct that amount into your PPF account. However, make sure to deposit the money by the 5th of each month, as the balance on that day determines the interest calculation for the account.
Budget 2025 brings zero tax on Rs 12 lakh annual income! Find out how to invest your extra cash wisely for secure wealth growth. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
