Union Budget 2025: Except Tax Relief Major Concerns Remain Unaddressed for Employees

 

Union Budget 2025: Except Tax Relief Major Concerns Remain Unaddressed for Employees

Bruhaspati Samal

General Secretary

Confederation of Central Govt. Employees and Workers

Odisha State Coordination Committee, Bhubaneswar

The Union Budget 2025, presented by Finance Minister Nirmala Sitharaman on February 1, 2025, has introduced significant tax relief measures aimed at the salaried middle class. However, beyond these tax adjustments, the budget appears to have overlooked several critical areas concerning the welfare of employees and pensioners. While tax benefits provide some respite, various other pressing issues remain unresolved, raising concerns among government employees and retirees.

In an effort to increase disposable income and boost consumption, the government has revised the income tax slabs under the new tax regime. In the new tax regime, the revised tax rate structure will stand as follows:

As announced, no personal income tax is payable up to income of Rs 12 lakh (i.e. average income of Rs 1 lakh per month other than special rate income such as capital gains) under the new regime. This limit will be Rs 12.75 lakh for salaried tax payers, due to standard deduction of Rs 75,000. The new structure will substantially reduce the taxes of the middle class and leave more money in their hands, boosting household consumption, savings and investment. But the new Income-Tax Bill scheduled to be placed in the next week to be clear and direct in text so as to make it simple to understand for taxpayers and tax administration, leading to tax certainty and reduced litigation which has created suspicion in the minds of the employees. It is said that revenue of about Rs. 1 lakh crore in direct taxes will be forgone. Instead, it is a fact that nearly 1 crore new Taxpayers are likely to enrolled which may increase the flow of collection of IT and make good the said shortfall. For senior citizens, the tax deduction limit on interest income has been doubled, and the Tax Deducted at Source (TDS) threshold on rental income has been raised, providing them with additional financial relief. While these changes will benefit many taxpayers, the budget has been criticized for failing to address other crucial concerns of employees and pensioners.

One of the major disappointments in the budget is the absence of any mention of the government’s declared intent to increase its contribution to the Unified Pension Scheme. As per the Gazette Notification dated January 25, 2025, the government had announced an increase in its contribution from 14% to 18.5%, to be implemented from May 1, 2025. However, this crucial measure was not reflected in the budget, leaving many pensioners in a state of uncertainty. The lack of financial allocation or even a mention in the budget raises questions about the government's commitment to the welfare of pensioners. Another significant omission in the budget is the non-mention of the 8th CPC. The government had previously indicated its intent to constitute the 8th CPC to revise pay scales and benefits for central government employees. However, the budget does not include any allocation or plan for its implementation, leading to speculation that the matter has been deferred indefinitely. Central government employees have been expecting a revision in their pay scales to keep up with the rising cost of living. The absence of any announcement regarding the CPC not only dampens their morale but also affects their financial stability, as salary hikes have remained stagnant for years.

Another major disappointment is the failure to address the pending Dearness Allowance (DA) arrears for the 18-month period from January 1, 2020, to June 30, 2021. Despite repeated demands from employees and pensioners, the government has not provided any assurance regarding the release of the withheld DA/DR payments. This prolonged delay has financially strained many government employees and pensioners, who were expecting a resolution in this year’s budget. The issue of vacant government positions is another pressing concern that remains unaddressed. As of January 2025, there are approximately 11 lakh vacant posts in various central government departments. Filling these positions would not only improve administrative efficiency but also provide much-needed employment opportunities, particularly at a time when India’s unemployment rate stood at 7.8% in December 2024, The lack of any concrete announcements regarding recruitment drives in the budget has left job seekers disappointed.

Healthcare and insurance are other key areas where the budget falls short in addressing employee welfare. While the government announced plans to establish Day Care Cancer Centres in district hospitals over the next three years, the budget did not provide a comprehensive strategy to enhance overall healthcare benefits for employees. Given that out-of-pocket healthcare expenditure in India remains alarmingly high at 62.4% of total health expenses, the absence of enhanced medical support for employees and pensioners is a significant drawback. A more robust healthcare policy with improved insurance coverage could have alleviated the financial burden on the workforce.

The budget also introduced certain provisions for gig workers, proposing the issuance of identity cards and the registration of one crore gig workers on the e-Shram portal. This move aims to provide them with access to healthcare under the Pradhan Mantri Jan Arogya Yojana (PM-JAY). While this initiative is a step in the right direction, the absence of a comprehensive social security framework for gig workers leaves them vulnerable to financial instability.

 While the Union Budget 2025 offers notable tax relief to salaried employees and senior citizens, it has failed to address several crucial issues that directly impact government employees and pensioners. The lack of provisions for pension reforms, salary revisions, DA arrears, job creation, and healthcare improvements reflects a missed opportunity to enhance the welfare of the workforce. A more comprehensive and employee-centric approach in future budgets is essential to ensure holistic economic growth and social security for all stakeholders.

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