Budget 2025 : Govt May Cut Income Tax for ₹15 Lakh Earners
The Indian government is reportedly considering significant income tax relief for individuals earning up to ₹15 lakh per annum in the upcoming Budget 2025-26. This anticipated move aims to ease the financial burden on the middle class and stimulate economic growth amidst a slowdown in consumption.
According to sources cited by Reuters, the government has not yet decided on the extent of the tax cuts, with final decisions expected closer to the budget presentation on February 1, 2025. Economists and experts have also advocated for these reforms during a recent meeting with Prime Minister Narendra Modi at NITI Aayog.
In addition to income tax cuts, stakeholders have urged rationalization of customs tariffs and policies to bolster exports. These measures aim to address concerns about India’s decelerating growth, which stood at 6.7% and 5.4% in the first two quarters of the current fiscal year.
Comprehensive Review of the Income Tax Act
Union Finance Minister Nirmala Sitharaman had earlier announced a comprehensive review of the Income Tax Act in Budget 2024-25. A review committee, led by Chief Commissioner of Income Tax V.K. Gupta, is expected to submit its findings before Budget 2025-26.
However, a new Income Tax Act is unlikely to be introduced in the upcoming session, as officials suggest it could take over a year to integrate the necessary changes into existing systems.
Economic Backdrop and Growth Concerns
The discussions around tax cuts come amid a backdrop of slowing economic growth. The Asian Development Bank recently lowered India’s GDP growth forecast for the current financial year to 6.5%, citing weaker-than-expected private investment and housing demand. Similarly, the Reserve Bank of India revised its projection to 6.6% from 7.2%.
With global economic challenges and domestic deceleration, the government’s proposed tax reforms could play a pivotal role in reviving consumption and providing relief to taxpayers.
Conclusion
The Budget 2025-26 holds significant promise for middle-class taxpayers, with anticipated income tax cuts aimed at fostering economic stability. As Finance Minister Nirmala Sitharaman gears up to present the budget, all eyes will be on measures that address slowing growth while simplifying tax structures for citizens.
