Govt Considers Income Tax Relief for Middle-Class Earning Up to ₹15 Lakh: Report
Income Tax Saving: Claim Up to ₹1 Lakh Deduction on Health Insurance Premium Under Section 80D for FY 2024-25
Proposed budget changes aim to relieve middle-class burdens and stimulate consumption.
The Indian government may consider reducing income tax for individuals earning up to ₹15 lakh annually in the upcoming Union Budget 2025-26, as per a Reuters report citing government sources. This initiative, under the 2020 tax regime, seeks to ease financial pressure on the middle class and encourage economic growth amid urban challenges like high inflation and living costs.
Key Highlights
• Potential Tax Relief: Targets individuals earning up to ₹15 lakh annually under the 2020 tax system, which excludes exemptions like housing rental deductions.
• Decision Timeline: Final decisions on the size of tax cuts are expected closer to February 1.
• Economic Boost: More disposable income could drive consumption in urban areas, addressing weak demand due to high inflation.
• Growth Concerns: India’s economy, the world’s fifth largest, grew at its slowest pace in seven quarters (July-September), prompting the need for fiscal stimulus.
Impact on Urban Middle Class
• Rising Costs: Food inflation and high living costs have dampened purchasing power, impacting demand for essentials and luxuries.
• Expected Benefits: Tax cuts could provide much-needed financial relief, enhancing spending on goods like cars, two-wheelers, and household products.
The proposed income tax reduction aligns with efforts to revitalize economic activity while addressing middle-class challenges. If implemented, this move could provide a significant push to consumption, benefiting both taxpayers and the broader economy.
