Income tax cut likely for those earning up to Rs 15 lakh a year: Report
Size of cut not yet decided but may apply to new tax regime; move to come as big relief to taxpayers, boost consumption in slowed economy plagued by inflation
The upcoming Union Budget in February 2025 may bring some great news for the middle class, a Reuters report has claimed.
Citing two unnamed government sources, the news agency has reported that income tax may be slashed for those earning up to Rs 15 lakh a year.
Not only will such a move come as a big relief to millions of taxpayers, especially city dwellers burdened by high living costs, it will also boost consumption in a slowed economy plague by inflation.
Also read: Netizen requests Sitharaman for ‘relief for middle class’; FM replies
May apply to new tax regime
The slash has reportedly been planned for the new tax regime that came into force in 2020, which strips exemptions such as housing rentals.
Under the new tax regime, annual income of Rs 3–15 lakh is taxed at between 5 and 20 per cent. A higher income draws 30 per cent.
While the old tax regime allows exemptions on housing rentals and insurance, the new regime has slightly lower rates but does not allow major exemptions.
Also read: Inflation leaves Indian middle class, and its buying capacity, shrinking
Boost to economy
The sources told Reuters that reduced tax rates would likely encourage more people to choose the simpler new system.
The size of the cut has reportedly not yet been decided.
But more money in the hands of the middle class may help boost the world fifth largest economy that grew at its slowest pace in seven quarters between July and September.