The government is reportedly considering significant income tax cuts for individuals earning up to ₹15 lakh annually. If implemented, these changes could provide much-needed relief to millions of urban taxpayers struggling with rising living costs.
Finance Minister Nirmala Sitharaman recently spoke openly about the challenges faced by the middle class. She highlighted the government’s efforts in the last Budget to ease their financial burden while maintaining fiscal responsibility.
“I understand the need to provide relief to the middle class and truly wish to do more. However, there are limitations within the taxation framework,” she said in an interview with Times Now. She pointed out one key measure: an increase in the standard deduction for salaried individuals from ₹50,000 to ₹75,000, aimed at offering direct financial relief.
Proposed Tax Changes
The government is also exploring broader reforms to the tax system under the 2020 tax regime. Currently, incomes between ₹3 lakh and ₹15 lakh are taxed at rates ranging from 5% to 20%, while those earning above ₹15 lakh face a 30% tax rate. If new changes are introduced, they could bring additional benefits for taxpayers who opt for this system, which does not allow exemptions like those for housing rent.
This potential reform aligns with the government’s broader goal of boosting spending and stimulating the economy, which has been slowing in recent quarters.
Additional Financial Support
Beyond tax changes, Sitharaman outlined other measures designed to ease financial pressures on families. These include subsidized interest rates on student loans up to ₹10 lakh and benefits for affordable housing. These initiatives aim to provide holistic support to middle- and low-income households.
Economic Challenges
The backdrop for these measures is India’s economic slowdown. Growth between July and September was the weakest in seven quarters, driven by high food inflation and reduced demand for goods like vehicles. The number of taxpayers earning between ₹50 lakh and ₹1 crore has grown by 440% over the past decade, showing increasing financial strain on both middle- and high-income groups.
Focus on the Future
With the upcoming Budget, the government is prioritizing taxpayer concerns, boosting consumption, and addressing economic challenges. By implementing targeted measures, it aims to balance financial relief for citizens with the need for sustainable economic growth.