Finance Minister Nirmala Sitharaman didn’t mince words when addressing middle-class taxpayers. Acknowledging their struggles, she outlined tax tweaks in last Budget aimed at putting more money in their pockets—without breaking the government’s bank.
“I respect the issue of giving relief to the middle class. I wish to do more, but there are limitations in taxation. To make a difference for salaried people, the standard deduction has been increased from ₹50,000 to ₹75,000,” Sitharaman said in an interview to Times Now.
This adjustment, combined with revised tax rates, aims to benefit not just middle-income earners but also higher-income groups, offering incremental relief across various tax brackets, she said.
The government reportedly is exploring broader income tax reductions for individuals earning up to ₹15 lakh annually, potentially impacting millions of urban taxpayers grappling with high living costs. This move, as per a Reuters report, aligns with the broader goal of stimulating consumption amid an economic slowdown.
Under the 2020 tax regime, incomes between ₹3 lakh and ₹15 lakh are taxed at rates of 5% to 20%, while higher incomes are taxed at 30%.
The proposed changes, if implemented, would extend relief to taxpayers opting for this system, which excludes exemptions like those for housing rentals.
In addition to tax reforms, Sitharaman in the interview outlined initiatives targeting education and affordable housing. “Subsidized interest for student loans up to ₹10 lakh for students and benefits for affordable housing are key steps to support families,” she noted, emphasizing the government’s commitment to holistic financial relief.
The context for these measures is stark. India’s economic growth slowed to its weakest in seven quarters between July and September, compounded by high food inflation that has curbed demand for consumer goods and vehicles. The number of taxpayers earning between ₹50 lakh and ₹1 crore has surged by 440% over the last decade, highlighting the growing financial pressures on middle- and high-income groups.
With the upcoming budget, the government’s focus is clear: addressing the concerns of taxpayers, boosting consumption, and navigating economic challenges with targeted measures.