Indian Government Considers Income Tax Cuts for Earning Up to ₹15 Lakh in 2025-26 Budget

New Delhi (The Uttam Hindu): The Indian government is reportedly considering a reduction in income tax for individuals earning up to Rs 15 lakh annually in the upcoming Budget for 2025-26. This proposed move aims to provide relief to the middle class and boost consumption amid concerns about slowing economic growth. Sources suggest that the exact extent of the tax cuts has not yet been determined, with a final decision expected closer to the budget presentation on February 1, 2025.

This proposal follows increasing demands from economists and the public for tax relief, particularly as rising living costs continue to put pressure on urban taxpayers. Currently, individuals earning between Rs 3 lakh and Rs 15 lakh are taxed at rates ranging from 5% to 20%, while those earning above Rs 15 lakh face a 30% tax rate. The government offers two tax regimes: one that allows various exemptions and deductions, and a newer system introduced in 2020 that features lower rates but fewer exemptions.

The expectation of tax cuts is seen as a strategy to increase disposable income for the middle class, which could, in turn, stimulate economic activity. Recent data shows that India's economic growth has slowed, sparking discussions about measures that could rejuvenate consumer spending. The Asian Development Bank has also lowered its growth forecast for India, emphasizing the need for swift government action. As the government prepares for the budget announcement, there is growing public interest in how these potential changes will impact taxpayers and the broader economic landscape in India.