In pre-budget consultations, Finance Minister Sitharaman engaged with stakeholders, including economists, trade unions, and chambers of commerce, who strongly advocated for income tax reductions.
New Delhi: The Modi 3.0 government is set to present the full budget for the current financial year in July. Earlier this year, Union Finance Minister Nirmala Sitharaman introduced a 'Vote on Account' due to the Lok Sabha elections. Sources indicate that the government is contemplating a reduction in personal income tax rates in the forthcoming budget, particularly aimed at low-income individuals to stimulate consumption expenditure. This move, reported by various national media outlets, aims to inject over 50,000 crore rupees into the consumer market, thereby supporting economic momentum.
Finance Ministry officials are reportedly discussing a proposal that would enhance consumers' purchasing power by lowering taxes. If enacted, this measure would benefit individuals earning between Rs 5 lakh and Rs 15 lakh annually, who currently face a tax rate of 5-20 percent. There is also speculation about the introduction of a new income tax slab. These discussions are in the preliminary stages, with a final decision expected in early July, pending approval from the Prime Minister's Office (PMO). While a tax cut would reduce government revenue, the administration plans to maintain a fiscal deficit target of 5.1 percent of GDP for this fiscal year.
Approximately half of the proposed 500 billion rupees aimed at boosting consumption would come from income tax cuts, with the remainder sourced through other means. Plans include increasing the annual cash payment to small farmers from 6,000 to 8,000 rupees and enhancing financial support under the Minimum Employment Guarantee Program, as well as for women farmers.
In recent pre-budget consultations, Finance Minister Sitharaman engaged with stakeholders, including economists, trade unions, and chambers of commerce, who strongly advocated for income tax reductions. The budget is likely to be presented on July 22. A post-election survey highlighted that price rise, unemployment, and declining incomes are significant voter concerns. Despite the Indian economy growing at 8.2 percent in the 2023-24 fiscal year, consumer spending grew at less than half that rate. An official commented that reducing the personal tax rate would leave people with more disposable income, potentially boosting consumption. The Ministry of Finance has yet to make any official statements on this matter.
New Delhi: The Modi 3.0 government is set to present the full budget for the current financial year in July. Earlier this year, Union Finance Minister Nirmala Sitharaman introduced a 'Vote on Account' due to the Lok Sabha elections. Sources indicate that the government is contemplating a reduction in personal income tax rates in the forthcoming budget, particularly aimed at low-income individuals to stimulate consumption expenditure. This move, reported by various national media outlets, aims to inject over 50,000 crore rupees into the consumer market, thereby supporting economic momentum.
Finance Ministry officials are reportedly discussing a proposal that would enhance consumers' purchasing power by lowering taxes. If enacted, this measure would benefit individuals earning between Rs 5 lakh and Rs 15 lakh annually, who currently face a tax rate of 5-20 percent. There is also speculation about the introduction of a new income tax slab. These discussions are in the preliminary stages, with a final decision expected in early July, pending approval from the Prime Minister's Office (PMO). While a tax cut would reduce government revenue, the administration plans to maintain a fiscal deficit target of 5.1 percent of GDP for this fiscal year.
Approximately half of the proposed 500 billion rupees aimed at boosting consumption would come from income tax cuts, with the remainder sourced through other means. Plans include increasing the annual cash payment to small farmers from 6,000 to 8,000 rupees and enhancing financial support under the Minimum Employment Guarantee Program, as well as for women farmers.
In recent pre-budget consultations, Finance Minister Sitharaman engaged with stakeholders, including economists, trade unions, and chambers of commerce, who strongly advocated for income tax reductions. The budget is likely to be presented on July 22. A post-election survey highlighted that price rise, unemployment, and declining incomes are significant voter concerns. Despite the Indian economy growing at 8.2 percent in the 2023-24 fiscal year, consumer spending grew at less than half that rate. An official commented that reducing the personal tax rate would leave people with more disposable income, potentially boosting consumption. The Ministry of Finance has yet to make any official statements on this matter.
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