Mint Quick Edit | Sitharaman’s income tax bonanza: Time to rejoice

Overall, it’s a win-win for taxpayers and the Indian economy. (PTI)
Overall, it’s a win-win for taxpayers and the Indian economy. (PTI)

Summary

  • The tax changes will leave more money with taxpayers across the board. It’s a direct fiscal stimulus that could support GDP growth too—a win-win for taxpayers and the economy alike.

India’s middle class has reason to rejoice. Finance minister Nirmala Sitharaman has eased income tax burden under the new regime across the board. The threshold level for zero income tax, for instance, has been bumped up to 12 lakh annually from 7 lakh. That’s quite a leap.

Also Read: Union Budget 2025 strengthens the middle class for a consumption-driven economy

It also means that the tiny base of individuals who pay tax will get tinier, making India even more of an outlier on this. Those with higher income will also see their tax liability go down, thanks to tax slabs having been both raised and spaced apart. Annual income above 24 lakh puts one into the 30% bracket now, up from 15 lakh. As an example, Sitharaman said that an individual with income of 25 lakh would now be left with 1.1 lakh extra.

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What’ll really help is a tax system that people at large can understand. A bill for a simplified tax law is expected next week. Hopefully, this will lessen the befuddlement that accompanies the task of working out one’s taxes. The tax relief offered isn’t just aimed at pleasing the middle-class. The underlying idea is to lift consumption. With a brighter outlook on retail sales trends, perhaps businesses would be inclined to invest more. 

Also Read: Tax-policy reforms have a huge role to play in Viksit Bharat journey

Thus, the fiscal stimulus imparted can have far-reaching effects in support of GDP growth. Overall, it’s a win-win for taxpayers and the Indian economy. Two birds struck with one stone.

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