New Delhi- The middle class has high hopes from the budget to be presented by Finance Minister Nirmala Sitharaman on February 1. The middle class has not got any major relief in the last two-three budgets.
The change in tax slabs in Budget 2025 is expected to give the middle class a major relief. This step can not only improve the financial condition of the people but also give new energy to the sluggish economy. The government is considering making changes in income tax slabs, which can benefit salaried taxpayers earning up to Rs 20 lakh annually.
According to a report in Business Standard, the government is currently considering two major options. First, making annual income up to Rs 10 lakh completely tax-free. Second, introducing a new tax slab of 25% on income between Rs 15 and 20 lakh. Currently, income above Rs 15 lakh is taxed at 30%. If the budget allows, both options can be implemented. For this, the government is ready to bear a revenue loss of Rs 50,000 crore to Rs 1 lakh crore.
The concession was incomplete in the previous budget
. In 2023, the Finance Minister had increased the exemption under Section 87A and made income up to Rs 7 lakh tax-free, but for this, most of the deductions had to be given up. Now under the new tax regime, the tax exemption limit can be increased to make income up to Rs 10 lakh tax-free. Currently, people with income up to Rs 7.75 lakh do not have to pay tax with a standard deduction of Rs 75,000.
The economy will get a boost
if the government expands the scope of tax exemptions or introduces a new slab, which could help boost urban consumption, especially at a time when the country’s GDP growth rate is slowing. The GDP growth rate in the second quarter of FY25 was 5.4%, the lowest in seven quarters. Tax concessions will increase the spending capacity of the people, which will increase demand in the market and strengthen the economy.
PwC consultant and former CBDT member Akhilesh Ranjan believes that a 25% tax slab should be introduced for those with incomes between Rs 15 lakh and Rs 20 lakh. This will leave more money with the middle class, which will increase the purchase of consumer durables (like refrigerators, TVs). IASCC professor Anil K Sood says that a 30% tax on incomes slightly above Rs 15 lakh is unfair. He suggested that the government should provide relief to the salaried class, but without changing the existing incentives.
Focus on fiscal deficit
Professor Sood said that the government is more focused on fiscal deficit. He also said that budget is made for capital expenditure but there is a shortage in spending it. For example, the National Highway Authority of India (NHAI) has sufficient funds, but they are being used to repay loans.
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