In a significant move to bolster the middle class and stimulate economic growth, India's Finance Minister Nirmala Sitharaman unveiled the Union Budget 2025-26 on February 1, 2025. The budget introduces substantial personal income tax reforms, aiming to increase disposable income and boost domestic consumption.
Key Tax Reforms:
Increased Tax Exemption Threshold: The income tax exemption limit has been raised from ₹7 lakh to ₹12 lakh per annum. This change ensures that individuals earning up to ₹12 lakh will not be liable to pay any income tax, providing significant relief to middle-class taxpayers.
Revised Tax Slabs: For incomes above ₹12 lakh, the tax slabs have been restructured to reduce the tax burden across various income brackets. The new tax rates are as follows:
₹12 lakh to ₹16 lakh: 15%
₹16 lakh to ₹20 lakh: 20%
₹20 lakh to ₹24 lakh: 25%
Above ₹24 lakh: 30%
Additionally, the standard deduction has been increased to ₹75,000 from the previous ₹50,000, further enhancing tax savings for salaried individuals.
Economic Implications:
These tax reforms are anticipated to leave more money in the hands of the middle class, thereby boosting household consumption, savings, and investment. Economists predict that the increased disposable income will spur demand across various sectors, including consumer goods, automobiles, and real estate.
The government estimates that these measures will result in an annual revenue loss of approximately ₹1 trillion. To offset this, the budget outlines a modest increase in capital spending, focusing on infrastructure development and rural initiatives.
Additional Budget Highlights:
Agricultural Support: The budget introduces the Prime Minister Dhan-Dhaanya Krishi Yojana, aiming to develop 100 agricultural districts and benefit 1.7 crore farmers. Enhanced credit facilities through the Kisan Credit Card (KCC) will provide short-term loans of up to ₹5 lakh to farmers, fishermen, and dairy farmers.
Research and Innovation: An allocation of ₹20,000 crore has been made to implement a private sector-driven Research, Development, and Innovation initiative. The PM Research Fellowship will offer 10,000 fellowships for technological research in IITs and IISc.
Export Promotion: To incentivize electronics and electric vehicle manufacturing, exemptions have been provided for components like open cells for LED/LCD TVs and capital goods for lithium-ion batteries. The budget also proposes measures to promote Maintenance, Repair, and Overhaul (MRO) services and trade facilitation.
The Union Budget 2025-26 reflects the government's commitment to strengthening the economy by empowering the middle class, supporting agriculture, and fostering innovation. These measures are expected to drive consumption, enhance productivity, and position India for sustained economic growth in the coming years.
#india #budget #newsIn a significant move to bolster the middle class and stimulate economic growth, India's Finance Minister Nirmala Sitharaman unveiled the Union Budget 2025-26 on February 1, 2025. The budget introduces substantial personal income tax reforms, aiming to increase disposable income and boost domestic consumption.
Key Tax Reforms:
Increased Tax Exemption Threshold: The income tax exemption limit has been raised from ₹7 lakh to ₹12 lakh per annum. This change ensures that individuals earning up to ₹12 lakh will not be liable to pay any income tax, providing significant relief to middle-class taxpayers.
Revised Tax Slabs: For incomes above ₹12 lakh, the tax slabs have been restructured to reduce the tax burden across various income brackets. The new tax rates are as follows:
₹12 lakh to ₹16 lakh: 15%
₹16 lakh to ₹20 lakh: 20%
₹20 lakh to ₹24 lakh: 25%
Above ₹24 lakh: 30%
Additionally, the standard deduction has been increased to ₹75,000 from the previous ₹50,000, further enhancing tax savings for salaried individuals.
Economic Implications:
These tax reforms are anticipated to leave more money in the hands of the middle class, thereby boosting household consumption, savings, and investment. Economists predict that the increased disposable income will spur demand across various sectors, including consumer goods, automobiles, and real estate.
The government estimates that these measures will result in an annual revenue loss of approximately ₹1 trillion. To offset this, the budget outlines a modest increase in capital spending, focusing on infrastructure development and rural initiatives.
Additional Budget Highlights:
Agricultural Support: The budget introduces the Prime Minister Dhan-Dhaanya Krishi Yojana, aiming to develop 100 agricultural districts and benefit 1.7 crore farmers. Enhanced credit facilities through the Kisan Credit Card (KCC) will provide short-term loans of up to ₹5 lakh to farmers, fishermen, and dairy farmers.
Research and Innovation: An allocation of ₹20,000 crore has been made to implement a private sector-driven Research, Development, and Innovation initiative. The PM Research Fellowship will offer 10,000 fellowships for technological research in IITs and IISc.
Export Promotion: To incentivize electronics and electric vehicle manufacturing, exemptions have been provided for components like open cells for LED/LCD TVs and capital goods for lithium-ion batteries. The budget also proposes measures to promote Maintenance, Repair, and Overhaul (MRO) services and trade facilitation.
The Union Budget 2025-26 reflects the government's commitment to strengthening the economy by empowering the middle class, supporting agriculture, and fostering innovation. These measures are expected to drive consumption, enhance productivity, and position India for sustained economic growth in the coming years.
#india #budget #news
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