The central government is expected to reduce income tax on annual earnings up to Rs 15 lakh in the forthcoming 2025-26 Budget, offering relief to the middle class and aiming to stimulate economic demand. Reuters, citing two government sources, reported that the move is intended to accelerate economic growth, which has been slowing in recent months. However, the final decision on the extent of the tax cut is yet to be made, with the specifics set to be determined before the Budget is presented on February 1, 2025.
Prime Minister Narendra Modi recently chaired a meeting with chief economists and regional experts at NITI Aayog, where they shared their ideas and suggestions for the upcoming budget. During the discussions, experts called for a reduction in income tax rates, improvements in customs rates, and effective government measures to boost exports. Union Finance Minister Nirmala Sitharaman is set to present the Budget in the Lok Sabha on February 1, 2025.
A comprehensive review of the Income Tax Act was announced in the 2024-25 Budget by the Finance Minister, leading to the formation of a committee under the chairmanship of Income Tax Department Chief V.K. Gupta. The committee is expected to submit its report before the 2025-26 Budget. However, according to a government official, the new income tax law will not be implemented in the upcoming budget session and will take more than a year to come into effect.