FM Nirmala Sitharaman Likely To Announce Income Tax Relief In Budget 2025

In the interim budget for 2024-25, Finance Minister Nirmala Sitharaman set a target for India’s GDP growth at 6.5 to 7 percent. However, the first advance estimate shows the economy growing at a four-year low of 6.4%. Despite the government's efforts, such as incentives for manufacturing, corporate tax cuts, and promoting domestic industry through the 'Aatmanirbhar Bharat' initiative, growth has not met expectations. Economists suggest introducing income tax cuts for the middle class, with several possibilities to stimulate growth. These include raising the exemption limit, lowering tax rates, and adjusting tax slabs. Proposals for cutting the peak tax rate to 25% and increasing the standard deduction for salaried individuals are also under consideration. Additionally, exemptions for health insurance premiums and NPS contributions might be raised. With GST collections at a record high and income tax collections up by 24%, many believe the government can afford these tax cuts. Additionally, the new Direct Tax Code is expected to simplify the income tax filing process, making it easier for taxpayers.