As the Union Budget for the fiscal year 2025-2026 draws closer, the government is exploring the possibility of implementing personal income tax relief measures. These potential tax cuts are designed to stimulate consumer spending and support overall economic growth.
Reports suggest that the government is considering reducing personal income taxes to help workers grappling with weak wage growth and inflation. Despite these reductions, the tax cuts are expected to align with India’s fiscal responsibility goals, as the government plans to bring the fiscal deficit down from the predicted 4.9% to below 4.5% in the upcoming financial year.
The Confederation of Indian Industry (CII) has also proposed additional measures, including cuts in fuel and income taxes, an increase in state-backed benefits, cash handouts for farmers, and the introduction of consumption vouchers for low-income groups. Further recommendations include simplifying tax regulations, offering relief on capital gains taxes, and a 25% increase in infrastructure spending for the next fiscal year.
While details of the proposed tax relief remain under wraps, the government’s consideration signals a strategic move to boost disposable income and drive consumer demand, which could spur economic growth.
Finance Minister Nirmala Sitharaman is set to present the Union Budget on February 1, 2025, with the budget session running from January 31 to February 13, 2025.
