Budget 2025: Govt considers cutting personal income tax to lift consumption
India Budget Tax Cut: India is considering cutting income tax for individuals making up to 1.5 million rupees ($17,590) a year in February's budget to provide relief to the middle class and boost consumption as the economy slows, two government sources told Reuters.
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The move could benefit tens of millions of taxpayers, especially city dwellers burdened by high living costs, if they opt for a 2020 tax system that strips exemptions like housing rentals.
Also Read: Income tax rate cut in Budget: Top economists urge Modi to lessen burden for Indians
Under that system, annual income of 300,000 rupees to 1.5 million rupees is taxed at between 5% to 20%. Higher income draws 30%.
Indian taxpayers can choose between two tax systems — a legacy plan that allows exemptions on housing rentals and insurance, and a newer one introduced in 2020 that offers slightly lower rates, but does not allow major exemptions.
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