In a candid conversation, India’s Finance Minister Nirmala Sitharaman acknowledged the financial strain on the country’s middle-class taxpayers, revealing that the government is committed to offering them more relief—though with some constraints. “I respect the issue of giving relief to the middle class. I wish to do more, but there are limitations in taxation,” she said during an interview, emphasizing the government’s careful approach to balancing fiscal prudence with taxpayer relief.
Sitharaman highlighted the changes made in last year’s Budget aimed at easing the burden on middle-income earners. A key measure was the increase in the standard deduction from ₹50,000 to ₹75,000, which she noted would directly benefit salaried individuals. This increase, coupled with revised tax rates, is designed to help taxpayers across various income brackets, especially those between ₹3 lakh and ₹15 lakh annually, a segment that is increasingly feeling the pinch of high living costs.
Tax reduction till Rs15 lakh earning is under consideration
The government is also reportedly considering broader tax reductions for individuals earning up to ₹15 lakh annually. This move aligns with efforts to boost consumer spending in the face of a slowing economy. These potential cuts would target the urban middle class, whose wallets have been squeezed by inflation and rising living costs. As it stands, incomes between ₹3 lakh and ₹15 lakh are taxed at rates ranging from 5% to 20%, while those earning more face a 30% tax.
Sitharaman also touched on other government initiatives designed to support families. These include subsidized interest rates on student loans up to ₹10 lakh, aimed at easing the financial burden on young students, and benefits for affordable housing, ensuring that more families can access homeownership.
The backdrop to these measures is the slowing Indian economy, which saw its growth slow to a 7-quarter low in the July-September period. High food inflation has curbed demand for consumer goods and vehicles, adding to the financial pressures faced by citizens. Despite these challenges, Sitharaman emphasized that the government’s approach remains focused on providing relief while stimulating consumption and navigating the economic slowdown.
With an eye on the upcoming Budget, the government’s focus is on boosting consumption, addressing taxpayer concerns, and providing much-needed relief without jeopardizing the fiscal balance.
