The government of India may reduce income taxes for people earning up to Rs. 15 lakhs per year to boost the economy and increase the spending capacity of middle-class people.
According to the report published by the news agency Reuters, it is heard that this decision will be proposed in the next union budget which will be placed in February 2025.
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As per the report, if the government finalises this proposal, it could benefit millions of middle-class taxpayers, especially those who live in cities with high costs of living.
It was stated that this tax cut would apply to the 2020 tax system, which has lower rates but doesn’t allow exemptions like housing rent deductions.
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People with incomes between Rs. 3,00,000 and Rs. 15,00,000 are taxed at 5% to 20% in the 2020 Tax System. On the other side, people with more income pay 30% in taxes. The older system has higher rates but offers exemptions.
The government believes this modification would persuade more people to utilise the 2020 method, which is more straightforward.
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Most of India’s income tax revenue comes from people who earn Rs. 1 crore per annum or more, who pay the highest tax rate of 30%. Lower taxes for the middle class could give them more money to spend, boosting the economy, which is slowing down.
