Income tax may be reduced for those earning up to ₹15 lakh this Union Budget: Report

If implemented, the proposal could benefit millions of taxpayers, particularly urban residents facing high living expenses.

Published on: Dec 27, 2024, 15:08:38 IST

By HT News Desk

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India is considering reducing income tax for people earning up to ₹15 lakh annually in the upcoming February Budget, aiming to provide relief to the middle class and stimulate consumption amid an economic slowdown, news agency Reuters reported citing two government sources.

The number of taxpayers with a gross income between ₹50 lakh and ₹1 crore has grown by 440% over the last decade (FILE PHOTO)

If implemented, the proposal could benefit millions of taxpayers, particularly urban residents facing high living expenses. The relief would apply to those opting for the 2020 tax regime, which excludes exemptions such as those for housing rentals. Under that system, annual income of ₹3 lakh to ₹15 lakh is taxed at between 5% to 20%. Higher income draws 30%.

HT.com couldn't independently verify the information.

This is primarily to boost personal consumption and provide some relief to the middle class, potentially benefiting tens of millions of taxpayers, especially in cities who are burdened by rising living costs.

India, the world's fifth-largest economy, grew at its slowest pace in seven quarters between July and September. It is also marred by high food inflation, biting into demand for consumer goods and even vehicles.

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However, the size of the cut has not yet been fully decided, and the final decision will be made closer to the budget on February 1, 2024, according to the report.

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At the moment, taxpayers can choose between two tax systems; The old regime which allows exemptions on housing rentals and insurance, and the new regime introduced in 2020 which offers slightly lower rates, but doesn't allow major exemptions.

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According to the report, reducing the tax rate would also encourage more people to choose the new system, which is also less complicated.

The report said that a bulk of India's current income tax collections come from persons earning at least ₹10 lakh, for which the rate is 30%.

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HT News Desk
Follow the latest breaking news, major developments and agenda-setting stories from India and around the world with the newsdesk at Hindustan Times. Operating round the clock, the desk brings together experienced editors, reporters and correspondents to deliver fast, accurate and contextual reporting across subjects that influence public policy, governance, business, society and international affairs. The HT News Desk covers politics, elections, government policies, the economy, business and markets, science and technology, the environment, law and order, infrastructure, education, climate issues and geopolitics, while closely tracking developments across states, institutions and global capitals. The team also leads coverage of major breaking news events, policy announcements, court proceedings, natural disasters, public emergencies and significant international developments. Reports published by the newsdesk are based on information gathered from reporters on the ground, official statements, government agencies, court records, regulatory filings, recognised institutions and other authoritative sources. Stories undergo editorial scrutiny and verification processes to ensure accuracy, fairness and relevance, and are updated as events evolve and additional information becomes available. Whether covering a key political decision in New Delhi, an economic policy shift affecting millions, a landmark court ruling or a major global event, the HT News Desk aims to provide readers with reliable, fact-based journalism that delivers not only the latest developments but also the context and analysis needed to understand their wider implications.Read More

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