Govt Likely to Cut Income Tax for Citizens Earning Upto Rs 15 Lakh In Upcoming Budget 2025

In a bid to provide much-needed relief to the middle class, the central government is considering a significant cut in income tax rates for individuals earning up to Rs 15 lakh per annum in the upcoming Budget 2025-26.

“The sources, who did not want to be named because they were not authorised to talk to the media, said they had not decided on the size of any cuts. A decision would be taken closer to the budget on February 1," [Source: Reuters]

This move comes in light of the current economic scenario, where the growth rate has been slowing down, and there is a pressing need to boost consumption.

However, the actual size of the cuts is yet to be finalized, and a decision is expected closer to the budget presentation on February 1.

Eminent economists have also voiced their support for reducing income tax rates to alleviate the burden on citizens. Prime Minister Narendra Modi recently met with these experts at NITI Aayog to seek their inputs and suggestions for the upcoming Budget.

Suggestions included rationalizing customs tariffs, supporting exports, and, of course, reducing income tax.

Budget 2025-26: What Lies Ahead

The Union Finance Minister, Nirmala Sitharaman, is set to unveil the Budget for 2025-26 in the Lok Sabha on February 1, 2025. In the previous Budget for 2024-25, she had announced a comprehensive review of the Income Tax Act, leading to the formation of a review committee led by Chief Commissioner of Income Tax, V K Gupta. The panel is expected to submit its report before the upcoming Budget.

Despite the potential changes in income tax rates, a senior government official indicated that the implementation of a new Income Tax Act could take more than a year. The official highlighted the need for systems to adapt to the changes and the complexity involved in implementing a whole new Act with updated rules, forms, and system integration.

What You Can Expect?

With the Budget 2025-26 just around the corner, individuals falling within the Rs 15 lakh per annum income bracket can anticipate potential income tax cuts aimed at providing them with much-needed relief. The government's focus on boosting consumption and supporting the economy amidst slowing growth signals a positive change on the horizon.

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