The Indian government has announced its largest tax relief in at least a decade, aiming to revive economic growth by boosting consumer demand. The move is expected to benefit millions of households struggling with high inflation.
According to Finance Minister Nirmala Sitharaman, the new tax structure will increase disposable incomes, encouraging household consumption, savings, and investment. The government has introduced significant changes, including a tax exemption for individuals earning up to 1.28 million rupees ($14,800) per year.
The most notable change is the removal of the highest tax rate on income above 2.4 million rupees, while also increasing the standard deduction for taxpayers earning up to 1.2 million rupees per year. This will result in a significant reduction in taxes paid by these individuals.
The government estimates that it will forego revenue of around 1 trillion rupees per year due to the tax relief and expects this to lead to higher consumption, savings, and investments in the economy.
Source: https://www.reuters.com/world/india/how-indias-tax-rate-tweaks-will-boost-middle-class-spending-2025-02-01