India Considers Tax Relief for Middle-Income Earners

In a move to stimulate the economy and provide relief to the middle class, the Indian government is reportedly considering income tax cuts for individuals earning up to Rs 15 lakh annually. This proposal is expected to be part of the upcoming February budget, aiming to boost consumption amidst economic slowdown.

Understanding the Tax Systems

Indian taxpayers currently have the option to choose between two tax systems: a legacy plan that allows exemptions on housing rentals and insurance, and a newer system introduced in 2020 that offers slightly lower rates but without major exemptions. The proposed tax cut could encourage more people to opt for the newer, less complicated system.

Impact on Economy and Middle Class

With the economy growing at its slowest pace in seven quarters and high food inflation affecting demand for various goods, this tax relief could provide much-needed financial breathing space for the middle class. It may also help in reviving the economy by increasing disposable income and consumption.