Budget 2024: Tax relief for the middle class? This is what the Modi government is planning

Budget 2024: Tax relief for the middle class? (Image source: Canva)

With the full fiscal year 2025 budget set to be released next month, expectations are high for significant announcements. The salaried class also expects something big to bring relief to them.

Why does the wage-earning class expect relief?

The anticipation is fueled by Prime Minister Modi’s signal that the newly elected government cares about the middle class and will provide some relief.

What’s in the report?

As per an ET Now report, Modi 3.0 is working to provide tax relief to taxpayers and the middle class is the one who can benefit from tax relief.

According to a report by Indian Express, the government is considering changes to the current income tax system, especially for lower income groups.

Why is the government working on a tax relief proposal?

Experts expect the upcoming budget announcement in late July may focus on tax cuts for low-income earners rather than increasing social spending due to rising disposable income. This is beneficial because it, in turn, is expected to stimulate economic activity and consumption.

Current tax rates

Currently, the tax rate starts from 5 percent for income starting from Rs 3 lakh and increases to 30 percent for income starting from Rs 15 lakh and above.

The government is focusing on fiscal consolidation

In recent years, the government has focused on fiscal consolidation, with the goal of reducing the budget deficit to 5.1 percent. GDP in 2024-25 and further reducing it to below 4.5%. in 2025–2026.

RBI’s forecast for the growth of the Indian economy

The Reserve Bank of India (RBI) in its recent monetary policy announcement has projected 7.2 per cent growth for the Indian economy for FY25. This growth is expected to be driven by improving rural demand and moderating inflation.