PM Modi’s Lakshmi Blessings: A Hint at Middle-Class Income Tax Relief?

As Prime Minister Narendra Modi addressed the media at the start of Parliament’s Budget session today, he made a remark that has sparked widespread speculation among the middle class and economic analysts alike. "I pray that Goddess Lakshmi showers the poor and middle class with blessings," he said, a statement that many believe could hint at possible income tax relief for the middle class in the upcoming budget.

With the Union Budget around the corner, expectations are high, particularly from the salaried middle class, which has long sought tax relief. Over the years, the government has introduced various measures to support taxpayers, such as revised tax slabs under the new tax regime, but many still feel the need for more substantial reductions in income tax rates or higher exemptions to ease financial burdens.

PM Modi’s mention of the middle class in the context of the Budget session, just a day ahead of the Union Budget speech, has fueled anticipation regarding potential income tax relief in Budget 2025. Many wonder if the upcoming budget will bring much-needed tax relief to the common man.

Every year, salaried taxpayers look forward to the Budget for reductions in income tax rates, revisions in tax slabs, and other measures aimed at alleviating their financial burden. Tax experts and economists have consistently advocated for further rationalization of income tax slabs under the new tax regime, along with a hike in the standard deduction to provide the middle class with more disposable income.

Budget Expectations and the Middle-Class Demands

The middle class, often described as the backbone of India's economy, has been advocating for measures such as:

1. Increase in Basic Exemption Limit

   The current basic exemption limit under the new tax regime stands at ₹3,00,000. There is speculation that the government may raise this threshold to ₹5,00,000, providing taxpayers with greater disposable income.

2. Inclusion of Individual Contribution to NPS

   At present, only the employer’s contribution to the National Pension Scheme (NPS) qualifies for tax benefits under the new tax regime, while self-contributions are not covered. The government may consider extending this benefit to individual contributions, aligning it with the old tax regime.

3. Enhancement of Section 87A Rebate

   Currently, the tax rebate under Section 87A applies to income up to ₹7,00,000 at a 100% rate. There are expectations that this limit may be increased to ₹8,00,000 under the new tax regime.

4. Revision of Tax Slabs

   Experts anticipate potential adjustments to tax slabs, particularly shifting the 30% tax rate to apply to income above ₹20,00,000 instead of the existing threshold of ₹15,00,000.

5. Increase in Standard Deduction

   Last year, the standard deduction limit was raised from ₹50,000 to ₹75,000. Experts suggest that the government might further increase this limit to ₹1,00,000 to enhance the appeal of the new tax regime.

Government’s Focus on Economic Growth and Public Welfare

PM Modi’s remark aligns with the government’s broader vision of economic growth and financial inclusivity. Over the years, the government has focused on increasing disposable income through targeted welfare schemes, reduced corporate taxes, and fiscal policies aimed at boosting consumption.

While no official announcement regarding income tax relief has been made, political and economic analysts suggest that the upcoming budget could offer some benefits to the middle class, either through tax cuts or new incentives.

Will Budget 2024 Fulfill Middle-Class Aspirations?

With elections on the horizon, the government may consider a populist approach, which could include tax relief measures. If PM Modi’s invocation of Goddess Lakshmi is indeed a hint at upcoming reforms, middle-class taxpayers may have reason to rejoice.

As Finance Minister Nirmala Sitharaman prepares to present the Union Budget, all eyes will be on whether the government translates these prayers into tangible financial relief for millions of hardworking Indians.

Would you like to see specific tax reforms in the upcoming budget? Share your thoughts!