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February 18, 2025
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In India, Anyone Making up to Rs 12 Lakhs Annually are Exempt from Income Tax

  • February 1, 2025
  • 2 min read
In India, Anyone Making up to Rs 12 Lakhs Annually are Exempt from Income Tax

As she unveiled an annual budget that also aimed to stimulate private investment to support growth, Finance Minister Nirmala Sitharaman said on Saturday that India would lower personal income tax rates to increase middle-class spending power.

According to Sitharaman, the budget for 2025–2026 also contained measures to help women, farmers, the impoverished, and young people. He also highlighted intentions for revolutionary tax reforms.

The government announced that the tax exemption level would be raised from 700,000 rupees to 1.28 million rupees ($14,800) annually. According to Sitharaman, the measures will cost approximately 1 trillion rupees in tax revenues. They also reduced tax rates for those who earn more than the new threshold.

However, the government kept improving its financial situation, aiming for a budget deficit of 4.4% of GDP in 2025–2026 instead of the revised 4.8% of GDP in the present year.  To cover this year’s fiscal deficit, the government would borrow 14.82 trillion Indian rupees ($171 billion) from the bond market.

The government has allocated for a slight increase in capital investment this year to make up for the lost revenue, which will climb to 11.21 trillion rupees in 2025–2026 from a revised 10.18 trillion in the current year.

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