Tax relief for middle class on cards in Union Budget 2025, says economist

Taxpayers, particularly lower middle tax, may likely get relief in Finance Minister Nirmala Sitharaman's Budget on Saturday as the Narendra Modi government looks to boost consumption to spur a shuttering economy, Deloitte India economist Rumki Majumdar said.

She saw the finance minister giving relief to taxpayers who have opted for the new tax regime that offers no exemptions but a higher base for levying tax. This could be particularly for those in the ₹7 lakh to ₹10 lakh annual income category.

Prime Minister Narendra Modi invoking the Goddess Lakshmi may hold the cues for the possible relief.

On Modi's comments that he prays to Goddess Lakshmi to shower the poor and middle class with blessings, Majumdar said she hoped the Prime Minister was referring to Sitharaman and that she indeed blesses the middle class.

"Most likely they (should) probably look at the ₹7-10 lakh income slab, which is where they can probably go for more exemptions. That is a possibility," she said, adding that there has been a positive uptick in rural development in the past few months, owing to good agricultural produce.

Spending is also going up, she said, referring to the hike in flight and hotel fares.

"It's the middle class, which is kind of getting impacted, and a large proportion actually falls, with between 7-10. So, it probably makes sense to have some exemptions here and give them some relief. That will definitely boost consumption," Majumdar said in an interview with PTI.

She said the tax collected from the ₹7-10 lakh income group is "miniscule", and an exemption will not impact the revenue that the government is collecting.

Rather, the government can make up for it by plugging the leakages that are happening, bringing more people into the tax bracket, she said, adding that "it is quite possible that the government can go ahead with this with confidence because the revenue basket is quite good there".