Government considering personal tax rate cuts to boost consumption

The Indian government is considering lowering personal tax rates for certain individuals to boost consumption in the economy, two sources told Reuters. This plan, possibly announced in July during the first budget of Modi's new term, aims to address concerns about inflation, unemployment, and decreasing incomes. \r

Despite India's 8.2% economic growth in 2023-24, consumption grew at half that rate. Tax cuts could enhance middle-class savings and spending. Individuals earning over Rs 15 lakh annually may benefit, with potential adjustments to the 2020 tax scheme. \r

The government also considers lowering rates for incomes around Rs 1 million. Increased consumption could offset any revenue loss, targeting a 5.1% fiscal deficit for 2025.