Finance Minister Nirmala Sitharaman reiterates her commitment to income tax relief for India’s middle class to lessen their financial burdens. She spoke at length about the tax reforms initiated by the previous Union Budget with the objective of increasing disposable income for salaried people. Amongst the most important changes is the enhancement of the standard deduction from ₹50,000 to ₹75,000, bringing significant income tax relief to millions of taxpayers.
The government is reportedly mulling further income tax relief for individuals earning up to ₹15 lakh annually. It would provide much-needed relief for urban taxpayers who are burdened with the increasing cost of living. Under the prevailing tax regime introduced in 2020, income between ₹3 lakh and ₹15 lakh are taxed at 5% to 20%, while higher incomes are taxed at 30%. Such reforms could reduce these rates and benefit taxpayers who forgo exemptions under the new system. She stated:
“I respect the issue of giving relief to the middle class. I wish to do more, but there are limitations in taxation. To make a difference for salaried people, the standard deduction has been increased from ₹50,000 to ₹75,000,”
Holistic Financial Support by Finance Minister Beyond Income Tax Relief
Beyond the tax measures, Sitharaman has provided relief from other financial pressures on families with measures on changes in taxes as well. The interest rates subsidized for loans on students up to ₹10 lakh and benefiting affordable housing have been a prime part of providing holistic economic support by the government. These measures aim to promote consumption and improve demand across all sectors affected by such slow growth.
The budget is being introduced against a backdrop of economic challenges. The GDP growth rate has slowed in India, and high food inflation has curbed demand for consumer goods. This surge in taxpayers earning between ₹50 lakh and ₹1 crore—that is, a 440% increase over the last decade—actually underlines increasing financial stress on middle- and high-income earners. She stated:
“Subsidized interest for student loans up to ₹10 lakh for students and benefits for affordable housing are key steps to support families,”
The government’s focus here is clear: to take care of the taxpayer’s concerns while boosting economic activity. With targeted income tax relief and other financial reforms, Budget 2025 could provide much-needed respite to Indian families who are undergoing challenging times.
Also, see: Union Budget 2025: Will Taxpayers Finally See Income Tax Relief?
‘I wish to do more’ – says Finance Minister Nirmala on announcing income tax relief for middle-class