Omkar Dattatray
Finally the long wait of the middle class and the salaried class has come to end on 1st of February 2025 ,when finance minister unveiled her new budget and gave a bonanza for the salaried class as well as middle class when she announced that the government has decided to exempt middle class from the tax on the yearly income of Rs 12,00000.In fact in the new tax regime an employee earning up to Rs 12.75 lakh have to pay no income tax because Rs 75000 is the standard deduction. It is in fact for the time in the history of Independent India that such a big relief has been announced for the middle class including salaried people .It is a great milestone and is historic that a gift of such a huge nature has been announced in 2025 union budget for the salaried people. The net effect of this big relief for the middle income group is that 95% population of the country is freed from pay income tax for this maiden time and this is no ordinary thing or a mean development. Thus it will benefit a great majority of the people of India.FM Nirmala Sitharaman on Saturday unveiled a budget bonanza for taxpayers ,particularly the middle class ,which has been reeling under the double impact of a slowing economy and rising prices.PM Modi had strongly hinted at it on Friday and so did the president Droupadi Murmu. There will be a rebate on annual income up to Rs 12 lakh , compared with Rs 700000 currently, and higher limits across slabs under the new regime. For the salaried ,who also get standard deduction of Rs 75,000 under the new regime ,the rebate will mean zero tax liability for those with income up to Rs 12.75 lakh. As a result of the sweeping changes in the tax structure and the exemptions ,,almost 1 crore of the 3 crore Indians who actually pay taxes will now legally escape the tax net-though they will still have to file IT returns to avail of the rebate .Those who will pay taxes will save amounts ranging from Rs 30000 to Rs 1.1 lakh a year ,depending on their income level. While vast of the middle class will gain ,the big beneficiaries are those with taxable income of Rs 15,0000-Rs 24,0000,who were earlier in the highest slab of 20% and will now face levies of 15% to 25%.No taxes up to Rs 12 lakh annual income set to boost consumption spending stays the path on fiscal consolidation with fiscal deficit target of 4.4Pc in FY 26 farm economy in FM’s focus too with a slew of measures. Finance minister N.Sitharaman on Feb 1 placed the bets firmly on India’s vast consuming salaried and middle class to power the economy ,announcing wide-ranging changes in income tax rates and slabs in the 2025-26 union budget in a plucky drive to push growth amid fast gathering global headwinds. Amid signs of moderation in the broader economy ,Sitharaman unveiled measures to catalyze a swift recovery by putting more money in people’s pockets ,and amplifying their purchasing power. This predicted on the assumption that higher disposable income will stimulate demand for goods and services. This in turn could set off a cycle of investment as companies eventually start adding capacities to meet the extra demand. Under the proposed new slabs and rates, anyone with an annual taxable income up to Rs 12 lakh -excluding capital gains income will not have to pay any taxes. This ,effectively means that those with annual income up to Rs 12.75 lakh will not have to pay any tax ,including a standard deduction benefit of Rs 75,000.FM said,” Slabs and rates are being changed across the board to benefit all tax -payers. The new tax structure will substantially reduce the taxes of the middle class and leave more money in their hands .boosting household consumption ,saving and investment.” The finance minister also rejigged slabs and rates. Under the proposed slabs ,people earning more than Rs 12 lack per annum ,there will be nil tax for income up to Rs 4 lakh,5% for income between Rs 4 and 8 lakh,10 % for RS 8 to Rs 12 lakh ,15 % for Rs 12 lakh to Rs 16 lakh. A 20 percent income tax will be levied on income between Rs 16 lakh to Rs 20 lakh,25 percent on Rs 20 to Rs 24 lakh and 30 % above Rs 24 lakh per annum.FM said,” Democracy, Demography and Demand are the key pillars in our journey towards Viksit Bharat. The middle class provides strength for India’s growth. The government under the leadership of Prime Minister Modi has always believed in the admirable energy and ability of the middle class in nation building.’ ‘FM’s Budget speech is being seen as a ”big relief” for middle class and salaried population. The announcement that there will be no tax on the annual income up to Rs 12 lakh and coupled with it the standard deduction of Rs 75 lakh, it is clear that salaried class will be exempt from income tax up to Rs 12.75 lakh annually. This announcement prompted a wave of joy among the middle -class salaried population, and as expected many took to social media to share happiness about the ”big relief”. In fact the Budget 2025 is a game changer for the middle class .”Slabs and rates are being changed across the board to benefit all tax payers. The new structure will substantially reduce the taxes of the middle class and leave more money in their hands.” So under the new tax regime, the tax rate structure has revised. Budget exercise is a politico-economic tool and political economy has much importance for the government and governance as well as the economic, social and political development of the country. The big bonanza of tax relief to the middle salaried class has won the hearts ,minds and sympathy of the central government. The elections are happening in Delhi and in few months there will be assembly elections in Bihar and the governments big relief in income tax to middle class will boost the political fortunes of the BJP in Delhi Assembly elections and it along with the huge allocations for the state of Bihar will finally result in votes in the Bihar assembly elections in favor of NDA and its allies which are going to be held in few months .So FM’s middle path will in fact lure Delhi and Bihar voters as it is most and accurate possibility. Delhi votes on 5th February that is Wednesday and Bihar in October or November this year. The Budget has gone the extra mile to woo them. For Delhi -Country’s richest city by per capita income and with large middle class straddling government employees ,private sector ,and businesses -the big tax giveaway is a clear and loud message./signal. The fact is that AAP’s core base is low income group and the lower middle class is wavering ,the Modi government appears to be hoping to tip them over to their side. So for as Bihar is concerned, BJP and its ally Nitish’s JDU political fortunes will be positively affected. To conclude one can say that FM’s tax bonanza to middle class /salaried population is the gift of Modi Sarkar to the middle class.
(The author is a columnist, social, KP activist & Freelancer)