top of page

Union Budget 2025-26: Personal Income Tax Reform as a fuel for Vikshit Bharat

The much-awaited Union Budget 2025-26 has been presented on 1st February 2025. The budget has proposed development measures across various broad areas. Development has been termed a journey. Agriculture, micro, small & medium enterprises (MSME), investment and exports have been characterised as four powerful engines in this journey of development. Moreover, reforms, inclusivity, and Vikshit Bharat have been termed as fuel, guiding spirit, and destination, respectively. The reforms, which are being treated as fuel, has been initiated across six domains, i.e., taxation, power sector, urban development, mining, financial sector and regulatory.


This article focuses on reforms initiated in the personal income tax reforms in the taxation domain. Personal income tax has gained importance for being a vital sources of government revenue and a tool for achieving several economic objectives. In the budget 2025-26, special focus has been given on the middle-class in the personal income tax reforms.  Through this reform the tax burden has been reduced. No tax is payable up to income of ₹ 12 lakhs per annum (₹12.75 lakh per annum for salaried taxpayers due to standard deduction of ₹ 75,000) in the new tax regime. This may become a significant boost for household consumption, savings and investment. Furthermore, there have been changes in income tax slabs and rates. These changes in slabs and rates of income tax will keep more money in the hands of all taxpayers, increase their purchasing power and may lead to economic growth of India. Taxpayer with an annual income up to 12 lakhs will have zero tax liability. In 2024-25, with the same annual income the tax liability was  80,000 as per the new tax regime. Hence there is a tax benefit is 80,000 in 2025-26 for annual income up to 12 lakhs. Similarly, another taxpayer with an annual income of  24 lakhs has a tax benefit of  1,10,000 as the tax liability is ₹ 3,00,000 in 2025-26 in comparison with  ₹ 4,10,000 in 2024-25.


The tax rebate given to taxpayers may give a significant boost to household consumption, savings and investment. As the personal income tax will leave more money in the hands of the middle-class, the purchasing power this rising middleclass will improve. The improved purchasing power may lead to increased household consumptions and upliftment of household sentiments. Household consumption is considered as major driver of economic growth. With an increase in household consumption the demand for goods and services rises which in turn encourages business to produce more and more and employ more and more workforce. Consequently, this gives a boost to employment in the economy. The increase in the employment further stimulates demand for goods and services and thus the economic activities increase and leads to overall economic growth.


Savings are another key factor for economic growth. Savings do play an important role in supporting long term growth. As savings provides the much-needed capital for investment, these are significant factor for the growth of the economy. Households channelise the savings to businesses through financial institutions. Businesses use this savings for the expansion of production capacity, new projects, technological upgradation etc. This helps in productivity improvements and overall economic growth.


Another important driver of economic growth is investment. This creates the foundation for the improvement in the productivity capacity of the economy which further leads to job creation and improved standard of living. Investment in physical as well as human capital enhances the productivity which leads to production of more goods and services to meet the household consumption and to achieve the accelerated growth of the economy.

In conclusion, it can be said that India, having a greater possibility, growth potential and aiming for global competitiveness as well as global positioning is bound to move towards the destination (Vikshit Bharat) through the fuel (Personal Income Tax Reforms). May the second quarter of the 21st century witness India as an economic superpower!


Author:

Dr. Suryakanta Nayak, Assistant Professor (Finance)

Department of Management, Paari School of Business

SRM University AP, Andhra Pradesh



Comments


Top Stories

Advertise Now (1).png
Russia’s FM Briefing: BRICS, Kosovo, JCPOA, France & West Threats | Putin Foreign Policy | Moscow

Russia’s FM Briefing: BRICS, Kosovo, JCPOA, France & West Threats | Putin Foreign Policy | Moscow

Russian Foreign Ministry spokeswoman delivers a sharp weekly briefing from Moscow. Topics May include Russia-Iran-China talks post-JCPOA, Trump’s trade wars boosting BRICS, Adrien Bocquet’s citizenship, Japan talks collapse, and West’s failed efforts at the UN. Lavrov warns of Western aggression. Topics may be addressed: 1. Russia, Iran, China at consultations in Moscow consider scenarios after JCPOA . 2. Trump’s trade wars may push more countries to join BRICS 3.Putin grants Russian citizenship to French journalist Adrien Bocquet 4.Talks with Japan now impossible, Kremlin says 5.Through its special operation, Russia is preventing a war of nuclear states — Kremlin 6.West tried to destroy Russia's UN resolution against Nazism — Lavrov 7.Russia wins industrial war, leaving Europe in the dust, British report shows 8.German politician calls for resuming gas supplies from Russia in response to US tariffs 9.Paris, London obsessed with idea of sending their troops against Russia - Lavrov 10.Western brands inquiring about running ads in Russia — advertising agency 11.Some 20% of Serbs left Kosovo in past 18 months — Russia’s UN envoy #RussiaBriefing #BRICS #JCPOA #AdrienBocquet #Lavrov #Putin #Geopolitics #Kosovo #TradeWar #westernmedia Amaravati Today is a news channel that provides the latest updates on world affairs and sports events. It covers a wide range of topics, including international politics, major global incidents, and sports highlights #WorldNews #GlobalInsights #AmaravatiToday #News #InternationalNews #GlobalNews #Politics Subscribe to the Amaravati Today channel and tap the bell icon to receive notifications whenever we go live https://www.youtube.com/@Amaravati_Today_Official Follow Amaravati Today on x or Twitter: https://x.com/amaravati_today Follow Amaravati Today on Facebook: https://www.facebook.com/amaravatitoday Follow Amaravati Today on Instagram: https://www.instagram.com/stories/amaravatitodayofficial/ Follow Amaravati Today on Rumble: https://rumble.com/user/Amaravatitoday Follow Amaravati Today on Linkedin: https://www.linkedin.com/company/amaravati-today/ Follow Amaravati Today on WhatsApp: https://www.whatsapp.com/channel/0029VaHWoNe5q08TF4NFKv3d Website: https://www.amaravati.today/ Source: Reuters
Frankfurt Stock Exchange Opens Amid Trump Tariffs & EU Market Moves | US Trade War

Frankfurt Stock Exchange Opens Amid Trump Tariffs & EU Market Moves | US Trade War

The Frankfurt stock exchange opens as Trump’s reciprocal tariffs take effect. European stock futures edge higher on reports of a German coalition deal. DAX, EuroStoxx 50, and CAC 40 show gains, while the euro strengthens. Stay tuned for market reactions and trading day insights from Frankfurt. #FrankfurtStockExchange #GlobalMarkets #EuropeStocks #TrumpTariffs #DAX #EuroStoxx50 #CAC40 #EUFutures #GermanPolitics #StockMarketUpdate Amaravati Today is a news channel that provides the latest updates on world affairs and sports events. It covers a wide range of topics, including international politics, major global incidents, and sports highlights #WorldNews #GlobalInsights #AmaravatiToday #News #InternationalNews #GlobalNews #Politics Subscribe to the Amaravati Today channel and tap the bell icon to receive notifications whenever we go live https://www.youtube.com/@Amaravati_Today_Official Follow Amaravati Today on x or Twitter: https://x.com/amaravati_today Follow Amaravati Today on Facebook: https://www.facebook.com/amaravatitoday Follow Amaravati Today on Instagram: https://www.instagram.com/stories/amaravatitodayofficial/ Follow Amaravati Today on Rumble: https://rumble.com/user/Amaravatitoday Follow Amaravati Today on Linkedin: https://www.linkedin.com/company/amaravati-today/ Follow Amaravati Today on WhatsApp: https://www.whatsapp.com/channel/0029VaHWoNe5q08TF4NFKv3d Website: https://www.amaravati.today/ Source: Reuters
NATO Chief Rutte Meets Japan PM Ishiba on Security Ties & Global Threats | South China Sea Tensions
37:26

NATO Chief Rutte Meets Japan PM Ishiba on Security Ties & Global Threats | South China Sea Tensions

NATO Secretary General Mark Rutte meets Japan's PM Shigeru Ishiba in Tokyo to strengthen ties amid rising global threats. Rutte emphasized NATO-Japan shared values and inseparable security challenges. He also praised Japan's Self-Defense Forces during a visit to the frigate Mogami. Talks continue as NATO eyes Indo-Pacific engagement. #NATO #Japan #MarkRutte #ShigeruIshiba #IndoPacific #UkraineWar #China #NorthKorea #GlobalSecurity #Tokyo Amaravati Today is a news channel that provides the latest updates on world affairs and sports events. It covers a wide range of topics, including international politics, major global incidents, and sports highlights #WorldNews #GlobalInsights #AmaravatiToday #News #InternationalNews #GlobalNews #Politics Subscribe to the Amaravati Today channel and tap the bell icon to receive notifications whenever we go live https://www.youtube.com/@Amaravati_Today_Official Follow Amaravati Today on x or Twitter: https://x.com/amaravati_today Follow Amaravati Today on Facebook: https://www.facebook.com/amaravatitoday Follow Amaravati Today on Instagram: https://www.instagram.com/stories/amaravatitodayofficial/ Follow Amaravati Today on Rumble: https://rumble.com/user/Amaravatitoday Follow Amaravati Today on Linkedin: https://www.linkedin.com/company/amaravati-today/ Follow Amaravati Today on WhatsApp: https://www.whatsapp.com/channel/0029VaHWoNe5q08TF4NFKv3d Website: https://www.amaravati.today/ Source: Reuters
Amorim & Man Utd Star Speak Ahead of Europa Clash vs Lyon | Soccer | Europe

Amorim & Man Utd Star Speak Ahead of Europa Clash vs Lyon | Soccer | Europe

Manchester United head coach Ruben Amorim and a key player address the media before their UEFA Europa League quarter-final first leg against Olympique Lyonnais in Décines-Charpieu. They share insights on team strategy, expectations, and preparation for the big match. Stay tuned for full coverage and key highlights! #ManchesterUnited #UEL #RubenAmorim #EuropaLeague #MUFC #OLYMUN #FootballPressConference #SoccerNews #UELQuarterFinals #ManUtd Amaravati Today is a news channel that provides the latest updates on world affairs and sports events. It covers a wide range of topics, including international politics, major global incidents, and sports highlights #WorldNews #GlobalInsights #AmaravatiToday #News #InternationalNews #GlobalNews #Politics Subscribe to the Amaravati Today channel and tap the bell icon to receive notifications whenever we go live https://www.youtube.com/@Amaravati_Today_Official Follow Amaravati Today on x or Twitter: https://x.com/amaravati_today Follow Amaravati Today on Facebook: https://www.facebook.com/amaravatitoday Follow Amaravati Today on Instagram: https://www.instagram.com/stories/amaravatitodayofficial/ Follow Amaravati Today on Rumble: https://rumble.com/user/Amaravatitoday Follow Amaravati Today on Linkedin: https://www.linkedin.com/company/amaravati-today/ Follow Amaravati Today on WhatsApp: https://www.whatsapp.com/channel/0029VaHWoNe5q08TF4NFKv3d Website: https://www.amaravati.today/ Source: Reuters
King Charles Arrives in Rome, Welcomed by PM Giorgia Meloni | Italy
42:30
IOC Press Conference After Executive Board Meeting in Lausanne | Olympics | LA28

IOC Press Conference After Executive Board Meeting in Lausanne | Olympics | LA28

The International Olympic Committee (IOC) holds a press conference in Lausanne following its executive board meeting. Key updates on upcoming Olympic Games, governance issues, and global sports developments were discussed. Stay tuned for official statements and media Q&A from IOC leaders. #IOC #Olympics #PressConference #Lausanne #SportsNews #OlympicGames #IOCMeeting #BreakingNews #GlobalSports #OlympicUpdate Amaravati Today is a news channel that provides the latest updates on world affairs and sports events. It covers a wide range of topics, including international politics, major global incidents, and sports highlights #WorldNews #GlobalInsights #AmaravatiToday #News #InternationalNews #GlobalNews #Politics Subscribe to the Amaravati Today channel and tap the bell icon to receive notifications whenever we go live https://www.youtube.com/@Amaravati_Today_Official Follow Amaravati Today on x or Twitter: https://x.com/amaravati_today Follow Amaravati Today on Facebook: https://www.facebook.com/amaravatitoday Follow Amaravati Today on Instagram: https://www.instagram.com/stories/amaravatitodayofficial/ Follow Amaravati Today on Rumble: https://rumble.com/user/Amaravatitoday Follow Amaravati Today on Linkedin: https://www.linkedin.com/company/amaravati-today/ Follow Amaravati Today on WhatsApp: https://www.whatsapp.com/channel/0029VaHWoNe5q08TF4NFKv3d Website: https://www.amaravati.today/ Source: Reuters
9.png
Live Streams | Facts | Analysis | Explainers | Breaking News

Get in Touch

Manikondu Pvt Ltd
SY. 130P & 115/1P, ISB Rd
Financial District, Gachibowli
Hyderabad, India 500032
letstalk {at} amaravati (dot) today

Follow us on

  • X
  • LinkedIn
  • Youtube
  • Facebook
  • Instagram

© 2024 by Amaravati Today | Privacy Policy | Imprint & Dsiclaimer | CIN: U70200TS2024PTC184435

bottom of page