New Delhi: Finance Minister Nirmala Sitharaman on Sunday stated that while Prime Minister Narendra Modi fully backed the idea of tax cuts, persuading the bureaucrats took time, PTI reported. Sitharaman on Saturday announced major tax cuts for the middle class and laid out a plan for economic reforms under ‘Viksit Bharat.’ She balanced these measures while keeping government spending under control.
“The PM was very clear that he wants to do something. It is for ministry to have had the comfort level and then go with the proposal. So, the more work that was needed, was needed for convincing the board that efficiency in collection and honest taxpayers’ voice… all this was work here in the ministry, not so much for the PM,” FM Sitharaman told in a PTI interview.
EXCLUSIVE | VIDEO: In response to a query on what it took to convince the PM (for the major announcement on tax relief), Union Finance Minister Nirmala Sitharaman () says, “I think the question should be how much did it take for me to convince the ministry, the… — Press Trust of India (@PTI_News)
Individuals earning up to Rs 12 lakh per year will not have to pay any income tax after the exemption limit was raised from Rs 7 lakh. Additionally, salaried individuals will get a Rs 75,000 standard deduction.
In her eighth consecutive budget, Sitharaman also revised tax slabs for those earning above this limit. People with annual incomes up to Rs 25 lakh could save up to Rs 1.1 lakh in taxes.
Due to the increased rebate, one crore people will no longer have to pay income tax. Overall, 6.3 crore taxpayers—over 80%—will benefit from the changes.
“The new structure will substantially reduce taxes on the middle class and leave more money in their hands, boosting household consumption, savings and investment,” Sitharaman said while presenting the budget in the Lok Sabha.
The Budget for the financial year 2025-26 proposes raising the foreign investment limit in the insurance sector from 74% to 100%. It also continues high spending on infrastructure and increases allocations for social welfare schemes, farmers, women, and youth.
Despite these spending measures, Sitharaman maintained fiscal discipline, projecting a fiscal deficit of 4.4% of GDP for FY26, down from 4.8% in the current year.
Prime Minister Narendra Modi called it a “people’s budget” that will “boost consumption, investment, and growth.”
“The Budget lays a strong foundation to increase savings and make citizens partners in development,” he added.
The budget comes as India’s economy faces challenges, including slow growth and global uncertainties. The estimated GDP growth for the current year is 6.4%, with a projected 6.3-6.8% in the next. These figures are below the 8% growth target needed for India to become a developed nation by 2047.
“Our endeavour will be to keep the fiscal deficit each year such that the central government debt remains on a declining path as a percentage of the GDP,” Sitharaman said. She projected government debt at 50% of GDP by March 2031.
(Based on PTI inputs)
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