Finance Minister Nirmala Sitharaman says income tax and RBI rate cut will boost economy: Report

Finance Minister Nirmala Sitharaman says income tax and RBI rate cut will boost economy: Report

Finance Minister Nirmala Sitharaman says income tax and RBI rate cut will boost economy: Report ByHT News Desk Feb 08, 2025 05:11 PM IST Share Via Copy Link Sitharaman had announced an income tax reform, allowing zero income tax for those earning up to ₹12 lakh. The RBI then announced a 25 bps repo rate cut

The income tax relief which the Budget 2025 provided, coupled with the Reserve Bank of India's (RBI) repo rate cut will boost recovery in consumption in the economy, a report by news agency ANI quoted Finance Minister Nirmala Sitharaman as saying.

Union Finance Minister Nirmala Sitharaman during an interview with PTI, in New Delhi, Sunday, Feb. 2, 2025. (PTI)

“Since after the budget, the few inputs that I've had from some business leaders and some senior journalists who have been interacting with business is that (though these are anecdotal),” the report quoted Sitharaman as having said at a press conference on Saturday after her customary post-Budget meeting with the Central Board of Directors of the RBI.

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"Most of it seem to be on the same page that the orders for fast moving consumer goods for the period April to June are already getting booked, and industry is clearly seeing the signs of a possible recovery of consumption," she added.

Sitharaman had announced in the 2025 Union Budget on February 1 that no income tax needs to be payable on income up to ₹12 lakh. Earlier, the limit was ₹7 lakh.

This would take an estimated one crore middle-income Indian taxpayers out of tax net, the report read.

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However, the government will also theoretically forego revenue of about ₹1 lakh crore in direct taxes and ₹2,600 crore in indirect taxes, according to the report.

However, the government also expects the money saved by taxpayers to be pushed back into the economy in either consumption, savings or investments.

Besides this, the RBI announced a 25 basis point repo rate cut from 6.5% earlier to 6.25% on February 7, 2025; The first cut in around five years.

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The report quoted Sitharaman as saying the Cabinet cleared the new income tax proposal on Friday. "(I) hope to have it introduced in the Lok Sabha in the coming week," she said. After the introduction, it will go to a committee for scrutiny, she added.

However, she didn't give a definite timeline for the rollout.