Tax Relief, Rate Cut to Boost Demand

India's domestic demand is expected to remain resilient, supported by the personal income tax concessions announced in the 2025 Union budget and the repo rate cut initiated by the Reserve Bank of India, S&P Global Market Intelligence said in a note.

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The RBI had reduced the repo rate by 25 basis points in the February monetary policy meeting.

In the Union Budget for 2025-26 tabled on February 1, the finance minister had announced that no income tax will be payable on income up to Rs 12 lakh, providing significant relief to taxpayers, especially the middle class. Earlier, this limit was Rs 7 lakh. The government expects that taxpayers saving money through lesser income tax will plough it back in the economy in the form of either consumption, savings or investments.

Additional liquidity-boosting measures by the RBI will also help the domestic economy, financial information and analytics firms said in the note.