I-T CUT MAY NOT BOOST PRIVATE CONSUMPTION

THE announcement on changes in income tax slabs involving reduction in effective income tax rates in Budget 2025-26 has expectedly made headlines in the Indian media.

- C Saratchand

However, this reduction looks somewhat substantial only because income tax slabs have not been revised in keeping with inflation rates for quite a while. It is presumed that this decision will increase the disposable income of the 'middle class'. The Reserve Bank of India, too, argues that the increase in expendable cash will induce private investments resulting in an initiation of a consumption-led growth.