Tax cut to increase consumption

CONSUMER-facing businesses—ranging from everyday consumables to big-ticket items like automobiles—are optimistic that the government's decision to cut personal income tax will lead to higher disposable income, ultimately driving demand.

- Arshad Khan

The tax relief comes at a crucial time when urban consumption has been under pressure, as highlighted in recent quarterly earnings of major FMCG firms.

Finance Minister Nirmala Sitharaman on Saturday proposed exempting income up to ₹12 lakh from tax, with salaried taxpayers benefitting from a higher exemption limit of ₹12.75 lakh due to a ₹75,000 standard deduction. Additionally, individuals in higher tax brackets will see benefits of up to ₹1.10 lakh under the new tax regime.

Gautam Singhania, CMD of Raymond Group, called the income tax exemption a "game-changing reform," expected to drive household spending, an essential growth driver for sectors like retail and real estate.