Govt may raise income-tax threshold in Budget to revive economy

The Centre is considering increasing the personal income tax threshold in next month’s budget, according to people familiar with the matter, as authorities seek to kickstart consumption in the economy.

Finance Minister Nirmala Sitharaman may raise the tax exemption limit for working-age individuals to Rs 300,000 ($4,316) of their annual income, up from the current Rs 250,000, the people said, asking not to be identified as they aren’t authorised to speak publicly about the proposals. The tax measures haven’t been finalised yet. Any tax exemptions will add stimulus to an economy that’s slowed sharply this year, with growth reaching a five-year low of 5.8 per cent in the first three months of the year.

The proposed tax move would put at least Rs 2,500 more in the hands of each of India’s 50 million taxpayers. It could also add to pressure on the budget deficit, which is pegged at 3.4 per cent of gross domestic product for the current fiscal year that began on April 1.
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