The budget for 2025-26 has provided major relief for the middle class by reducing the income tax burden. Finance Minister Nirmala Sitharaman in her budget speech announced substantial changes to the tax structure and raised the minimum taxable income to ₹12 lakh. This means those with an annual income of ₹12,00,000 don’t have to pay income tax under the New Tax Regime.
This is the first time there has been a major reduction in the income tax rates under the Modi government and every year there were demands to reduce the rates. Although tax exemption limit was increased and slabs were changed to give relief to the taxpayers, those were considered not enough by most people. Therefore, the income tax proposals in 2025-26 budget has been welcomed by all.
Amid this, Finance Minister Nirmala Sitharaman revealed that PM Modi had readily agreed to cut income tax, but it took some time convincing her own ministry for the same. She said this in an interview with PTI, when asked how much persuasion did it take to get the prime minister on board regarding the cut in income tax.
Finance Minister Nirmala Sitharaman says PM Modi supported the idea to cut taxes but it took time to convince bureaucrats. pic.twitter.com/uHUqc1omU3
— News Arena India (@NewsArenaIndia) February 2, 2025
To this, Nirmala Sitharama replied, “Your question should be how much did it take for me to convince the ministry.” She said that the PM was very clear that he wanted to do something, but it was for the ministry to have had the comfort level.
The finance minister said that more work was needed to convince the board. When PTI Editor-in-Chief Vijay Joshi said this meant that it was bureaucrats who needed to be convinced, she agreed, adding that they were right, as the officials have to be sure of revenue generation.
Nirmala Sitharama added that once everyone came abroad with the idea, then they brought the proposal to the prime minister.
She added that the reduction in the income tax rates was the first step towards the new Income Tax Bill that her ministry is bringing. In her budget speech, Sitharaman said that a New Income Tax Bill will be announced next week. She added that the new bill will be clear and direct in text, and it will have around half the chapters and words compared to the present law. It will be simple to understand for taxpayers and tax administration, leading to tax certainty and reduced litigation.
