The Union Budget 2025 has brought good news for middle-class taxpayers. Finance Minister Nirmala Sitharaman has proposed raising the minimum tax slab from ₹7 lakh to ₹12 lakh under the new tax regime. Additionally, a ₹75,000 standard deduction for salaried individuals has been introduced. Economists believe these changes will encourage both spending and savings, giving a much-needed boost to the Indian economy.
Economists Weigh In on Budget 2025
According to former Chief Economic Advisor Ashok Kumar Lahiri, increasing the tax exemption limit will leave middle-class taxpayers with more disposable income. This extra money is likely to fuel consumer spending, which will, in turn, drive market demand and strengthen the economy.
However, Lahiri also clarified that this change will not only increase spending but also encourage savings. “This proposal allows taxpayers to spend more while also saving more. It is a balanced approach that benefits both the individual and the economy,” he said.
A Shift Towards Demand-Driven Growth
Economist Probir Kumar Mukhopadhyay pointed out that, so far, the focus has been on the supply side of the economy. The new tax changes shift attention to demand generation, ensuring a more balanced approach.
He explained that middle-class taxpayers generally maintain a mix of spending and savings. While the exact balance will depend on individual choices, the tax relief is expected to drive economic activity by enhancing both consumption and financial security.
Relief for Senior Citizens
Apart from benefits for the salaried class, the budget has also increased the tax deduction at source (TDS) limit for senior citizens. Previously set at ₹50,000, it has now been doubled to ₹1,00,000. Since many senior citizens depend on interest income, this move is expected to provide significant relief.