Will the Middle Class Finally Have Something To Look Forward To In Budget? Here's What PM Modi Said
Prime minister Modi's pre-budget speech hinted at potential benefits for the middle class in the upcoming Budget.
Prime minister Narendra Modi's customary pre-budget speech on Friday, january 31, gave the nation's middle-class something to look forward to in Budget 2025. Every year, the middle class is mostly disappointed as the government introduces more schemes to benefit the poor and hardly has anything for the section that pays for most services through direct taxation. However, this year's pre-budget speech by PM Modi hinted towards middle-class benefits in the Budget presentation by Union Finance minister Nirmala Sitharama on Saturday, february 1.
PM Modi said: "Ahead of the Budget Session, I bow down to Maa lakshmi, the goddess of wealth and prosperity... I pray that Maa lakshmi continues to bless the poor and middle class of our country. It is a matter of great pride that india completed 75 years as a democratic nation. india has established itself well on the global pedestal...This is the first complete budget of my third term. I can confidently say that in 2047, when india will complete 100 years of Independence, india will fulfill its aim of Viksit Bharat and this budget will give new energy and hope to the nation..."
Middle-Class Contributions To Taxes
While many are hopeful of a raise in the tax slabs for the salaried class, there is no confirmation yet for the same. In fact, the middle class contributes to the lion's share of income tax as well as GST collections in India.
Even the number of income tax returns (ITRs) filed during PM Modi's term has increased from 3.35 crore in 2013-14 to 7.54 crore in 2023-24. However, the number of zero ITRs has more than doubled from 1.69 crore to 4.73 crore.
In september 2019, as part of the Financial Year 2019-20 budget, the government introduced a reduction in corporate tax rates. The tax rate for existing companies was cut to 22% from 30%, while new manufacturing companies, established after october 1, 2019, saw their rate slashed to 15% from 25%. This move created an imbalance in the country's tax structure.
For instance, individuals earning Rs 15 lakh annually are taxed at a rate of 30%, while corporations, that generate profits in crores, are taxed at a significantly lower rate of 22%. Additionally, while the middle class is taxed on income, corporations are taxed on profits, which can be reduced by deducting various business expenses.
As a result of these changes, personal income tax (PIT) collections have now surpassed corporate income tax (CIT) collections. In the financial year 2020-21, CIT stood at Rs 4.57 lakh crore, while PIT rose to Rs 4.87 lakh crore. By FY 2021-22, PIT collections were Rs 6.96 lakh crore, slightly below CIT collections of Rs 7.12 lakh crore.
However, in FY 2022-23, PIT again exceeded CIT, with collections reaching Rs 8.33 lakh crore compared to CIT's Rs 8.25 lakh crore. The trend continued in FY 2023-24, where PIT was Rs 10.45 lakh crore, surpassing CIT, which amounted to Rs 9.11 lakh crore. According to the 2024-25 budget, PIT collections are expected to rise to Rs 11.87 lakh crore, while CIT is forecast to be Rs 10.2 lakh crore.
Budget Amid delhi Elections
PM Modi's mention of the middle class in his pre-budget speech seems to be spurred by the increased focus on the approaching assembly elections in Delhi. Last week, former delhi CM arvind kejriwal laid out seven demands for the middle-class category of citizens.
PM Modi, too, during an address to bjp booth workers, also mentioned that the middle class was the backbone of the nation. He attacked the AAP and said that the middle class was paying for all facilities and development, but the ruling party in delhi was creating problems for them.
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