Kolkata: Will Union finance minister Nirmala Sitharaman deliver some Income Tax reliefs for the Indian middle class? Less than 2 weeks before the FM delivers her eighth consecutive budget, this question is on the lips and mind of perhaps every citizen who can be described as middle class taxpayers. While the FM did not listen to such swirl of expectations in the past few budgets, this time the economic situation is a bit different with analysts pointing to headwinds of thin job creation, declining GDP growth projection, private capex that refuses to firm up, captains of the industry lobbying for income tax cuts (perhaps for the first time) and wage hikes on the whole less than retail inflation.
In their Union Budget preview, economy research firm QuantEco Research has said they expect a marginal relief in terms of Income Tax. “… some marginal support to the cohort of income taxpayers via rejig of tax slabs/minor tinkering of rates can be offered, to aid disposable incomes especially among urban consumers,” analysts of QuantEco Research said in a note.
Rise in ELI scheme allocation expected
On the critical matter of job creation, the agency said that it hopes that allocation might rise in the ELI scheme. “…Eli scheme could see higher allocation of Rs 350-400 billion , in a bid to create formal jobs,” QuantEco added. ELI stands for ‘Employment Linked Incentive’. It was introduced in 2024. As the name indicates, it was launched to create jobs in the formal sector. These schemes provide benefits to employers and first-time employees who enroll in the EPFO (Employees Provident Fund Organisation).
Fiscal deficit to narrow in FY26
QuantEco analysts have mentioned that it expects the government to meet its fiscal deficit target of 4.9% (of the GDP) set for FY25. Moreover, it will be able to narrow down the deficit to about 4.5% in the next financial year, it has said. “We believe that Government would be able to to narrow its fiscal deficit to GDP ratio of 4.5% in FY26from 4.9% in FY25, while providing a push to growth via capex, job creation and increasing disposable incomes for middle class via some tax incentives,” the agency wrote.
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