From what I understand of this announcement regarding the New Tax Regime by our Finance Minister in today’s Union Budget 2025 Speech, this is going to be Modi’s most significant gift to the Indian economy; this move is going to register Modinomics ahead of Manmohan Singh’s liberalisation era.
What does zero tax bring to the economy?
- Many small-scale entrepreneurs will start filing income tax returns, thus becoming part of the organised, white, legitimised economy.
- Increasing Rs 12 lakhs return will add magical numbers to our GDP & it will not be surprising that GDP will start increasing and maybe double up within 3 financial years.
- More Taxpayers will now become eligible for various home loans, etc; hence, their disposable income will increase with increased repayment capacity within the next 3 years.
- This will lift consumption from the Bottom up, again giving a significant boost to the banking, financial, and manufacturing sectors.
- This will do what Demonetization could not achieve; it will gradually transform the unaccounted economy into an accountable economy in the next 3 years.
- All this cumulatively will increase indirect tax revenue collection for the Central and Respective State Governments.
How this budget has the potential to become Modi’s economic masterstroke
The new zero-tax regime proposed in the Union Budget 2025 is a game-changer for India’s economy. By incentivizing tax compliance, boosting disposable income, and driving sectoral growth, it promises to reshape the financial landscape. This visionary move could position Modinomics as a landmark era in India’s economic history.
The author is the chairman of the diversified Rajat Synergy Group. Views expressed above are the author’s own.
Author: Rajat Mohan Pathak
