While presenting the budget for the year, Finance Minister Nirmala Sitharaman gave a big relief to the middle-class employed people. Now individuals earning up to Rs 12 lakh annually will not have to pay any tax. In the Union Budget 2025-26, the income tax exemption limit has been increased from Rs 7 lakh to Rs 12 lakh. Along with this, the salaried class will also get a standard deduction of Rs 75,000. In such a situation, they will not have to pay any tax on an annual income of Rs 12.75 lakh.

This increase of Rs 5 lakh in the income tax exemption limit is the biggest increase so far and it is equal to all the tax reliefs given between 2005 and 2023. In such a situation, this announcement of Finance Minister Nirmala Sitharaman has become a silver for the employed people. Now she has told the story behind this big cut in tax.

PM Modi was in favor of tax cuts.

In an interview with the news agency PTI, Sitharaman quoted Abraham Lincoln and described this budget as a budget 'by the people, for the people, of the people'. Along with this, she said that Prime Minister Narendra Modi was in favor of tax cuts for the middle class, but it took time to convince the bureaucrats of this.

Sitharaman said, 'We have heard the voice of the middle class who were complaining about their aspirations not being fulfilled despite being honest taxpayers.' Taxpayers wanted the government to take steps to limit the impact of factors like inflation. After this, Prime Minister Modi had asked Sitharaman to consider ways to give them relief.

What was the objection of the bureaucrats?

Sitharaman said that the Prime Minister quickly agreed to the proposal of tax relief, but it took some time to convince the officials of the Finance Ministry and the Central Board of Direct Taxes (CBDT) of this. These officials have to collect money to complete public welfare and other schemes. Sitharaman said, 'I think the Prime Minister summed it up. He said that this is the people's budget, this is the budget that people wanted.'

When asked to describe the character of this budget in her own words, the Finance Minister said, 'As Abraham Lincoln said about democracy, this is a budget 'by the people, for the people, of the people'. Sitharaman said that the new rates will significantly reduce the taxes of the middle class and they will have more money in their hands which will boost domestic consumption, savings, and investment.

What did Sitharaman say on the new income tax bill?

Explaining the thinking behind this big announcement, she said that the tax cut was in the works for some time. Work towards making direct tax simple and easy to comply had started in the budget of July 2024. Now a new law is ready, which will simplify the language of the law, reduce the compliance burden, and be more user-friendly.

Sitharaman said, 'After the last budget, the voice of the middle class started rising. They felt that they were paying taxes but they did not have much to solve their problems. There was also a feeling that the government is very inclusive in taking care of the very poor and weaker sections.'

The Finance Minister said, 'Then I discussed this with Prime Minister Modi, who entrusted me with the special task of seeing what can be done in this direction.' She said, 'After looking at the figures, it was presented to the Prime Minister. He guided us about the step which was presented in the budget on Saturday.'

How did the deal happen on tax reduction?

When asked how much effort was required to convince Prime Minister Modi of the related proposal, Sitharaman said, 'No, I think your question should be how much time did it take me to convince the ministry and CBDT.' She said, 'The Prime Minister was very clear that he wants to do something. It depends on the ministry to feel comfortable and then move forward with the proposal. The ministry and the CBDT needed to be convinced as they had to be sure about revenue generation.”

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