FM Nirmala Sitaraman presented the Union Budget on Saturday.
Credit: PTI Photo
New Delhi: The Centre is confident of meeting its net tax targets for the upcoming financial year (FY26) despite revenue loss of Rs 1 lakh crore on account of the tax relief for the middle class, as announced in the Union Budget, a top official told DH on condition of anonymity.
“If you go by the past few budgets, we have never been over-optimistic about tax targets. If anything, given how fiscally conservative the political leadership is, tax targets are modest,” the person said, a day after Finance Minister Nirmala Sitharaman presented the Union Budget for 2025-26
The budget assumes a nominal GDP growth of 10.1 per cent for FY26. Net tax receipt for the coming year is budgeted at Rs 28.37 lakh crore, a rise of 10.9% from the revised estimates of FY25.
The FY26 budget estimate (BE) for personal income tax is Rs 14.4 lakh crore, a growth of 14.4 per cent from the revised estimates (RE) of FY25. This seems likely to be achieved in spite of the tax foregone due to sops for salaried classes, as the personal income tax growth in FY25 was 20.3 per cent over FY24, the official said.
However, there is concern regarding corporate taxes, which has lagged personal income tax over the past few years, both in terms of absolute amount and year-on-year percentage growth.
The FY26 BE for corporate tax is Rs 10.8 lakh crore, an improvement of 10.4 per cent from FY25. However, the growth for FY25 over FY24 was only 7.5 per cent.
Yet, the centre is confident that corporate tax targets will be met as well.
“The relaxations on personal income tax will spur demand and consumption, which in turn will positively impact the sales and margins of companies across the board. The consumption boost will lead to higher tax returns by India Inc,” the person stated.
Faced with the concern of a slowing economy, Sitharaman rolled out tax cuts across the board and rejigged the income tax slabs, in a clear signal that the Modi government has prioritised the revival of urban consumption and demand by putting more money in the hands of the common citizens.
Effectively removing any tax liability for those earning upto Rs 12 lakh per annum, Sitharaman brought in new slabs which eases the burden on taxpayers earning upto Rs 24 lakh per annum. Only those above this bracket will pay the highest tax rate of 30 per cent.
Union Budget 2025 | Nirmala Sitharaman, as Finance Minister, presented her record 8th Union Budget this time. While inflation has burnt a hole in the pockets of 'aam janata', the Modi govt gave income tax relief for those making up to Rs 12 lakh per year in salaried income. Track the latest coverage, live news, in-depth opinions, and analysis only on Deccan Herald. Also follow us on WhatsApp, LinkedIn, X, Facebook, YouTube, and Instagram.