India Budget: India's tax cut plans will boost consumption, top execs say

Britannia Industries

01/02/2025 08:09

By Praveen Paramasivam
       Feb 1 (Reuters) - India's plans to cut personal income
tax rates will put more disposable income in the hands of the
people and eventually boost consumption in the world's
fifth-largest economy, executives from automobile and consumer
firms said on Saturday.
    This comes after the government said that people earning up
to 1.28 million rupees ($14,800) per year will not have to pay
any taxes, raising its threshold from 700,000 rupees. It also
cut tax rates for people earning above the new threshold.
    Consumption in the Indian economy has been under stress in
the last few quarters as shoppers tightened their purse strings
amid stubborn inflation and modest wage growth.
    "Tax reforms benefiting the middle class will increase
disposable income, further fuelling demand across essential and
aspirational categories," Aasif Malbari, CFO of Godrej Consumer
Products  GOCP.NS , said.
    The government's announcement sent the shares of consumer
goods  .NIFTYFMCG , autos  .NIFTYAUTO  and realty  .NIFTYREAL 
firms up by 1.7%-3.6% on Saturday.
    "The tax cut is going to be a helpful factor in accelerating
demand for various kinds of consumer products," RC Bhargava,
chairman of Maruti Suzuki India  MRTI.NS , told TV channel ET
Now.

 (Reporting by Praveen Paramasivam; Editing by Dhanya Skariachan
and Sonia Cheema)
 ((Praveen.Paramasivam@thomsonreuters.com; +91 867-525-3569;))