With expectations of a significant income relief for the middle class rising, it appears Finance Minister Nirmala Sitharaman could meet them when she presents Union Budget 2020.
Sources have told CNBC Awaaz's Manish Desai that the 5 percent income tax slab may be relaxed from Rs 2.5 lakh-Rs 5 lakh currently to Rs 2.5 lakh to Rs 7 lakh.
For income bracket from Rs 7 lakh to Rs 10 lakh, the tax proposed is 10 percent. For Rs 10 lakh to Rs 20 lakh bracket, 20 percent is proposed.
For Rs 20 lakh to Rs 10 crore, the bracket may attract see 30 percent tax and for income of Rs 10 crore and above, the rate is likely to be 35 percent.
If the above announcement comes through, it could result in large savings for the salaried.
For instance, for individuals earning Rs 10 lakh, Rs 15 lakh and Rs 20 lakh, respectively, it could result in savings of Rs 60,000, Rs 1.1 lakh and Rs 1.6 lakh, respectively.
The above calculation does not take into account the impact of cess.
Experts feel that personal income tax cuts can put additional money in the hands of the middle and lower middle classes that will drive consumption and investment spending.
They also feel that the income tax cuts could further boost market sentiment.
Others have strongly argued against personal tax cuts on the grounds that income tax cuts would benefit only a small percentage of the population, which may not be the best option to stimulate growth. They feel that the government should use the money it has to invest and stimulate demand.