NDA govt has left more money in the hands of middle class by lowering income tax: PM Modi

New Delhi: Prime minister Narendra Modi on Tuesday said the income tax rationalization undertaken by the Centre in the last 10 years has left more money in the hands of the middle class.

The Union budget presented on 1 February made income up to ₹12 lakh tax-free, up from ₹7 lakh earlier. Factoring in the standard deduction of ₹75,000 for the salaried class, an income up to ₹12.75 lakh will be tax-free. This income, however, excludes capital gains, which are taxed at separate short-term and long-term tax rates.

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In his reply to the motion of thanks on the President’s address, Modi also drew a comparison with the UPA government, saying that in FY 2013-14, tax exemption was allowed only for people earning up to ₹2 lakh per annum, which has now been increased to ₹12 lakh.

"In the last years, by lowering income tax we have increased the income (money in hand) of the middle class. In 2013-14, only income of up to ₹2 lakh was tax-free, while today income of up to ₹12 lakh is exempted from tax," he said.

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Presenting the budget, finance minister Nirmala Sitharaman had said that the new tax structure will substantially reduce the taxes of the middle class and leave more money in their hands, boosting household consumption, savings and investment. As a result of the rationalization in income tax, the government will forgo revenue of about ₹1 trillion in direct taxes.

Outlining the Centre's welfare schemes including Jal Jeevan Mission in his address on Tuesday, Modi said that NDA government focusses on bringing in development which also increase savings for households.

"Our model is, savings along with development; janta ka paisa janta ke liye" (public money for public service)," he said.

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At a time when the war over artificial intelligence (AI) has seen the Chinese firm DeepSeek disrupt the global tech market with its large language model, Modi said India has a significant position in the global AI race and that AI would help in developing "aspirational India".

The budget for the next fiscal announced the setting up of a new centre of excellence in AI for education, with an outlay of ₹500 crore. Further, the government would also consider a Deep Tech Fund of Funds to catalyze next generation startups.

The Economic Survey for FY25 also highlighted that India’s predominantly services-driven economy, coupled with its young and dynamic population, offered fertile grounds for leveraging the benefits of emerging technologies. The survey identified AI as a tool tailored to particular purposes, more suited to supplement human action rather than be a total replacement for work performed by them.