Tax Exemption for Earnings Up to Rs 12 Lakh: Impact on Finance Company Stocks and Benefits from the Upcoming 2025 Budget

Following Union Finance Minister Nirmala Sitharaman’s budget announcement to exempt income up to Rs 12 lakh from taxation and to lower tax rates across all income brackets, there has been a notable increase in consumer spending expectations and demand for consumer finance. Stocks of major finance companies surged, with Bajaj Finance’s share price climbing over 5% on Monday and 6.85% over two days. Other firms, such as L&T Finance and Mahindra & Mahindra Financial Services, also saw share price increases. Analysts predict that the tax savings for around 1.75 crore taxpayers will boost disposable income by approximately Rs 9,000 per month, leading to higher consumption of consumer goods financed through accessible loans from financial institutions. This scenario suggests a potential multiplier effect that could significantly enhance the lending business and profitability of finance companies in the coming months.

Tax Exemption for Earnings Up to Rs 12 Lakh: Impact on Finance Company Stocks and Benefits from the Upcoming 2025 Budget

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