Since 2014, the Modi government's approach to personal income tax has been marked by incremental changes rather than sweeping reforms. The introduction of a new simplified tax regime and the reduction of the lowest slab rate to 5% in the old regime stand out as notable modifications.
Understanding the Tax Framework
The current tax structure offers two paths for taxpayers:
For individuals earning up to ₹7 lakh annually under the new regime, income is effectively tax-free, representing significant relief for lower-income taxpayers.
The Common Man's Perspective
The definition of a "common man" in tax terms typically encompasses those earning up to ₹10-12 lakh annually. Rahul Garg, Advisor to Assocham's National Council on Direct Tax, notes that recent changes have primarily benefited those at the lower end of the tax pyramid.
Key Considerations:
Government's Perspective
The government's cautious approach to tax cuts stems from several factors:
Revenue Implications
Every tax concession impacts government revenues:
Reform Suggestions
Looking Ahead
The government's approach to personal income tax reflects a balance between:
While major tax cuts might not be imminent, focus areas include:
The Way Forward
For meaningful tax reform, considerations should include:
As India's economy evolves, the tax system must balance revenue needs with taxpayer relief while ensuring efficient resource redistribution and infrastructure development.
[Note: Tax regulations are subject to change. Readers should consult tax professionals for specific advice.]
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