Personal Income Tax

Delhi, January 28, 2025 (Punjab Khabarnama Bureau): The NDA government led by Prime Minister Narendra Modi has not made any major changes to the personal income tax laws since it took office in May 2014, much to the disappointment of many taxpayers. However, it did introduce a new simplified tax regime and for those staying with the old tax regime, it halved the rate to 5% for the lowest tax slabs.

The new tax regime offers lower tax rates for forgoing various deductions and rebates for interest paid on housing loans, investment in social security instruments and expenses on child education.

Personal income tax provides significant and steady revenues to the government. Its collection exceeds the government’s revenues from taxes on the profits of corporations. However, every tax rebate, deduction, and revision of income subject to tax leads to revenue losses for the government.

So, can the common man complain about getting a raw deal from the government? Should the government have given more concessions to ordinary folks?

It all depends on who is defined as a common man. Ideally, an individual with an annual income of up to ₹10-12 lakh fits that description.

Offsetting inflation impact

Advisor to Assocham’s National Council on Direct Tax Rahul Garg who was previously with a Big 4 auditing and consulting firm explains the income tax rates need to be changed if the common man is under stress because of the income tax. He pointed out that additional rebates announced in the last budget for the salaried opting for the new tax regime had made incomes of up to ₹7 lakh tax-free. Essentially, those at the bottom of the tax pyramid have got relief over the years rather than being burdened.

Summary: The government remains cautious about reducing personal income tax in Budget 2025, focusing on fiscal balance and long-term economic priorities.



Punjab Khabarnama

Punjab Khabarnama

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