Tax payers are likely to get a big relief in the supplementary general budget to be announced in the second fortnight of July. It is being said that policy makers can reduce income tax rates to rationalize the current income tax structure. According to Reuters news, the government may make a big announcement on income tax in the next budget to revive the Indian economy. It is being stated that this step will be taken with the aim of promoting leggings consumption in the country.
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More concessions for low income earners
The report claims that under this scheme, lower income tax payers can be given more tax concessions. The newly formed BJP-led National Democratic Alliance (NDA) government is expected to present the full budget for the financial year 2024-25 by the third week of July.
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Two government officials said it was likely that the government would prioritize cutting income tax rates for low-income earners over other democratic plans and excessive welfare spending. Officials said the tax cut would bring more money into people’s hands, resulting in increased consumption and spurring economic activity.
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People will have more money in their hands, which will increase consumption and increase direct and indirect tax revenue. Therefore, even if a reduction in income tax rates leads to a reduction in revenue, the net effect will be positive.
The tax slab is not reasonable
An official said that a review of the existing tax slabs revealed that the current tax structure is not rational. In this, the increase in income tax is very high. In the new tax system, the first slab of five percent starts from an income of Rs 3 lakh. When the income reaches Rs 15 lakh, i.e. a five-fold increase, the tax rate increases from five percent to 30 percent, i.e. a six-fold increase in the income tax rate. This growth rate is very high.