Income Tax News: To revive the Indian economy, the government can make a big announcement regarding income tax in the upcoming budget. Tax cuts will put more money in the hands of people, resulting in increased consumption and boosting economic activities.
Taxpayers are likely to get a big relief in the supplementary general budget to be announced in the second half of July. It is being said that policy makers can cut income tax rates to rationalize the current income tax structure. According to Reuters, the government can make a big announcement regarding income tax in the upcoming budget to revive the Indian economy. It is being said that this step will be taken with the aim of promoting the sluggish consumption in the country.
More exemption to low income earners
It has been claimed in this report that more tax exemption can be given to low income taxpayers under this scheme. The newly formed government of the BJP-led National Democratic Alliance (NDA) is expected to present the full budget for the financial year 2024-25 by the third week of July.
Two government officials said the government is likely to prioritise income tax rate cuts for low-income earners over other populist schemes and high welfare spending. Tax cuts will put more money in the hands of people, resulting in higher consumption and boosting economic activity, officials said.
People will have more money in their hands, which will increase consumption and increase direct and indirect tax revenue. Therefore, even if the reduction in income tax rates leads to a reduction in revenue, its net effect will be positive.
Tax slabs are not rational
An official said that the review of the current tax slabs has revealed that the current tax structure is not rational. The increase in tax on income is very high. In the new tax system, the first slab of 5% starts from an income of Rs 3 lakh. When the income reaches Rs 15 lakh, i.e. increases five times, the tax rate increases from 5% to 30%, i.e. the income tax rate increases six times. This increase rate is quite high.
