Among the most significant announcements in Union Minister of Finance Nirmala Sitharaman’s Budget Speech in July 2024 was the proposal to undertake a comprehensive review of the Income-tax Act, 1961.
With rising inflation, the value of money has decreased over the years. So there is an expectation that the tax threshold limit would be increase
Among the most significant announcements in Union Minister of Finance Nirmala Sitharaman’s Budget Speech in July 2024 was the proposal to undertake a comprehensive review of the Income-tax Act, 1961.
In her Budget Speech, she said: “The purpose is to make the Act concise, lucid, easy to read and understand. This will reduce disputes and litigation, thereby providing tax certainty to the taxpayers. It will also bring down the demand embroiled in litigation. It is proposed to be completed in six months.”
So we can expect tax reforms to take place. Outlook Money spoke to the common taxpayer to find out what Indian taxpayers expect from tax reforms. Let us take a look.
Simplified Tax Bracket: People expect the number of tax brackets to be reduced and made simpler so that it is easy to calculate and file taxes.
Increased Threshold Limit: With rising inflation, the value of money has decreased over the years. So there is an expectation that the tax threshold limit would be increased from the current Rs 2.5 lakh for the old tax regime and Rs 3 lakh for the new tax regime so that the tax outgo decreases.
Increased Deductions: Higher deductions for expenses like education, healthcare, and home loan interest.
Lower Tax Rates: Decrease in tax rates for small businesses so that their tax outgo goes down and they can focus their resources on their business.
Simplified Tax Filing: Many people find the tax filing process complex. A simplified and user-friendly tax filing process is thus also among the wishlist items.
Reduced Litigation: Tax disputes can be a time-consuming process. Simpler and more streamlined tax resolution processes can bring down the time and cost involved in dispute resolution.
Fair Taxation Of Digital Economy: Now, we make a lot of digital transactions. There is an expectation that there would be clearer rules for taxes on digital transactions.
Enhanced Transparency: Tax policies to be made more transparent so that taxpayers are more confident and compliant.
Reduced Penalties: Taxpayers want smaller penalties for minor tax omissions so that taxpayers are encouraged to rectify any error at the soonest.
Effective Tax Administration: The efficiency of the administration and tax authorities also needs to be increased so that they can revert faster to customer complaints and issues.