One Nation, Two Income Tax Systems

There were wide expectations leading up to the announcement of the Union Budget for the next fiscal that Finance Minister Nirmala Sitharaman would provide relief to salaried taxpayers, like she did to corporates a few months ago. For quite some time now, the government has also been hinting towards simplification of the income tax regime in India to make compliance easier and also to bring more people under the tax net. Two hours into the budget speech, the FM finally came to the widely anticipated subject and announced a series of changes and reductions in the Personal Income Tax slabs. As per the government estimates, the new personal income tax rates, which would bring “substantial benefits” for the taxpayer, will entail estimated revenue forgone worth `40,000 crore per year for the government. However, as the finance minister kept listing the details, it became apparent...