As anticipation builds for Budget 2023, ET Now spoke to Alok Agrawal of Deloitte India to understand the expectations of the salaried class.
Agrawal breaks down the new tax regime, tax slabs and the expectations of the public from the last full-fledged budget of the Modi government before the 2024 general election.
This is that time of the year when the ordinary taxpayer has a long wishlist and over the years there is a feeling that the common man bears an enormous amount of tax burden. Agrawal quoted PM Modi saying that only 1.5 crore Indians paid tax. Though, he said, that the reality has changed a bit, the figure underlines the scale of the problem.
He noted that the tax rates had not reduced in recent years, in fact for higher income rates they had only gone up. Some reductions and exemptions had become irrelevant over the years because of inflation, he said. “Even for those tax payers who are not in the higher tax bracket, the tax burden has increased if you look at the real value of the income they are earning and the tax they are paying,” said Agrawal.
Agrawal said that one area where the government attempted reform was the individual tax area – the new tax regime. While that simplified the tax structure is appealing but there has been very less onboarding.
Agrawal said that: “The govt has introduced more tax slabs, the rebate for low income tax payers still exists. If you are going into the new tax regime, the problem is more in terms of what you are foregoing if you want to go into this new tax regime.” The new tax regime does not have standard deduction, House Rent Allowance and other investment oriented deductions. Salaried individuals who are saving for the long term, for them it does not make sense to forego their 80c deductions. Agrawal said.
He said that the government should make the new tax regime more attractive to incentivise taxpayers to move over. He said benefits like standard deduction and HRA exemption should be retained to make the new tax regime more attractive.