The purpose of these measures is to reduce financial stress and encourage savings among taxpayers.
Increase 30% tax slab up to ₹ 18 lakhs
Since 2020, 30% income tax slab is ₹ 15 lakh.
However, the cost inflation index (CII) has increased by 21% during this period.
Shetty suggests that the threshold should be increased to 18 lakhs to align with inflation.
“It will provide relief to urban salaried persons struggling with rising costs. It will also ensure that high-or-east earnings do not bear excessive tax burden, ”Shetty explained.
Pay attention to tax bracket enhancement
Instead of increasing the tax-free income limit, Shetty highlights all the tax brackets and sheds light on a balanced approach.
“Just increasing the bus tax-free income to ₹ 10 lakh changes the burden for high-earnings. Tax bracket reforms should ensure fairness in all income levels, ”he said.
He said that in the assessment year 2023-24, only 2% of taxpayers contributed 77% of the total income tax, highlighting the need for a justified system.
Encourage savings with 30% flat cuts
Shetty proposed a 30% flat cut on gross income with a cap of ₹ 15 lakh to promote savings and financial planning.
“The deductions under the new tax regime are absent, reducing interest in savings, insurance and necessary financial security,” he said.
Shetty added it to the decline in life insurance entry, low influx in equity linked saving schemes (ELSS), and declining domestic savings.
He argued that simplified tax deduction would encourage investment in insurance, National Pension System (NPS), and small savings schemes.
first published: January 22, 2025 1:09 pm First
(Tagstotransite) Budget (T) Budget 2025 (T) Budget Proposal (T) Income Tax (T) Budget Tax Proposal