CNN Central News & Network–ITDC India Epress/ITDC News Bhopal: The Complexity of the Tax Slab System
In Budget 2024, Finance Minister Nirmala Sitharaman made several key announcements to provide relief to taxpayers. Under the new tax regime, income up to ₹7 lakh has been made completely tax-free. However, reports suggest that by utilizing certain deductions and exemptions, individuals earning up to ₹12 lakh may also end up paying zero tax. This raises a fundamental question in the minds of taxpayers—if income up to ₹12 lakh can indeed be tax-free, then why is the tax slab system still in place? Is it a simplified option for taxpayers, or does it add to the confusion with its complex structure?
India’s taxation system follows a progressive tax structure, where higher earners pay higher taxes. This is why different tax slabs exist, ensuring varied tax rates for different income groups. However, the claim that ₹12 lakh income is completely tax-free is not a direct rule—it depends on multiple deductions and exemptions. For instance, taxpayers can reduce their taxable income through standard deduction, Section 80C benefits, and other tax-saving instruments.
This process, however, can be complicated for individuals who are not well-versed in tax planning. Many taxpayers end up paying more tax due to a lack of awareness, even though they could legally reduce their tax liability. While the system benefits those who actively plan their taxes, it can be overwhelming for the average taxpayer.
The tax slab system is not merely a tool for revenue collection—it also encourages saving and investment. The government aims to strengthen financial security by offering tax incentives for various financial instruments. If ₹12 lakh income were made directly tax-free, government revenues might decline, impacting public welfare schemes and development projects.
The real question remains—should the government simplify the tax system further? Should tax slabs be reduced, or should the complexities of deductions and exemptions be eliminated?
India needs a tax system that is simple, transparent, and taxpayer-friendly. Until such reforms take place, the idea of “tax-free income up to ₹12 lakh” will remain a technical calculation—one that is not easily understood or utilized by everyone.
#IncomeTax #TaxFree #Budget2025 #Finance #Taxation
