Inflation increased by 21 percent in five years, but no relief to high tax payers 

New Delhi| Since the implementation of the new tax regime, the government has given relief to taxpayers earning less than Rs 15 lakh annually by increasing the limit according to the tax slab, so that their pockets are less affected in the era of rising inflation. But, for the last five years, there has been no relief on the limit front for those taxpayers who pay the highest taxes.

Adil Shetty, CEO of Bank Bazaar, says that the new tax regime was introduced in 2020. Since then, the Cost Inflation Index (CII) has increased by about 21 percent. To mitigate this impact of inflation, the government has increased the limit by a minimum of 20 per cent and a maximum of 40 per cent for taxpayers with income less than Rs 15 lakh in five years. However, there has been no change in the limit for taxpayers earning more than Rs 15 lakh and they have to pay tax at the maximum rate of 30 per cent.

According to statistics, 70 per cent of taxpayers who pay ITR have a taxable income of 5 lakhs or less. Adil said, the government should consider adjusting inflation in the tax slabs in the 2025-26 budget to provide relief to the taxpayers paying the highest taxes. For this, the annual income limit should be increased by at least 20 per cent to Rs 18 lakh under the maximum tax slab of 30 per cent. This will provide a lot of relief to urban employees facing the challenge of paying home loan EMIs at higher interest rates, paying expensive school fees for children and shelling out more for a better lifestyle.

Grant Thornton’s survey: 57 percent of taxpayers want…Government should reduce taxes
57 percent of the country’s individual taxpayers want the government to cut taxes in the next fiscal year’s budget. 25 per cent have demanded relaxation in the maximum tax slab. According to a survey report by Grant Thornton India, despite 72 per cent of individual taxpayers opting for a new income tax regime, 63 per cent are in favor of an increase in incentives under the old regime. About 46 percent advocated lowering tax rates to increase the attraction towards a new tax regime. 53 per cent of respondents surveyed have sought to allow compensation for losses on residential property under the new tax regime. 47 per cent want the ‘set-off’ limit to be increased under the old system or the Rs 2 lakh limit to be removed altogether. Akhil Chandna, partner, Grant Thornton India, said the increase in NPS tax deduction limit and this will boost retirement savings if there are more flexible withdrawal rules.