(MENAFN- KNN India)
New Delhi, Jan 21 (KNN) Think tank Global Trade Research Initiative (GTRI) has proposed significant reforms to India's tax system in the upcoming 2025 Union Budget, emphasising the need to adjust income tax exemption thresholds for inflation.
According to their analysis, the current income tax exemption threshold of Rs 2.5 lakh, unchanged since 2014, has effectively diminished to Rs 1.4 lakh in real terms due to inflation.
In a report co-authored by former CBDT Chairman JB Mohapatra and GTRI founder Ajay Srivastava, the think tank suggests raising the income tax exemption threshold to Rs 5.7 lakh to maintain parity with 2014 standards.
The report highlights that various deduction limits have similarly lost value over time, recommending that the Rs 10,000 savings deposit interest deduction from 2013 should be increased to Rs 19,450 by 2025.
The organisation also advocates for simplifying the Tax Deducted at Source (TDS) system, which has expanded from four categories in 1961 to 40 TDS categories and 13 TCS versions today.
Despite this expansion, GTRI notes that most TDS revenue comes from limited sources such as salaries, dividends, contracts, and professional services, suggesting that less significant categories could be eliminated without impacting revenue collection.
A key recommendation addresses the disparity between taxation of bank deposits and equity investments. Currently, long-term capital gains from equities are taxed at 12.5 percent, while fixed deposit interest faces taxation at individual slab rates up to 30 percent.
GTRI proposes capping the tax on fixed deposit interest at 12.5 percent for deposits held over 365 days, aiming to create a more balanced investment environment.
The report also draws attention to the current minimum wage for skilled workers in Delhi, which stands at Rs 21,917 monthly or Rs 2.63 lakh annually.
By adjusting tax thresholds, many lower-income professionals could be exempted from tax return filing requirements, potentially providing relief to middle-income taxpayers in line with current economic needs.
(KNN Bureau)
MENAFN21012025000155011030ID1109114293
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.