Income tax payers in India have good reason to feel neglected

Subscribe to enjoy similar stories. As the countdown to the budget for 2025-26 enters its final phase, it is about time individual taxpayers got a look-in from finance minister Nirmala Sitharaman. They are yet to receive the kind of largesse given by her to corporates in 2019, when the rate of corporate income tax was cut from 30% to 22%.

The budget to be presented on 1 February is an opportunity to correct this. India’s post-covid K-shaped economic recovery makes the case stronger than ever before. Fast growth is the lodestar for every government, no doubt, but it must be achieved keeping in mind the all-important aspect of equity.

In its effort to shift individual taxpayers to its exemption-free regime of personal income tax, the Centre must be commended for dangling carrots but sparing the stick. However, till such time as all taxpayers move to the new system, distortions in the old one need to end. At the macro level, weak overall demand could be an argument for easing the liability of taxpayers, particularly the middle class.

But there is much sorting out to be done at the micro level too. Last year, the FM made a beginning in this direction, but many inconsistencies persist. Take just three.

Currently, a standard deduction—enhanced to ₹75,000 from ₹50,000 earlier—is available only to salaried employees, not to others such as gig workers, informal-sector workers, senior citizens other than pensioners, etc. This anomaly must be rectified and the benefit of standard deduction extended to all individual taxpayers. Likewise, in the case of tax on accrued interest on bank fixed deposits, introduced by former finance minister P.