Tax: Value for money

Finance Minister Nirmala Sitharaman seems to have struck a fine balance by giving significant relief to the salaried in her last full budget before the national elections. earning up to 700,000 will be able to avail exemption under the country’s new income tax regime 500,000, while its original exemption limit has been removed from 300,000 250,000. To enhance the appeal of the new tax option, the benefit of standard deduction has been given, and its slabs have been reduced so as to reduce the burden on middle-class earners. There is relief for the rich too, with India’s top effective tax rate coming down from around 43% to 39%. The move is especially commendable, given the psychological put-off that constitutes a rate of close to half the earnings compared to one-third. We need to remain globally competitive on this front as well, as the affluent can easily change residence, as some high-level tax consultants recommend. While motivating the middle class to change the tax regime is a good idea, retaining the jurisdiction’s buyers is even better. treasury is expected to take a trap 35,000 crore hit for these giveaways. But it will probably prove to be value for money