14 June, 2021

Bite Before The Balm

The FM has, at last, bitten into tax reforms. It may hurt a while, but it will heal.

Madhu Kapparath
Bite Before The Balm
If there's one area in Budget 2005 where finance minister P. Chidambaram has gone in for sweeping reforms, it is in the realm of personal income tax. In a swoop, it has changed the face of your pay slip and the shape of your wallet. In the run-up to the budget, Chidambaram had given notice that he would be looking to implement these long-overdue reforms. It was universally known that these would be directed at two problems: one, the number of taxpayers was way too low; and second, there were too many escape routes—in the form of exemptions that enabled people to get away with paying much less tax. The Kelkar task force on tax reforms had already set out a blueprint to address these issues, and the FM used it as his point of reference. Sceptics had doubted his ability to garner political support to pull off these reforms, but he seems to have taken a bold gamble.

First, of course, the income tax slabs have been recast. Now, those with annual incomes up to Rs 1 lakh will pay no tax; the exemption limit is higher for women (Rs 1.25 lakh) and senior citizens (Rs 1.5 lakh)....

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