The Union Budget 2024-2025 will be announced on Tuesday, July 23, at 11 A.M. All the taxpayers from various fields are eagerly expecting some changes. A common salaried person expects a huge income tax cut along with the standard deduction and changes in the tax system. As the government is trying to simplify the tax reform and enhance compliance, we can expect the changes through the budget.
According to recent data, the Government of India has collected a much higher amount of tax than expected, which might grow further in coming years. This leads to the possibility that the government might consider increasing tax relief. As indicated by a senior government official, the government is considering measures to provide tax relief to boost consumption and demand without increasing welfare spending. The eyes of Aam Aadmi carry hope in terms of extensive tax relief.
Impact of Extensive Tax Relief on Aam Aadmi (Common Man)
The objective of this article is to analyze the effect of extensive tax relief on the Aam Aadmi (common man) in India.
Answering Yes/No to whether India can afford the extensive tax relief that a common man desires is a little complicated as there are always two sides. Regardless of the decisions and major turnarounds, Aam Aadmi should continue filing ITR timely with the help of experts. Effects of providing the extensive tax relief the Aam Aadmi desires-
Fiscal Budget Deficit
Tax Relief lessens the amount of tax to be paid. Tax is the greatest source of revenue for the government. The government might struggle to pay for necessary things for the development of a nation. This will eventually lead us towards the fiscal budget deficit. A situation will arise where the country needs to borrow the money to make up for it.
Economic Growth
Tax policies influence economic changes. Cutting excessive tax rates might encourage men to work more, earn more, and invest more. The increased spending and investment help grow the economy.
Political Consideration
Tax policy is a very trending topic during elections that influences voting decisions.
Easy Life
However, the middle-class family would be able to live an easy life, and rich people would have an easier life.
Labour Supply
Extensive tax relief may lead people to spend more and save less, which additionally impacts the Labor Supply as many people would already reach their financial goals and seek something different. The effect can be seen leading to a reduction of national savings and an increase in the tax rate in India in the long term.
Education and Healthcare
Tax Deductions on Education and Health Care will make it much more affordable to financially poor backgrounds.
Inflation
There is a high risk of inflation, where the cost of living will rise as the price of everything goes up, as people will have more money to spend.
Conclusion
No doubt, the modification in revenue and the formation of a tax system impacts the economy of a country. As you read the above, not all have positive impacts. There might be negative impacts that incur. The tax relief should be provided in such a way that maximizes the benefits and minimizes the negative effects rather than just making it extensive.
Lowering the tax relief for essentials while imposing higher rates on luxury consumption can be one solution for future complications. Excessive Tax Benefits to the common people of India have immense immediate benefits but the long-term poor economic conditions.
We need to understand the difference between a need and a desire. Needs are essential for our survival, whereas desires are the things we crave for which we might not afford. By reading the article, we know that extensive tax relief is what we crave and that we might welcome some unwanted problems for the government in the future that we cannot afford.
Frequently Asked Question
Why does the common man desire extensive tax relief?
A common man desires tax relief for savings and economic stability in India.
Why are India’s expectations for tax relief high in the budget 2024?
The main reason for people to expect high tax relief in the upcoming budget is the record of a huge collection of taxes by the government. There is a hope that the government might use this to provide relief to the people of their country.
How does public feedback influence the tax relief measures in the Union Budget?
Public feedback is very significant as the government considers orienting the tax policy in a way that meets the needs and demands of the public.
Which class will benefit more from the tax relief?
Middle-class people will likely have a better life after tax relief as it reduces the financial burden.
What should be considered by the government while providing tax relief?
Economic Goals
Fiscal Prudence
Social Equity