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Income Tax Act in India is obscure, antiquated and outdated.

It’s a common saying that for a government all its citizens are same and there should not be any differences in the treatment of citizens on any grounds.

The Constitution of India defines it thoroughly:

Right to Equality is enshrined under Articles 14 to 18 of the Indian Constitution of India, which guarantees the right to equality to all persons and prohibits any kind of discrimination against any citizen on any of the grounds of religion, race, caste, gender, and place of birth. Article 14 provides that all persons are equal before the law.

From my point of view, I have always been a big fan of “Equity” and not so much on Equality.

Equality can be defined as things which are same while equity means fair and impartial treatment.

One such aspect where the Govt has given equal treatment to, but “equity of treatment” is missing is the charging of Income Tax.

Our Income Tax Act is 61 years old, which means it’s like a senior citizen. The average life expectancy of an Indian is around 68 years, which signifies our Income Tax Act is pretty close to the extinction of its shelf life.

The Act is obscure in a way that it does not take into account modern realities even though it’s amended every year through the Finance Act passed year on year in Budget Session.

The following are the list of points which Income Tax should have but has never really considered while taxing the taxpayers of this great nation.

  1. Regional disparity: Multiple surveys has shown that cost of living is cheaper in Eastern parts of India as compared to may be Southern or Northern Part. Let’s take an example to better explain this:

Mr Ankit Agarwal a Finance Broker residing in Kolkata earns Rs 1.25 lacs p.m and Mr Rohit Agarwal a Chartered Accountant in Bangalore earns 1.5 lacs p.a. Ankit monthly personal expenses (home rent, grocery, manicure etc) costs him around 35k p.m. which means he has net saving of 1lacs while Mr Rohit net monthly expenses comes around 55K approx. meaning a net saving of 95k only for him. But when both sit down to calculate their taxes Mr Rohit tax will be more than Mr Ankit tax liability by around Rs 90,000. The tax calculation here has failed to take into consideration the cost-of-living expenses.

The USA is a prime of example of considering this point. Each state in USA charges different tax rates according to its own social and economic scenario.

Indian Govt can also think segregating the nation in 4–5 tax zones.

2. Gender disparity: It’s a common knowledge the level of coverage of education in women in India is still vastly inferior to the men in the country. While the girls are slowly catching up there is a long way to go. Also, gender pay gap is a real issue which means women in the same position earn less than their male counterparts. It is estimated that this gap is around 25%.

Still our good old taxation system does not consider this and charge both the genders equally. Until a few years back there were a separate tax bracket for women, providing them higher exemption then the men, but now his has also been removed and both genders are charged equally.

3.Dependent disparity: The dependency disparity might be debatable, but an author can not be blamed for stating obvious facts.
An individual surrounded with more dependents has a far higher cash outlay as compared to a bachelor or somebody with earning parents. Dependents can be parents, spouse or children. Where spouse & childen come into the life of the taxpayer by his/her own choice, parents are an inherent part. With age, parents require advanced healthcare facilities, which might end up costing a fortune for the respective taxpayer and burn through their savings. Government Schemes, Tax Rebates, and Government funded hospitals are inadequate as seen during the pandemic. Enhancement of the tax relief for taking care of dependent parents can go a long way in helping such taxpayers’ money.

These are some of the points which should be considered and should be taken on board under merit.

This article is Written By Neeraj Agarwal, This Article First Appeared At



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