Indian taxpayers are dragged into paying higher income tax. Govt must factor in inflation | Prof. Vidya Mahambare writes for The Print

The article highlights that the government aims to discontinue the old tax regime but before finalising the new tax regime, it needs to carefully re-consider the tax brackets and the marginal tax rates to factor in the inflation impact on income tax payable. Our back-of-the-envelope calculations suggest three changes to the existing new tax regime to compensate for the inflation impact on the average tax rate during the last decade.

1) No tax should be payable for between Rs 2.5 lakh and Rs 5 lakh when gross income exceeds Rs 5 lakh.

2) There should be only four tax brackets (as shown in the below table)

3) The highest marginal tax rate is 25 per cent compared to the current 30 per cent.