New tax regime signals shift in India’s fiscal landscape, says Dr Satya Kishan

 

 

The Union Budget for 2025 has ushered in substantial changes to India’s income tax framework, raising pertinent questions about the potential shift from the old tax regime to the new one. Dr Satya Kishan, Associate Professor in the MSBS Department at MATS University in Raipur, elucidates, “The restructuring of the personal income tax system is a pivotal move, particularly with the increase in income tax exemption to Rs 12 lakh. This development marks a significant relief for middle-class taxpayers.” The introduction of new tax slabs designed to offer lower rates for middle-income groups, while introducing higher rates for the wealthiest, reflects a progressive approach. Dr Satya Kishan adds, “This system aims to empower the working population by enhancing disposable income, which is expected to drive consumer spending and stimulate economic activity.”

 

Moreover, the new regime focuses on simplifying the tax structure by eliminating most deductions and exemptions. Dr Kishan observes, “This is a welcome change for many taxpayers, as it provides an easier and more transparent method of tax filing.” However, despite these significant alterations, the old tax regime remains intact, allowing taxpayers the option to choose between the new and old systems. According to Dr Kishan, “While the dual system offers flexibility, the government’s push for the new tax regime through lower rates and simplicity could gradually lead to its widespread adoption.” Looking ahead, Dr Satya Kishan concludes, “The government’s intent to modernise the tax system is clear. Though the old regime persists for now, it is likely to be phased out, aligning with the goal of a more efficient, streamlined, and consumption-driven economy.”