Growth pangs
This refers to ‘Uncertain outlook on rupee, further rate cuts’ (February 17). It is widely anticipated that raising the income tax exemption limit to ₹12 lakh would increase disposable income, stimulating consumption and, in turn, boost GDP. This move was accompanied by an RBI policy rate cut of 25 basis points. However, given prevailing domestic and global economic conditions, such measures may not necessarily translate into sustained economic growth.
The US has adopted a more protectionist stance, with proposed reciprocal tariff hikes likely to impact emerging markets like India. A potential reassessment of rate cuts by the US Federal Reserve could accelerate FII outflows, further weakening the rupee. Additionally, increased crude oil imports from the US under a recent trade agreement may widen India’s overall trade deficit, exacerbating currency depreciation. Furthermore, the expected rise in consumption may not fully materialise, as taxpayers constitute only 2 per cent of the population.
Srinivasan Velamur
Chennai
Streamlining income tax
The article ‘Income tax makes no economic sense’ (February 17) raises points that are long overdue for serious consideration and definite corrective action. That income tax is devoid of any economic sense had been plain and clear, but the political exigencies of the leviathan state apparatus with all its need for ever burgeoning budgets thrust income tax upon us; based on fallacious notions of the morality of ability.
Hope the authorities bring down income tax rates and devise a very nominal rate of tax on discretionary expenditure and a higher one on luxury spending.
Jose Abraham
Vaikom, Kerala
New IT Bill
The introduction of the new Income Tax Bill, which intends to simplify the existing statute that dates back to 1961, in Parliament is welcome. The Bill, which is now being scrutinised by a select committee of the Lok Sabha, is in line with the Modi government’s move to abolish over 1,500 obsolete laws while updating and amending others. By omitting outdated provisions, restructuring related portions, and simplifying the language, the new Income Tax Bill has ensured taxpayers read the law easier. The phrase ‘assessment year’ has now been replaced by the word ‘tax year’.
Also, the Bill brings cryptocurrencies under the capital assets umbrella to enable tax authorities to call for information from ‘virtual digital space’, such as online investments and trading accounts. It is hoped the new Bill will improve the ease of doing business and ease of everyday living.
M Jeyaram
Sholavandan, TN