They are yet to receive the kind of largesse given by her to corporates in 2019, when the rate of corporate income tax was cut from 30% to 22%. The budget to be presented on 1 February is an opportunity to correct this. 

India's post-covid K-shaped economic recovery makes the case stronger than ever before. Fast growth is the lodestar for every government, no doubt, but it must be achieved keeping in mind the all-important aspect of equity. 

Also Read: Inequality alert: India's economy appears to be getting even more K-shaped

In its effort to shift individual taxpayers to its exemption-free regime of personal income tax, the Centre must be commended for dangling carrots but sparing the stick. However, till such time as all taxpayers move to the new system, distortions in the old one need to end. 

At the macro level, weak overall demand could be an argument for easing the liability of taxpayers, particularly the middle class. But there is much sorting out to be done at the micro level too.

Last year, the FM made a beginning in this direction, but many inconsistencies persist. Take just three. 

Currently, a standard deduction—enhanced to ₹75,000 from ₹50,000 earlier—is available only to salaried employees, not to others such as gig workers, informal-sector workers, senior citizens other than pensioners, etc. This anomaly must be rectified and the benefit of standard deduction extended to all individual taxpayers. 

Likewise, in the case of tax on accrued interest on bank fixed deposits, introduced by former finance minister P. Chidambaram, we should shift its incidence from the accrual stage to the time of actual receipt. 

It is hard to see why tax must be paid even before the interest income is received by the taxpayer. This is akin to levying capital gains tax on notional gains as share prices rise, instead of taxing what is eventually realized. 

Given the heavy reliance of senior citizens, especially, on earnings from fixed deposits, it is only fair that the liability on various streams of income is kept even-handed.

Also Read: Mint Quick Edit | Tax cuts are in high demand

A third area in urgent need of reform is the GST levied on medical insurance. Agreed, this indirect tax is not the exclusive domain of the Union government, as it is under the purview of the GST Council, where state governments have an important voice. Nonetheless, there is no denying that if the FM makes a case for it, state governments would follow suit. 

Related to this is the issue of GST on services rendered to senior citizens in assisted living facilities or old-age homes. Currently, a tax exemption up to ₹7,500 per month is allowed on payments made to Resident Welfare Associations (RWAs). But senior citizens in retirement communities who are unable to manage community-related affairs through RWAs due to infirmities of age are not allowed a similar exemption. 

Such taxpayers need other forms of relief too. Interest on the government's Floating Rate Savings Bonds, for example, is currently paid every half year. Senior citizens who do not get pension, which is true of the vast majority of our elderly, and are dependent on their savings would be relieved if they are allowed to opt for monthly payments instead.

Also Read: Tax-policy reforms have a huge role to play in Viksit Bharat journey

Income tax changes are among the last set of announcements to be finalized. Typically, every budget tries to improve the system. While nudging taxpayers to the new tax regime is a worthy aim, let it not overshadow other things in need of fixing.