Fair or Flawed? The Real Impact of Tax Reforms on Indians

By Neeti Daeyapukar

You may have heard about the word “Tax Reforms". But what are they? Tax Reforms are changes made to improve the structure, equity, and efficiency of a country’s tax system. But do these reforms help the common citizen of India?

Well…it has both pros and cons.

Over the years, India has made many changes to its tax system. One of the prominent reforms is GST (Goods and Services Tax). It was introduced in 2017, replacing various taxes.  It was introduced to eliminate cascading taxes, improve the ease of doing business, and create a common national market. GST did make positive changes, but it also created problems such as, some daily use items being taxed at higher rates.

Another change is that the government has introduced a new tax regime, which offers lower rates but removes exemptions. This created both burdens and benefits for the country.  For example, for the middle-class taxpayers, the lack of deductions like HRA (house rent allowance) and Section 80C under the new regime can also mean paying more.  Meanwhile, corporate tax cuts and incentives to start-ups may indirectly benefit citizens through job creation.

While the idea of these reforms is to help all,  they seem to be benefiting the large businesses and startups, than helping the middle and lower-income individuals who still struggle.

What can be done? Better financial literacy can be provided to these people, the use of technological support should be promoted, there must be a rebalancing of taxes, and GST should be lower, or rather not be applied for necessity goods.

Tax reforms in India have taken great strides toward modernization and transparency. But unless they are citizen-centric, the gap between policy and real-life impact will persist.