Basics of Income Tax – Brackets and Deductions

Income tax is a crucial component of fiscal policy, directly impacting both government revenue and individual financial planning. This research paper explores the foundational aspects of income tax in India, with a particular focus on the structure of tax brackets and the role of deductions in determining taxable income. The study aims to analyses the progressive nature of income tax slabs, evaluate the effectiveness of key deductions such as those under Sections 80C, 80D, and 24(b), and compare the implications of the old and new tax regimes introduced in recent years. Utilizing a structured questionnaire, the research assesses taxpayer awareness, preferences, and challenges related to tax compliance and deduction utilization. The findings are expected to highlight gaps in taxpayer education, the behavioural impact of bracket structures, and the practical difficulties faced in claiming deductions. This study provides actionable insights for policymakers to enhance the efficiency and inclusiveness of the tax system, and for taxpayers to optimize their tax planning strategies.