Income Tax Bill 2025: Delving into Historical Tax Rates and the Proposed New Structure

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Income Tax Bill 2025: Delving into Historical Tax Rates and the Proposed New Structure


The fiscal landscape of India is poised for a significant alteration with the unveiling of the Income Tax Bill 2025. As discussions surrounding this pivotal legislation intensify, it becomes pertinent to examine the historical context of taxation within the nation, particularly the zenith of income tax rates witnessed in the annals of Indian economic history. In the year 1961, a markedly different economic paradigm prevailed. During this era, individuals fortunate enough to earn in excess of Rs 1,00,000 annually were subject to a formidable income tax rate of 70%. This figure, representing the highest tax rate levied in 1961, underscores the significantly progressive nature of the tax regime at that time.

To put this historical rate into perspective, consider the income tax slabs prevalent in 1961:

Income Slab

Income Tax Rate

Up to ₹3,000

Nil

₹3,001 – ₹5,000

3%

₹5,001 – ₹10,000

5%

₹10,001 – ₹15,000

8%

₹15,001 – ₹20,000

10%

₹20,001 – ₹30,000

15%

₹30,001 – ₹40,000

20%

₹40,001 – ₹50,000

25%

₹50,001 – ₹70,000

30%

₹70,001 – ₹1,00,000

40%

Above ₹1,00,000

70%

Source: Deccan Heral

Fast forward to the present day, and the proposed Income Tax Bill 2025 introduces a revised tax structure, ostensibly designed to foster economic growth and simplify compliance.           

The salient features of this new tax rate regime are detailed in the following table:

Income Slab

Income Tax Rate

Up to ₹4 lakh

Nil

₹4 lakh – ₹8 lakh

5%

₹8 lakh – ₹12 lakh

10%

₹12 lakh – ₹16 lakh

15%

₹16 lakh – ₹20 lakh

20%

₹20 lakh – ₹24 lakh

25%

Above ₹24 lakh

30%

Source: Deccan Herald

This proposed tax structure under the Income Tax Bill 2025 marks a considerable departure from the historical peak of 70% witnessed in 1961. The tiered system suggests an attempt to balance revenue generation with considerations for different income levels within the contemporary Indian economy. Whether this new framework will effectively achieve its intended objectives remains a subject of ongoing debate and analysis.

Article Credit: This article is based on information from the Deccan Herald article "Income Tax Bill 2025: This was the highest tax rate in 1961".


Sandeep Ojha

Hi, I’m an accountant, tax consultant, and ERP expert passionate about making finance easy. At Commerce Tutors, I share clear, concise guides on accountancy, income tax, GST, and company laws to empower students and professionals alike facebook instagram reddit quora linkedin

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