New Delhi, May 25 -- The government announced income tax concessions amounting to a total of Rs.1 trillion to stimulate demand in the economy. The savings on tax outgo will take time to cumulate into a meaningful chunk of additional purchasing power in the hands of taxpayers. If the amount of tax given away for the entire year could be put into the hands of taxpayers upfront, they might be more inclined to spend it. That, however, would call for an additional government initiative.

"A taxpayer in the new regime with an income of Rs.12 lakh will get a benefit of Rs.80,000 in tax (which is 100% of tax payable as per existing rates). A person having income of Rs.18 lakh will get a benefit of Rs.70,000 in tax (30% of tax payable as per exist...